Northrop, EADS land $35 bln airborne tanker deal

NEW YORK (MarketWatch) -- In a major upset, the Air Force on Friday tapped Northrop Grumman Corp. and EADS to build 179 of its next-generation airborne refueling tankers, a deal worth at least $35 billion.

Aftermarket revenue for parts and maintenance could easily add another $60 billion to their coffers, making it one of the largest defense contracts on record. It could also grow to include eventual replacement of the Air Force's 500 Stratotankers, many of which are already more than 40 years old.

The contract was originally estimated to be worth $40 billion, but the deal Northrop and EADS finally agreed to was $5 billion less.

The first phase of the work calls for developing four test KC-45 aircraft for $1.5 billion. The plane had been dubbed the KC-30 through the bidding process.

Once the basic design has been hammered out, the contract calls for delivery of 64 more aircraft at a cost of about $10.6 billion.

The deal strengthens Los Angeles-based Northrop's chance of landing future airborne tanker orders and expands EADS' role in supplying the U.S. military. The partners have said the plane would be built at facilities in Mobile, Ala., creating 5,000 new jobs in the process.

Defense industry analysts had widely expected Boeing Co. to submit the winning bid, using a converted 767 commercial airliner as the platform for the new military tanker. The KC-767 is smaller than the converted A330 aircraft offered by Northrop and built by the Airbus unit of EADS (FR:005730) , the acronym for the European Aeronautic Defence and Space Co.

In after-hours trading following the news, shares of Northrop (NOC) fell rose 5.6% to $83. Boeing (BA) shares fell 3.2% to $80.11.

Boeing will be briefed on the decision on or after March 12. The Chicago-based company is likely to file a protest with the Government Accountability Office. The Air Force wouldn't provide details as to why Boeing was not chosen, but stressed its decision process was well documented.

"The records are clear and well documented, and Boeing has known all along where they stand in the process," said Sue Payton, assistant secretary of Air Force Acquisition in a news conference announcing the deal.

Once the protest is filed, the GAO has 100 days to either dismiss Boeing's complaint or find in favor of the company.

During the conference, Air Force General Arthur Lichte said the Northrop bid was chosen because its aircraft could carry more passengers, cargo, and fuel while also offering more flexibility and dependability over Boeing's offer.

"Overall, Northrop was strong in aero refueling and airlift, as well as in past performance, and offered great advantage to the government in cost," added Payton.

Later Payton added that the creation of American jobs was not a factor in choosing the Northrop, EADS offer.

The KC-45 is based on the Airbus A330 tanker that has already won four awards in Australia, Britain, the United Arab Emirates, and Saudi Arabia.

Dollar tumbles to three-year low versus yen Renewed risk aversion boosts Japanese currency, other low-yielders

LONDON (MarketWatch) -- Last week it was the euro; now it's the Japanese yen's turn to explore historic strength against the U.S. dollar.

The yen ended last week on a strong note, then extended gains in Asian and early European activity Monday to rally to its strongest level against the U.S. dollar in three years.

Foreign-exchange strategists linked the move mainly to renewed concerns about the U.S. economy and the prospect for further turmoil in the global financial sector.

The yen was 0.7% higher against the dollar at 102.99 yen in recent activity, after hitting 102.59 earlier in the session, according to data from FactSet. With the yen leading the way, the dollar was lower against most other major counterparts.

The dollar index, which measures the greenback against a trade-weighted basket of six major currencies, was quoted at 73.732 in recent action after dipping to its lowest level since the index was created in 1973.

Bouts of risk aversion have proven supportive to the yen in recent months as it leads traders to shun once-popular "carry trades." In a carry trade, a player borrows in a low-yielding currency, such as the yen or the Swiss franc, and then uses the funds to buy assets denominated in a higher-yielding currency.

Combined with underlying ideas the U.S. economy may already be in recession and expectations the U.S. Federal Reserve will continue aggressively cutting interest rates, the stage was set for further gains against the dollar by major currencies, analysts said.

Strong gains by the low-yielding Swiss franc indicated that risk aversion was the main theme of the day, said Roberto Mialich, a foreign-exchange strategist with UniCredit. The Swiss unit was trading near $1.0403 against the dollar, a gain of 0.1% on the day. Earlier, the dollar traded as low as $1.0305 against the Swiss franc.

Japanese stocks were hit hard as the yen rose. The stronger currency put pressure on Japanese exporters, analysts said. Tokyo's 225-issue Nikkei Stock Average dropped 3.6% to 13,114.30 and the broader Topix index sank 3.4% to 1,278.84. See full story.

