U.S. Stocks Rally; Cablevision To Buy Bresnan

Arthi Gupta, Mayank Mehta and Sanjay Barot
14 Jun, 2010
New York City

U.S. stocks trade higher on upbeat euro-zone industrial production report. Obama urges BP Plc to set up escrow account to pay for oil spill damages in the Gulf of Mexico. Cablevision agrees to buy Bresnan for $1.36 billion.

[R]10:00 AM New York – U.S. stocks trade higher on upbeat euro-zone industrial production report. Obama urges BP Plc to set up escrow account to pay for oil spill damages in the Gulf of Mexico. Cablevision agrees to buy Bresnan for $1.36 billion.[/R]

U.S. stocks rose after industrial output in the euro-zone increased by 0.8% in April. Asian markets gained on hopes that the global economy will not be affected by the euro area debt crisis, and European markets surged on strong euro-zone industrial output data.

Govt. debt accounts for a smaller portion of euro area bank exposure, according to a report released by the Bank for International Settlements or BIS.

BIS stated global financial markets were highly volatile from mid-April to early June as fiscal concerns and weak growth led to a rapid deterioration in investor confidence. The agency said that government debt accounted for a smaller part of euro area banks'' exposures to the countries facing market pressures than claims on the private sector.

The report said that financial problems faced by Greece and other euro area sovereigns were crystallized by investors'' anxiety about unsustainable fiscal positions, and investors went back to traditional safe haven assets amid growing uncertainty. Even a significant European rescue package could not allay market concerns about the economic outlook. It could only bring about a temporary reprieve from the crisis in euro sovereign debt markets, the BIS stated.

Further, the BIS said that the largest non-euro area holders of claims on the public sectors of Greece, Ireland, Portugal and Spain were the Japanese and the UK banks with their greatest exposures to the Spanish public sector.

President Barack Obama said he wants BP Plc to set up an escrow account to pay for damages for its oil spill in the Gulf of Mexico, according to reported media sources quoting White House adviser David Axelrod.

White House adviser David Axelrod said ""We want to make sure the money is escrowed for the businesses and want to make sure the money is independently administered so it''s not slow-walked.""

Obama begins a two-day visit tomorrow to assess the situation in the Gulf Coast and would be meeting BP''s chairman, Carl-Henric Svanberg, at the White House on June 16.

Obama opined that BP has the resources to meet the claims, and the setting up of an escrow account would be discussed with Svanberg.

BP has spent more than $1.4 billion to arrest the oil spill that has closed about 37% of the Gulf of Mexico fishing area, and cut offshore drilling in the U.S. by half.

Cablevision Systems Corp., the media and entertainment company has agreed to buy broadband telecommunication services provider Bresnan Communications for $1.36 billion, according to media reports.

Cablevision plans to make the acquisition through a newly-created subsidiary that will hold the debt the cable operator is issuing to fund the deal. Cablevision is also expected to announce a share buyback as part of the deal.

Bresnan, majority-owned by private equity firm Providence Equity Partners and 30% owned by cable services provider Comcast Corp. provides broadband-communication services to about 320,000 subscribers in Montana, Wyoming, Colorado and Utah.

Cablevision''s purchase of Bresnan would expand the company''s customer base from the New York metro area into the western U.S. market,

Cablevision Systems Corp. ((CVC)) rose $0.03 or 0.13% and closed Friday''s regular trading session at $23.40 on a volume of 2.88 million shares.

Commodities, Currencies and Yields

Dollar edged higher against euro to $1.2122 and increased against the Japanese yen to 91.70.

Crude oil decreased $0.50 to $74.98 a barrel for a front month contract, natural gas edged higher $0.06 cent to $4.70 per mBtu and gasoline decreased 0.260 cents to 206.79 cents.

Gold decreased $0.90 in New York trading to close at $1,221.30 per ounce, silver closed lower $0.184 to $18.00 per ounce and copper for the front month delivery increased 6.750 cents to $2.93 per pound.

Yields on 10-year U.S. bonds increased to 3.30% and on 30-year U.S. bonds traded at 4.21%.

Stock Movers

Akamai Technologies, Inc., the supplier of software and services fell 0.4%.

Becton, Dickinson and Company, the maker of disposable medical supplies fell 0.1%.

Questcor Pharmaceuticals, Inc declined 8.2% after the drugmaker announced that it has received notification from the U.S. Food & Drug Administration that the PDUFA date for Questcor''s supplemental new drug application (sNDA) to approve Acthar for the treatment of infantile spasms (IS) has been extended to September 11.

SanDisk Corporation, the memory chip supplier fell 0.2.

Earnings Review

Finisar Corporation ((FNSR)), the provider of optical subsystems and components said fourth quarter revenues rose 75.2% to $188.5 million from $107.6 million a year ago. Net income in the quarter was $14.2 million or 19 cents per diluted share compared to net loss of $25.8 million or 43 cents per share a year ago.

Herley Industries, Incon ((HRLY)), the microwave communications systems maker said third quarter sales rose 8.6% to $45.4 million from $41.8 million a year ago. Net income in the quarter rose 8.3% to $2.6 million or 19 cents per diluted share compared to net income of $2.4 million or 18 cents per share a year ago.

National Semiconductor Corporation ((NSM)), the semiconductor company said fourth quarter revenues rose 42% to $398.5 million from $280.8 million a year ago. Net income in the quarter was $79.2 million or 33 cents per diluted share compared to net loss of $63.7 million or 28 cents per share a year ago.

Thor Industries, Inc. ((THO)), the maker of recreational vehicles said third quarter sales rose 64% to $680.2 million from $415.5 million a year ago. Net income in the quarter was $34.1 million or 66 cents per diluted share compared to net income of $2.1 million or 4 cents per share a year ago.

Asian Markets Review

The Nikkei 225 Index in Tokyo closed higher 174.60 or 1.80% to 9,879.85, Hang Seng index in Hong Kong increased 179.53 or 0.90% to 20,051.91. The FTSE Bursa KL Composite index in Malaysia closed higher 2.49 or 0.19% to 1,297.16. The markets in China and Australia were closed today.

The Kospi Index in South Korea increased 15.26 or 0.91% to close at 1,690.60. SET index in Thailand closed higher 11.58 or 1.50% to 781.13 and JSE Index in Indonesia increased 24.94 or 0.89% to 2,826.84. The Sensex index in India increased 273.22 or 1.60% to 17,338.17.

Europe Markets Review

In London FTSE 100 Index closed higher 23.52 or 0.46% to 5,187.20, in Paris CAC 40 Index increased 24.73 or 0.70% to 3,541.37 and in Frankfurt DAX index traded higher 3.80 or 0.06% to 6,060.39. In Zurich trading SMI increased 55.21 or 0.87% to 6,431.87.