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The Zacks Analyst Blog Highlights: Cisco Systems, Reynolds American, Altria Group, Philip Morris International and Lorillard

Zacks Equity Research

For Immediate Release

Chicago, IL – April 8, 2013 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include Cisco Systems Inc. (CSCO), Reynolds American Inc. (RAI), Altria Group Inc. (MO), Philip Morris International (PM) and Lorillard Inc. (LO).

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Here are highlights from Friday’s Analyst Blog:

Cisco to Acquire Ubiquisys Ltd.

Cisco Systems Inc. (CSCO) recently announced that it has agreed to buy cellular-network-gear provider, Ubiquisys Ltd. for $310 million.

Swindon, U.K.-based Ubiquisys Ltd. is a privately-held mobile communications company. It designs and develops communications devices and solutions for mobile operators and consumers. It specializes in small-cell radio transmitters called picocells or femtocells that improve cellular services.

Upon the completion of the deal, Ubiquisys will become a part of Cisco's Small Cell Technology Group, augmenting Cisco’s offering to service providers.Cisco is seeing strong momentum in the mobile market. Cisco’s product portfolio already offers small-scale equipment handling for 3G cellular traffic and Wi-Fi.

After the acquisition, Cisco will benefit from Ubiquisys software, expertise and knowledge that should boost Cisco’s mobile-carrier business in the future.

Cisco Systems is a leading provider of IP-based networking and other products. As a part of its acquisition strategy, Cisco bought 11 companies in 2012. In January, Cisco spent $475 million to purchase Intucell, a company that develops advanced self-optimizing network (SON) software to enable mobile carriers to plan, configure, manage and optimize cellular networks automatically.

Further, it acquired cloud services management business SolveDirect for an undisclosed amount. SolveDirect offers cloud-based solutions for enterprises and service providers, which help to streamline data and workflows across unified networks.

We believe that these acquisitions will broaden Cisco’s customer base and network offerings, providing the company with a significant competitive edge.



FDA Amends NRT Rules

Americans should find it easier to quit smoking following a recommendation by the U.S. Food and Drug Administration regarding over the counter Nicotine Replacement Therapy (NRT).

The FDA has recommended that those keen to quit smoking can now opt for the over the counter NRT on the day they chose to quit smoking even if it is not immediate.

The over the counter NRTs usually comes in the form of gum, lozenge or patch. Although previously the products could not be used for more than 12 days, the modification of the rule by FDA allows users to do so now.

Nicotine is addictive and has been tied to cardiovascular problems, high blood pressure and diabetes. But unlike tobacco, it hasn't been linked to cancer.

The recommendation is expected to boost sales of NRTs. Tobacco giants who are putting more and more focus on alternate tobacco products will benefit from this move. Tobacco companies have to turn to alternate harmless tobacco products as per the evolving demand.

In accordance with such needs, Reynolds American Inc. (RAI) has developed a nicotine replacement therapy. The Zonnic gum brought into the market by the company is different from the other nicotine gums existing in the market as they are similar to cigarettes in many ways. Zonnic does not pass on the harmful effect of tobacco to its users. The idea seems to be supportive to the consumers who are trying to quit cigarettes

Moreover, in May, 2012, Altria Group Inc. (MO) introduced a non-dissolving, lozenge-shaped nicotine disc called Verve – a mint-flavored disc that provides nicotine extracted from tobacco. The other tobacco giant Philip Morris International (PM) have purchased the patent and global rights to an aerosol nicotine-delivery system. It will develop the aerosol technology into a smokeless product that it says could be less harmful than traditional cigarettes

The recommendation is another step forward in FDA’s anti smoking campaign. The FDA is committed to reduction of cigarette smoking in the U.S. with its stronger anti smoking campaigns. The watchdog has designed warning labels with graphic design of a dead body, cancerous lungs and rotten teeth to be used on cigarette packets. It is intended to scare tobacco lovers each time they pick up a packet of their favorite brand.

Tobacco biggies are worried about the anti-smoking campaigns of FDA. Five tobacco giants across the globe have registered a protest against the forceful use of such graphic labels on the cigarette packets. Reynolds American Inc., Lorillard Inc. (LO), Ligget Group, Santa Fe Natural Tobacco, and Commonwealth Brands have gone to the extent of filing a case against FDA for imposing labels that are intend to reduce smokers rather than helping consumers make a free choice.

While Altria and Lorillard hold a Zacks Rank #2 (Buy), Reynolds America and Philip Morris International hold a Zacks Rank #3 (Hold).

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