HP Acquires Palm; U.S., World Stocks Rebound

Arthi Gupta, Mayank Mehta and Sanjay Barot
29 Apr, 2010
New York City

U.S. stocks traded higher after weekly jobless claims declined. Hewlett Packard agreed to acquire Palm Inc for $1.2 billion. Visa Inc second quarter net surged 33%. Aetna Inc quarterly net increased 29%.

[R]10:00 AM New York – U.S. stocks traded higher after weekly jobless claims declined. Hewlett Packard agreed to acquire Palm Inc for $1.2 billion. Visa Inc second quarter net surged 33%. Aetna Inc quarterly net increased 29%.[/R]

U.S. stocks trade higher as the Federal Reserve pledged to keep rates low for an extended period. The FOMC left the key interest rate in a range of zero to 0.25%.

Seasonally adjusted weekly jobless claims decreased 11,000 to 448,000 from the revised previous week claims of 459,000. The preliminary insured unemployment rate in the week ending April 17 was unchanged from the prior week''s unrevised rate of 3.6%.

Investors are also optimistic that the Greece sovereign debt crisis will end soon. The International Monetary Fund promised to increase the €45 billion aid package for Greece to as much as €120 billion over three years.

On Wednesday, Dominique Strauss-Kahn, the IMF’s managing director made the higher aid pledge in a private meeting with German legislators. The package would be the equivalent of up to $160 billion and would come from both the IMF and from other countries using the euro.

Hewlett-Packard Co. said it will buy Palm, Inc. for $1.2 billion. Under the terms of the merger agreement, Palm stockholders will receive $5.70 in cash for each share of Palm. Palm surged 26% after the announcement.

Visa and Aetna reported better-than-expected earnings.

Visa Inc., the payment processor said second quarter revenues rose 17.4% to $1.96 billion from $1.67 billion a year ago. Net income in the quarter rose 33% to $713 million or 96 cents per diluted share compared to net income of $536 million or 71 cents per share a year ago.

Aetna Inc., the health insurer reported first quarter sales rose 0.1% to $8.62 billion from $8.61 billion a year ago. Net income in the quarter rose 28.5% to $562.6 million or $1.28 per diluted share compared to net income of $437.8 million or 95 cents per share a year ago.

Commodities, Currencies and Yields

Dollar edged lower against euro to $1.3274 and increased against the Japanese yen to 94.06.

Crude oil increased $1.03 to $84.25 a barrel for a front month contract, natural gas edged higher $0.01 cent to $4.35 per mBtu and gasoline increased 0.570 cents to 233.84 cents.

Gold decreased $2.40 in New York trading to close at $1,169.40 per ounce, silver closed higher $0.040 to $18.17 per ounce and copper for the front month delivery decreased 2.200 cents to $3.40 per pound.

Yields on 10-year U.S. bonds increased to 3.77% and on 30-year U.S. bonds traded at 4.63%.

Stock Movers

Covance Inc. declined 7.4%. The contract research organization for pharmaceutical companies forecast second quarter profit of 50 cents a share.

Green Mountain Coffee Roasters, Inc. plunged 14% and the company said net income for the second quarter of fiscal 2010 totaled $24.7 million or 54 cents per fully diluted share.

Palm, Inc. surged 25.9%.

iRobot Corporation, the maker of Roomba home vacuums and battlefield bomb-disposers surged 22.8%.

Illumina, Inc. surged 10.2% after the maker of DNA analysis equipment said net income for the first quarter of 2010 was $26.6 million, or 21 cents per diluted share.

Earnings Review

Akamai Technologies, Inc. ((AKAM)), the online video delivery company said first quarter revenues rose 14% to $240.0 million from $210.4 million a year ago. Net income in the quarter rose 10% to $40.9 million or 22 cents per diluted share compared to net income of $37.1 million or 20 cents per share a year ago.

CB Richard Ellis Group, Inc. ((CBG)), the commercial real estate services firm said first quarter revenues rose 15.7% to $1.03 billion from $890.4 million a year ago. Net loss in the quarter was $6.6 million or 2 cents per diluted share compared to net loss of $36.7 million or 14 cents per share a year ago.

Equifax Inc. ((EFX)), the credit reporting company said first quarter sales rose 3% to $461.3 million from $446.6 million a year ago. Net income in the quarter rose 4% to $56.7 million or 44 cents per diluted share compared to net income of $54.4 million or 43 cents per share a year ago.

First Solar, Inc. ((FSLR)), the manufacturer of solar modules said first quarter sales rose 36% to $568.0 million from $418.2 million a year ago. Net income in the quarter rose 4.7% to $172.3 million or $2.00 per diluted share compared to net income of $164.6 million or $1.99 per share a year ago.

Asian Markets Review

Hang Seng index in Hong Kong decreased 170.48 or 0.81% to 20,778.92 and CSI 300 index in China lower 37.29 or 1.20% to 3,060.06. ASX 200 index in Australia decreased 37.20 or 0.77% to 4,785.60. The FTSE Bursa KL Composite index in Malaysia closed higher 2.69 or 0.20% to 1,335.86 and the markets of Japan were closed today.

The Kospi Index in South Korea decreased 5.49 or 0.32% to close at 1,728.42. SET index in Thailand closed higher 3.71 or 0.50% to 753.20 and JSE Index in Indonesia increased 23.54 or 0.81% to 2,926.86. The Sensex index in India increased 123.39 or 0.71% to 17,503.47.