The Zacks Analyst Blog Highlights: Autodesk, Apple, Rio Tinto plc, BHP Billiton and Vale S.A

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Mar 30, 2012, 11:34 ET

CHICAGO, March 30, 2012 /PRNewswire/ -- 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 Autodesk Inc. (Nasdaq: ADSK), Apple (Nasdaq: AAPL), Rio Tinto plc (NYSE: RIO), BHP Billiton Ltd (NYSE: BHP) and Vale S.A (NYSE: VALE).

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Here are highlights from Thursday's Analyst Blog:

Autodesk Unveils New Products

In a bid to expand its cloud services offering,Autodesk Inc. (Nasdaq: ADSK) recently unveiled a new set of products including solutions and services for building design & construction, civil infrastructure, plant design and digital entertainment professionals. The company also unveiled a new 3D design and software portfolio for manufacturers.

The 2013 family of Autodesk products can seamlessly collaborate with Autodesk 360 (previously known as Autodesk Cloud), a family of hybrid cloud-based and on-premises software solutions launched in 2011. This helps Autodesk customers not only to store their work and gain access to the related designs and engineering documents through web browsers and mobile devices, but also to work and view, edit and share designs from anywhere through any web-enabled device, thereby eliminating the location issues.

Moreover, the new suites offer higher speed in modeling designs due to the infinite computing ability of the cloud. In addition to sophisticated new features, such as high-performance 3D visual communication, simulation and collaboration, designers, engineers and digital artists with Autodesk subscriptions are provided with additional cloud storage of up to 25 MB. We believe that the new cloud based products will boost Autodesk's subscriber base going forward.

According to Forrester, the global market for cloud computing will grow from $40.7 billion in 2011 to more than $241.0 billion by 2020. Both private and public cloud markets are expected to grow at a significant rate primarily due to higher computing speed and agility, which is available at a lower cost. As per data available from Deloitte, cloud-based applications will replace 2.34% of enterprise IT spending in 2014, finally rising to 14.49% by 2020.

We believe that this tremendous growth in cloud computing bodes well for Autodesk. The new design suites reflects Autodesk's gradual shift in focus on providing software over the web. The company is also increasing its penetration in the mobile market by developing software for smartphones and Apple's (Nasdaq: AAPL)iPad. We believe that these initiatives will boost Autodesk's top-line growth going forward.

To build its cloud computing portfolio, Autodesk has been on an acquisition spree lately. We believe that these acquisitions, particularly of the web-based communities, will boost the company's cloud offerings going forward. The acquisitions reflect Autodesk's strategy of expanding its digital prototyping solutions, which is expected to cater to manufacturers of all sizes, enhancing their ability to design, visualize and simulate their products before they are built.

In our view, the company's improvements and innovations in 3D design technology and product portfolio provides a competitive edge. Moreover, Autodesk's expanding product portfolio and broadening industry and geographic reach will help it sustain its longer-term growth strategy of providing high-volume, lower-cost CAD software. We believe this will likely drive earnings going forward. However, foreign exchange fluctuations and increasing competition are the primary headwinds.

We have a Neutral recommendation on Autodesk's shares in the long term. Currently, Autodesk has a Zacks #3 Rank, which translates into a short-term (1-3 months) Hold rating.

Alumina Biz Offer for Rio Tinto

Rio Tinto plc (NYSE: RIO) announced to have received a binding offer for its European specialty aluminas business from the U.S.-based private-investment firm H.I.G. Capital. The Anglo-Australian miner entered into exclusive discussion with H.I.G., wherein both the parties have agreed to respond to the binding offer following consultation with the relevant European works councils. The terms of the binding offer has not yet been disclosed.

Looking back, H.I.G seems to have experienced the potential of aluminum business with its prior investment in an aluminum extrusion business, called Signature Aluminum, based in Pennsylvania. Signature Aluminum is engaged in running business across eight facilities in the U.S. and Canada. Rio Tinto, on the other hand, suffered a setback in its aluminum business and was forced to book $8.9 billion impairment charge in 2011 to reflect a fall in the value of Rio Tinto Alcan, its struggling Aluminum division. However, Rio continues to follow its strategy of streamlining the aluminium group business through the divestment of non-core assets and this recent binding offer from H.I.G looks quite convincing to uphold such business strategy.

The specialty alumina, which is produced by refining bauxite, is essential for manufacturing ceramics, abrasives and glass. According to the International Aluminium Institute, this non-metallurgical alumina accounted for about 8% of total global alumina production in 2011, which comes to around 4.9 million metric tons.

Rio Tinto is the largest integrated supplier of non-metallurgical grade of aluminas. The company runs four production sites, namely Gardanne, La Bathie and Beyrede, all in southern France, and Teutschenthal in Germany, employing around 730 people.

Headquartered in London, UK, Rio Tinto plc is engaged in exploring, mining, and processing the earth's mineral resources, producing a broad range of metals and minerals. Rio Tinto competes against global mining giants like BHP Billiton Ltd (NYSE: BHP) and Vale S.A (NYSE: VALE).

We currently have a Neutral recommendation on the stock. RIO has a Zacks #3 Rank, which implies a short-term (1-3 months) Hold rating.

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