Meanwhile, Japanese officials gave no indication of concern about the yen's gains -- a factor that further encouraged the currency's rally, Mialich said. If traders begin to perceive an attitude of "benign neglect" toward a stronger yen by Japanese officials, the currency could soon make a test of the 100-yen level against the dollar, he said.

The euro, which last week marched to record territory against the greenback, was slightly higher against the U.S. unit at $1.5166. The European single currency was 0.7% lower against the surging Japanese currency at 156.14 yen, and was holding a gain of around 0.2% against sterling at 0.7640 British pounds.

The pound, meanwhile, was on the defensive against the greenback, losing 0.2% to $1.9849.

The European Central Bank and the Bank of England both hold policy meetings Thursday. Both are expected to keep interest rates on hold for this month.

Stronger-than-expected European economic data, including last week's unexpected rise in Germany's Ifo index of business sentiment, have contributed to expectations the ECB will leave its key lending rate on hold, analysts said. More global coverage.

A preliminary estimate of consumer price inflation across the 15 nations that make up the euro-zone was in line with market expectations for a 3.2% rise in February, according to data released by European Union statistical agency Eurostat. That matched the record pace seen in January and remains well above the ECB's medium-term target of under 2%.

Bank of England policymakers, meanwhile, have acknowledged risks of an economic slowdown. But they've also emphasized near-term concerns about inflation, focusing on its potential impact on consumers' longer-term inflation expectations. The bank's Monetary Policy Committee is expected to leave its key rate on hold at 5.25% after cutting by a quarter-point in February.

"Markedly faltering U.K. growth and the very real risk of a sharp economic downturn mean that further interest rate cuts are clearly on the Bank of England's agenda," wrote Howard Archer, chief U.K. and European economist at Global Insight. "Nevertheless, [Thursday's] meeting of the Monetary Policy Committee is highly likely to prove too soon to yield the next 25-basis-point interest rate cut to 5.00% given current elevated inflationary pressures."

Meanwhile, the U.K. CIPS purchasing managers index for manufacturing posted a stronger-than-expected rise to 51.3 in February, up from 50.7 in January, news reports said. Market expectations were for a reading of 51.0.

Analysts said PMI data for the services sector due for release on Wednesday could have an impact on U.K. rate expectations.

"Sterling faces another volatile week, with the services PMI survey on Wednesday likely to trigger a very ... jittery 24 hours ahead of the BOE verdict on Thursday," wrote analysts at Lloyds TSB. "A sharp drop for the PMI and wider [spreads between the London interbank overnight rate, or Libor, and the central bank's base rate] could spark sterling selling," potentially pushing the euro to another round of new highs against the pound.

Diebold gets $2.63 bln bid by United Technologies

Proposed deal is $40-share; maker of ATMs had rebuffed earlier overture

NEW YORK (MarketWatch) - United Technologies Corp. proposed to acquire Diebold Inc., the producer of automatic teller machines, voting terminals, retailing systems and other technology, for $40 a share, or $2.63 billion.

In a statement late on Sunday, United Technologies (UTX) , the Hartford, Conn., industrial and technology giant, laid out its proposal to acquire Diebold, which is based in North Canton, Ohio.

It made the public proposal after Diebold's board rebuffed an earlier takeover overture from United Technologies.

United Technologies also has told Diebold that if it could conduct a due-diligence financial review, it might be prepared to boost the $40 deal price.

That $40 price is 66% above Diebold's (DBD) closing price Friday of $24.12. In premarket trading Monday, shares were up 65% to $39.83 while United Technologies shares remained unchanged at $70.51.

In the past year, Diebold's shares touched a high of $54.50 last July and a low of $23.07, on Jan. 23, 2008.

UTX says its proposal is fully financed. The deal would be conditioned on a due-diligence review of Diebold and on regulatory clearances, United Technologies said.

"Diebold represents an excellent fit with" United Technologies, UTX Chairman and Chief Executive Officer George David said in the Sunday statement.

United Technologies makes its case

In a letter dated Feb. 19, which United Technologies made public, David proposed to Diebold Chairman John N. Lauer a deal at "a significant premium to the current trading price."

David said that UTX's "resources and presence in markets globally would be significant assets" in helping Diebold expand worldwide and build profitability.

United Tech sees complementary characteristics between several of its businesses and Diebold. For one, UTX's Otis Elevator has a 400-location network of offices and service centers. And Carrier air conditioners and UTC Fire and Security have comparable business models, United Tech said.

