Analyst Upgrades

• Citigroup (C) to outperform from market perform at Bernstein.
• Cubist Pharma (CBST) to outperform from neutral at RW Baird.
• Pentair (PNR) to buy from hold at Citigroup.
• Heritage Financial (HFWA) to outperform from market perform at Keefe Bruyette.
• SL Green Realty (SLG) and Digital Realty (DLR) to market perform from underperform at FBR Capital.
• MGM Resorts (MGM) to neutral from Sell at Janney Capital.
• Ciena (CIEN) to buy from neutral and Olin (OLN) to buy from underperform at BofA/Merrill.
• Mellanox (MLNX) to overweight from equal weight at Barclays.
• ConocoPhillips (COP) and Canadian Natural (CNQ) to overweight from neutral at JPMorgan.
• IDEX (IEX) to outperform from perform at Oppenheimer.
• Taiwan Semiconductor (TSM) to buy from hold at Deutsche Bank.
• Ctrip.com (CTRP) to positive from neutral at Susquehanna.
• Linear Technology (LLTC) and Analog Devices (ADI) to hold from sell at Auriga.
• Quicksilver (KWK) to outperform from market perform at BMO Capital.

Integrated circuit and systems software solution provider Qualcomm Inc.'s (QCOM) shares, first discussed here on January 28, 2011, at a price of $53.74, have pulled back about 10% to $54 in early 2011, but just view the retreat as a chance to scoop up shares, if you missed the January entry price.

And the reason is obvious enough: Qualcomm has the right products at the right time. The smartphone segment, aided by the 3G internet, is on fire, which has resulted in record model station modem (msm) chipset shipments.

Apple's (AAPL) iPad 2 got off to a great start during the first weekend of its launch, selling an estimated 400,000 to 500,000 units. Apple holds a substantial lead in the tablet market over competitors like Research In Motion (RIMM), Motorola Mobility (MMI), Dell (DELL), Samsung and LG Display.

How Much Will Suppliers Benefit from iPad 2 Sales in 2011?

Here we take a look at how much various iPad 2 component suppliers stand to gain from the product's success. We assume that Apple will continue to source iPad 2 components from the same set of suppliers throughout 2011.

Analyst Upgrades

• Parker-Hannifin (PH) to buy from hold at Deutsche Bank.
• JDSU (JDSU) to buy from hold at Citigroup.
• Noble Corp. (NE) to overweight from neutral at JPMorgan.
• Cerner (CERN) to buy from hold at Auriga.
• Cintas (CTAS) to outperform from neutral at RW Baird.
• American States Water (AWR) to buy from hold at Brean Murray.
• National Semiconductor (NSM) and Texas Instruments (TXN) to positive from neutral at Susquehanna.
• Lululemon (LULU) to buy from hold at ThinkEquity.
• DuPont Fabros (DFT) to top pick from outperform at RBC Capital.

Analyst Upgrades

• Expedia (EXPE) to buy from hold at Citigroup.
• Weatherford (WFT) to outperform from market perform at Wells Fargo.
• Abercrombie & Fitch (ANF) to buy from neutral at BofA/Merrill.
• MDC Holdings (MDC) to outperform from neutral at Credit Suisse.
• AutoNavi (AMAP) to buy from neutral at Goldman.
• Ciena (CIEN) and Nvidia (NVDA) to neutral from underweight at JPMorgan.
• Canadian Pacific (CP) to outperform from market perform at Raymond James.
• First Midwest (FMBI) and Quiksilver (ZQK) to buy from hold at Jefferies.
• Sonic (SONC) to neutral from negative at Susquehanna.
• MIPS Technologies (MIPS) to buy from hold at Benchmark Co.
• Arrow Electronics (ARW) and Avnet (AVT) to buy from hold at Stifel Nicolaus.

Mobile chips leader Qualcomm (QCOM) is planning to launch a variety of 'augmented reality' software for use in different consumer applications, according to Bloomberg/Businessweek.

Qualcomm wants to drive demand for its powerful processors that can handle high speed computing tasks for mobile devices. To do that, it intends to promote processor intensive augmented reality applications. Augmented reality aims to aid consumers with what they see. By pointing the phone's camera to objects and scanning them, the application can then identify them in the database, and find relevant material.

Qualcomm (QCOM) recently announced its fiscal 2011 first quarter earnings, in which it provided an outlook for the year. The notable positive here is the higher expected royalty rate in 2011, which reverses the trend of declining royalty rates in recent years. The tripling of capital expenditures that the company expects in fiscal year 2011 compared to 2010 also stands out to us, and we discuss the potential impacts of these below.

Qualcomm competes with other chip makers like Texas Instruments (TXN), Broadcom (BRCM) and Infineon (IFNNY), and we have a $53.82 Trefis price estimate for Qualcomm stock, which is around 4% below the current market price.

Coca-Cola (KO) has more than $13 billion in cash.

The top five companies (according to market cap) are:

• Exxon Mobil (XOM): $398.3 billion
• Apple (AAPL): $309.0 billion
• Microsoft (MSFT): $237.5 billion
• General Electric (GE): $215.0 billion
• Berkshire Hathaway (BRK.A): $202.5 billion

For years Microsoft (MSFT) was the tech leader. Then, Google (GOOG) came along and Microsoft missed the entire search engine revolution. But Microsoft still dominated in software. Then came Apple (AAPL) with its iPod, iPhone, and iPad. Again, Microsoft missed the small device revolution.

The Wall Street Journal reports that now Microsoft is playing catch-up again. With its next operating system it will use low-powered chips similar to those Apple uses.

Qualcomm (QCOM) is spreading its wings. It said Wednesday it has agreed to purchase Atheros Communications (ATHR) for $3.2 billion, as reported by the Associated Press. Why is Qualcomm making this deal? What are the advantages to the company?

Qualcomm is a big player in supplying chips to wireless phones. It has been looking to put its products in tablets and social notebook computers.

Analyst Upgrades

• Polo Ralph Lauren (RL) to buy from hold at Citigroup.
• Qualcomm (QCOM) to buy from neutral at Roth Capital.
• Walgreen (WAG) to conviction buy from neutral at Goldman.
• Rockwell (ROK) to outperform from neutral at Credit Suisse.
• Carnival (CCL) to buy from hold at Deutsche Bank.
• SunTrust (STI) and TD Bank (TD) to outperform from market perform at Keefe Bruyette.
• Hawaiian Electric (HE) to outperform from neutral at RW Baird.
• Essex Property Trust (ESS) to outperform from neutral at Macquarie.
• Amgen (AMGN) to neutral from underperform at BofA/Merrill.

Analyst Upgrades

• Walgreen (WAG) and Triumph Group (TGI) to buy from neutral at UBS.
• Focus Media (FMCN) to buy from neutral at Goldman.
• Home Depot (HD) to outperform from market perform at FBR Capital.
• Arbitron (ARB) to overweight from neutral at JPMorgan.
• Waddell & Reed (WDR) and Legg Mason (LM) to overweight from equal weight, and Janus Capital (JNS) to overweight from underweight, at Barclays.
• Central Euro Media (CETV) to buy from hold at Deutsche Bank.
• GenOn Energy (GEN) and Ntelos (NTLS) to outperform from sector perform at RBC Capital.
• Cooper Tire (CTB) to buy from neutral and Goodyear Tire (GT) to buy from underperform at BofA/Merrill.