United Tech also called itself "exceptionally technology intensive," spending more than $3.5 billion a year on research and development.

Financing would come from cash on hand and other "readily available" sources, the letter said.

In a Feb. 21 response, Lauer said Diebold's board took up United Tech's proposal "extensively" at a regular meeting. The directors voted unanimously that pursuing a combination with United Technologies "was not in the best interests" of Diebold or its holders, Lauer's letter said.

Eight days later, David told Lauer that after due diligence, United Technologies might be prepared to go beyond $40 a share. And he said that if UTX couldn't talk with Diebold's board, it would take the matter directly to Diebold's holders, which according to regulatory filings include mutual fund giant Fidelity Investments and Cooke & Beiler, a Philadelphia investment firm.

Early in February, Diebold estimated 2007 revenue at $2.95 billion, which would rise 6% to 8% in 2008. The company had said it was disappointed with the revenue growth it posted for 2007. And it also said it would cut about 5% of its global workforce to reduce costs.

Diebold also said then that the board's audit committee and regulators were continuing to review the company's accounting.

Morgan Stanley is advising United Technologies on the takeover proposal.

World on a string,Is just one global fund all you need?

LOS ANGELES (MarketWatch) -- Investors who want to cover the globe often end up with a portfolio that looks like the United Nations -- a general assembly of mutual funds.

That's not a bad strategy for experienced investors who are capable of dealing with the complexity of multiple prospectuses, proxies and quarterly statements. But for newcomers or less-savvy savers, such an approach can be overwhelming.

Enter the global or world fund, an investment vehicle that gives you exposure to the whole world via a single fund investing in both U.S. and international stocks.

Such a fund can be just the ticket for savers starting out in the work force or for parents setting up IRAs for their children, folks who may have just $1,000 or $2,000 to initially invest and who will be adding a limited quarterly or monthly sum after that.

Elliot Herman, partner in charge of wealth management at PRW Associates, in Quincy, Mass., employs this strategy for younger investors, or those who want to keep their investments simple initially. He argues that the one-stop funds he recommends often hold their own against a larger portfolio.

"These are proven strategies that over the years have done well or better than a diversified portfolio," he said. Two he likes are American Funds' Capital Income
Builder (CAIBX:58.37, -0.98, -1.6%) and Capital World Growth and Income
(CWGIX:41.36, -1.03, -2.4%) . Both carry initial sales charges, or loads, and require a $250 minimum investment.

The growth-and-income fund, which has an annual average return over the last 10 years of 13%, invests around 72% overseas. The less adventuresome Income Builder fund puts just 39% in non-U.S. stocks and has returned 11% annually over the last decade.

"You have a team in American Funds that is made up of experts in both the international world and the domestic world, supported by a number of analysts who cover these funds," Herman said.

A bigger world

A few years ago few in the U.S. would have considered global funds as a one-stop investment solution, said Kai Wiecking, a Morningstar fund analyst. "It's good we've made that much progress to recognize that foreign equities belong in everyone's portfolio," he said.

The global funds allow even investors without much cash to have a stake in evolving world markets. While the U.S. currently commands the lion's share of the market capitalization in stocks worldwide, Wiecking and others assert that situation is likely to change as Asia continues to emerge as a market powerhouse.

Wiecking's favorite world funds include American Funds' New Perspective (ANWPX:31.71, -0.78, -2.4%) , for its experienced management and highly diversified offerings, and Oppenheimer Global (OPPAX:65.33, -1.78, -2.6%) , which zeroes in on themes of new technologies, mass affluence and the aging population. Both carry a load or initial sales fee.

Among the no-load funds, he likes Oakmark Global (OAKGX: 22.16, -0.58, -2.5%) , which offers small-cap and midcap stocks, unlike most global rivals that stick to better-known large-cap stocks, and T. Rowe Price Global Stock (PRGSX:23.07, -0.72, -3.0%) .

Adam Bold, founder and chief investment officer of The Mutual Fund Store, headquartered in Overland Park, Kan., advises investors who want to use just one global fund to seek those that have matched or outperformed their peers.

He also likes the Oakmark fund, but makes a couple of other no-load recommendations as well: Polaris Global Value (PGVFX:16.79, -0.29, -1.7%) , which has beaten the S&P Index (SPX:1,330.63, -37.05, -2.7%) year-to-date and in one-year and five-year periods; and Julius Baer Global Equity
(BJGQX:40.68, -0.96, -2.3%) , a newer fund headed by the team of Rudolph-Riad Younes and Brett Gallagher, who have already proven their mettle on the now-closed Julius Baer International Equity (BJBIX:40.39, -0.71, -1.7%) .

Bold says most people need between seven and 12 funds to achieve diversity, including "large-cap growth, large-cap value, small-cap growth and value, international, bonds of some sort and a couple of sector funds."

"For the person who doesn't do that, wants to get something and have exposure to both, these funds make sense if you have the reality that mutual funds are not buy and forget investments," he said, noting that even one fund should get a once-over twice a year, either by the investor or an adviser.

Phillips Ruben, president of Boston-based Vision Financial Planning, makes use of Dimensional Fund Advisor funds as one-stop solutions for those investing only a small amount initially, but notes they're available only through a financial adviser. "They offer very broad diversification, are very tax efficient and very cost effective," he said

He likes DFA Global 60/40 Portfolio (DGSIX: 12.28, -0.19, -1.5%) , which is a mix of fixed income and global equity, and DFA Global Equity Portfolio (DGEIX:13.73, -0.36, -2.6%) , which is a more aggressive portfolio investing only in stocks. The latter, he said, would suit a younger investor with a much longer time horizon.

Going with just a single fund to start out, Ruben said, can prevent rash decisions, such as following trends in a particular fund or sector.

"I think a lot of people don't have the expertise to make the decisions to put together an effective diversified portfolio and this takes that decision-making piece out of it and puts it in the hands of the experts."

Five global funds to consider
Name of fund	Ticker	Expense ratio, load	3-year return (annualized)	5-year return (annualized)
Capital World Growth & Income	CWGIX	0.77%, 5.75%,	22.5%	10.3%
Oppenheimer Global	OPPAX	1.15%, 5.75%	21.1%	4.6%
Oakmark Global	OAKGX	1.26%, no load	24.6%	18.6%
Polaris Global Value	PGVFX	1.48%, no load	25.4%	16.3%
T. Rowe Price Global Stock	PRGSX	1.2%, no load	19.4%	2.6%

Source: Comstock

Bull rocket fueling up with $2 trillion

Bull rocket fueling up with $2 trillion

Turn the engines on with a five-star portfolio

LOS ANGELES (CBS.MW) - The MIR station crashing to Earth. A perfect media image for the 2001 market, as the S&P 500 experienced its worst first-quarter performance in its 44-year history -- vaporizing $1.8 trillion.

And in the space of a year, Nasdaq's technology payload triggered a flameout of our worldwide space adventure, with a total wipeout of $4.5 trillion net worth.

Now switch channels to a launch pad at Florida's Kennedy Space Center.

Imagine $2 trillion of cash building up like rocket fuel. Being loaded into a hissing, steaming, vibrating Titan missile. You got it - there's $2,000,000,000,000 being stock-piled in money market funds as investors sit nervously waiting for the next launch, waiting to catapult the S&P 500 and the Nasdaq back up into a bull orbit.

A huge pay-load of fuel

But there's also a heart-pounding fear rippling through the spectators in the bleachers - how do you pick "the bottom?" Will the next satellite launch in the next quarter? Or be delayed until 2002? More frightening, if we haven't hit bottom, how much deeper? Nobody knows. But we do know lots more fuel will be stockpiled! And that's my point. We could end up with $2.5 to $3 trillion in money market cash before we have lift-off!

Get the picture? A new image. Stop focusing on the crash of the MIR. Think positive. Look ahead. Plan. Something's building to ignition. And it will trigger. The longer we wait, the more fuel, and the bigger the explosion. True, bears fear an implosion. History suggests otherwise. Bulls always come roaring back.

Aiming for the stars

History also shows that most investors invariably miss a next launch. The majority of America's investors, including pros, typically misjudge market turning points and take-offs. Like now, most are so nervous and gun-shy from the relentless descent of the past year they'll remain spectators in the stands, clutching their cash, passively watching the next bull lift off.

How about you? Getting an itchy trigger finger? You should be. Let's say you're a typical long-term investor. If you are, here are my picks for a model five-star "lift-off" portfolio. Winners that'll work for dollar-cost averaging in a bear market or for positioning your thinking when your nerve returns, when you decide the bull's ready to move, when you want to move out of cash into the market fast with an aggressive growth portfolio.

Top-gun funds, so good you can fill a portfolio by throwing darts at the list:

Large-cap stock funds (60%)

Here are your core funds. Sixty percent of any long-term portfolio is made up of funds investing in America's blue-chip giants. And every respectable fund family has one or more solid large-cap stock funds to pick from. One fund will work, but I find most investors feel more comfortable diversifying with a few of these winners, mixing value, growth and blend:

Fidelity Dividend Growth (FDGRX:73.49, -2.21, -2.9%) is an $12 billion value stock giant also averaging over 20 percent the past 5 years.

For a basic indexing portfolio, stick with funds tracking the S&P 500 and the Wilshire 5000, funds like Vanguard 500 Index
(VFINX:122.89, -3.41, -2.7%) and Vanguard Total Stock Market
(VTSMX:32.19, -0.89, -2.7%) are solid broad market funds. And if you
lean one way or the other, try Vanguard Growth Index
(VIGRX:30.16, -0.79, -2.5%) or Vanguard Value Index
(VIVAX:23.69, -0.68, -2.8%) .

You should also check out some five-star large-caps with small-tier families. Try Harbor Capital Appreciation (HACAX:33.35, -0.59, -1.7%) , Selected American Shares (SLASX:44.30, -1.36, -3.0%) , Gabelli
Growth (GABGX: 31.93, -0.83, -2.5%) , Excelsior Value & Restructuring (UMBIX:54.06, -2.02, -3.6%) , White Oak Growth Stock
(WOGSX:31.71, -0.97, -3.0%) , and Legg Mason Value Primary
(LMVTX:52.75, -1.92, -3.5%) .

And several of the other key families have super-charged 4-star blue-chip funds that work in a five-starportfolio: T.Rowe Price Blue Chip Growth
(TRBCX:35.33, -0.94, -2.6%) , Janus Growth & Income
(JAGIX: 33.54, -0.77, -2.2%) , Invesco Equity-Income
(FIIIX:8.76, -0.23, -2.6%) , Dreyfus Disciplined Stock
(DDSTX: 31.07, -0.85, -2.7%) , and the American Funds New
Perspectives (ANWPX:31.71, -0.78, -2.4%) .

If you're a real aggressive long-term investor, swap 10-15 percent of your large-cap asset allocation into sector funds in technology and biotech. Keep in mind, however, that about 25 percent of the S&P 500 is already made up of technology companies. Some of the best five-star tech funds are Firsthand Technology (TVFQX:36.33, -0.66, -1.8%) , Invesco Technology
(FTCHX:25.71, -0.68, -2.6%) , Fidelity Select Brokerage Services
(FSLBX: 59.56, -1.31, -2.1%) , and Vanguard Health Care
(VGHCX:131.54, -1.91, -1.4%) . Consider shifting five percent of your large-cap stock fund allocation into two or three.

Small- & mid-cap stock funds (25%)

Liberty Acorn (ACRNX: 26.97, -0.67, -2.4%) is a small-cap no-load managing $3.6 billion in assets and averaging 20 percent the past decade. Some other high performing five-star comparables include Third Avenue Value
(TAVFX:9.98, -0.30, -2.9%) . Then mix in a mid-cap winner like Artisan Mid-Cap (ARTMX: 27.50, -0.73, -2.6%) , Weitz Value
(WVALX:28.78, -0.78, -2.6%) , Strong Opportunity
(SOPFX: 34.31, -0.86, -2.4%) , and Oakmark Select
(OAKLX:23.44, -0.75, -3.1%) .

International stock funds (10%)

One of the top performers with overseas investing is Tweedy, Browne Global Value (TBGVX:

Tweedy Browne:Gl Value

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TBGVX 27.28, -0.35, -1.3%) which manages $3.5 billion and averaged 17 percent for the past five years. Comparable five-star funds include Artisan International (ARTIX: 26.62, -0.71, -2.6%) , Fidelity Diversified International
(FDIVX:36.53, -0.89, -2.4%) , American Century International Growth
(TWIEX: 12.64, -0.29, -2.2%) , and Citizens Global Equity
(WAGEX: 21.01, -0.48, -2.2%) .

Fixed-income funds (5%)

Keep your money markets at a minimum. Instead, load up with ultra-short, intermediate and tax-free bond funds with minimal risk of capital, like Strong Advantage (STADX:8.89, +0.01, +0.1%) , Schwab YieldPlus Investor
(SWYPX: 8.79, -0.04, -0.4%) , or Vanguard Short-Term Bond Index
(VBISX:10.36, +0.05, +0.5%) . And if you prefer municipals, go with SIT Tax-
Free Income (SNTIX:9.01, -0.06, -0.7%) and Vanguard Intermediate Term Tax-Exempt (VWITX:12.83, -0.07, -0.5%) .

3 ... 2 ... 1 ... we have a lift-off!

Keep one eye focused on each channel - along with the continuing losses in the Dow, Nasdaq, economy, earnings estimates, interest dates, and spy planes, we also have a continuing buildup of money market cash, the rocket fuel being stockpiled for the next launch of the bull market. We don't know when. Or how much further down. Only that it will happen. And that the lift-off will probably catch most investors in the bleachers as spectators.

Remember, a solid five-star portfolio only needs eight to10 funds for a bull or bear market. With these 38 funds to pick from, you can probably pick the right ones for you by throwing darts at the list - so have some fun, use darts that look like NASA Titan rockets!

Paul B. Farrell, author of "The Winning Portfolio" and three books on online investing, has been executive vice president of the Financial News Network and an investment banker with Morgan Stanley. He holds a doctorate in psychology and a law degree.

Energy stocks swoon along with broad market

Last update: 6:11 p.m. EST Feb. 29, 2008

NEW YORK (MarketWatch) -- Energy stocks swooned with the broad market Friday as woes about the economy and lower oil prices weighed on the sector, but oil, natural gas and oil services shares still managed to hold on to slim gains for the week.

AIG 46.86, -3.29, -6.6%) results stoked fears about a recession, the Dow Jones Industrial Average retreated more than 300 points. Crude futures fell 75 cents, or 0.7%, to $101.84 a barrel, well below the record of $103.05 set earlier.

The Amex Oil Index (XOI:1,420.75, -37.53, -2.6%) fell 2.6% to 1,421. For the week, the index inched 0.6% higher. For the month, it rose 3.7%.

Occidental Petroleum( OXY 77.37, -3.04, -3.8%) subtracted 4% to $77.37as the leading decliner in the group.

The Amex Natural Gas Index (XNG:604.30, -19.71, -3.2%) dropped 3.2% to 604.3 after setting an all-time high in the previous session, leaving it with a 2.3% gain for the week. The index notched a strong 11% gain for the month, putting it firmly in record-high territory. Noble Energy (NBL:77.40, -3.95, -4.9%) fell 5% to $77.40 as the session's leading decliner.

The Philadelphia Oil Service Index ($OSX:, , ) fell 4.3% to 279, with Cameron International (CAM: 42.48, -2.50, -5.6%) falling nearly 6% to $42.48.

For the week, the oil services group advanced 0.5%, contributing to a robust 10.8% rise for the full month.

Southwestern Energy Co. (SWN:, gf65.23, -2.42, -3.6%) reversed earlier gains and fell 3.6% to $65.23 after doubling its fourth-quarter net income and setting a 2-for-1 stock split. See full story.


VLO 57.77, -0.50, -0.9%) set plans to buy back up to $3 billion of its stock and spend $2.4 billion to expand capacity by 90,000 barrels per day at its Port Arthur, TX refinery. Despite the moves, Valero shares fell 50 cents to $57.77.

Among other movers, Frontier Oil (FTO:35.71, -0.39, -1.1%) fell 1% to $35.71 after it set plans to buy back $100 million of its stock.

Exploration and production firm Canadian Natural Resources (CNQ:74.84, -2.50, -3.2%) fell 3.2% $74.84 after a downgrade to market perform from outperform at Raymond James.

EOG Resources (EOG:118.99, -5.74, -4.6%) fell 4.6% to $118.99 after its 18% run-up in the previous session. RBC Capital downgraded the exploration and production firm to underperform from sector perform.

Fluor Corp. (FLR:139.25, -3.23, -2.3%) , one of the engineering giants in offshore oil and gas construction, fell 3% to $139.25, reversing gains following a strong earnings report on Thursday.

PPL Corp. (PPL:45.38, -1.27, -2.7%) fell 2.7% to $45.38 after it revised its 2007 earnings downward to $3.35 a share, reflecting a fourth-quarter charge of $21 million, or 5 cents a share. The charge was due to a reassessment of its natural gas and propane businesses which are expected to be sold in the second half of 2008.

Calpine Corp. (CPN:18.88, -0.23, -1.2%) dipped 23 cents to $18.88 after it reported 2007 net income of $2.69 billion, or $5.62 a share, on revenue of $7.97 billion. The operator of electricity-generating plants emerged from Chapter 11 bankruptcy at the end of January, a little more than two years after seeking protection from creditors.