U.S. Deficit Widens; Macy

Arthi Gupta
11 Aug, 2010
New York City

U.S. stocks decline after the Fed noted a slowdown in the economy and trade deficit widened in June. The International Energy Agency estimates an increase in global oil demand. EPIX and Netflix announce exclusive Internet-only deal to stream movies.

[R]9:35 AM New York – U.S. stocks decline after the Fed noted a slowdown in the economy and trade deficit widened in June. The International Energy Agency estimates an increase in global oil demand. EPIX and Netflix announce exclusive Internet-only deal to stream movies.[/R]

Asian and European markets declined on global economic concerns. South Korean police raided Google offices. New Orleans judge to handle BP oil-spill lawsuits.

The Federal Reserve left interest rates unchanged at near-zero levels noting that recent data suggests a slowdown in the pace of the economic recovery.

The central bank''s Federal Open Market Committee said it would keep the target range for the federal funds rate at zero to 0.25%. Additionally, the Fed reiterated that economic conditions warrant exceptionally low rates for an extended period and estimated a more modest economic growth in the near-term.

The Fed also said that it would reinvest funds from maturing mortgage-backed securities to maintain the current size of its balance sheet.

The U.S. Commerce Department said today trade deficit for the month unexpectedly widened to reach its highest level in more than a year. This was mainly due to the value of imports increasing and the value of exports falling in the month of June.

The report showed that the trade deficit widened to $49.9 billion in June from a revised $42.0 billion in May.

The International Energy Agency said today that global oil demand will increase by 2.2% in 2010 and 1.5% in 2011 on stronger GDP assumptions and baseline adjustments.

The IEA in its monthly Oil Market Report released today said global oil demand will grow by 1.8 million barrels per day, or mbd, year-over -year in 2010 to 86.60 mbd. The agency largely maintained its 2011 demand growth forecast at 1.3 mbd to 87.9 mbd.

The agency noted global oil supply rose to 87.2 mbd in July amid supply increases form the OPEC and as Norwegian maintenance ended. On the inventory front, the IEA said OECD stocks fell by 0.8 million barrels (mb) in June to 2,760 mb or 61.0 days of forward demand cover.

The United States Judicial Panel on Multidistrict Litigation announced that all federal lawsuits filed against British oil giant BP plc over the Gulf of Mexico oil spill will be handled by a single judge in New Orleans. U.S. District Judge Carl Barbier has been assigned to preside over hundreds of lawsuits after considering all applicable factors.

The panel noted that the centralization of the lawsuits will serve the convenience of the parties and witnesses and promote the more just and efficient conduct of these cases taken as a whole. The centralization may also facilitate closer coordination with Kenneth Feinberg''s administration of the BP compensation fund.

Netflix, Inc., a subscription service of streaming movies and TV episodes and EPIX, an entertainment channel and a joint venture of Viacom Inc. announced an agreement through which Netflix members can instantly watch an array of new releases and library titles from EPIX streamed over the Internet from Netflix. Movies from the multi-year deal will begin streaming from Netflix on September 1 and include movies from Paramount, Lionsgate and MGM.

EPIX has subscription pay TV rights to new releases and movies from the libraries of its partners and will make these movies available to Netflix 90 days after their premium pay TV and subscription on demand debuts.

For Netflix, the agreement is a significant step in building the company’s streaming offer, adding many popular movie titles from some of the world’s leading studios.

For EPIX, the deal reflects the value of the EPIX platform which, from its start, has provided new rights and flexibility for the distribution of its movies. The agreement allows EPIX to continue the distribution of popular content on a variety of platforms and preserve the premium television, subscription on demand and online window reserved for cable, satellite and telco television partners.

The South Korean police raided Google Inc.''s offices to investigate if the company had possibly breached privacy laws by illegally collecting and storing personal wireless data. The Korean National Police Agency said that its cyber crime investigation team was looking into allegations that Google Korea has violated the country''s communications and privacy law in making Street View, a Google map service.

Wi-LAN Inc. settled all patent litigation with UTStarcom Inc. The terms of the settlement are confidential.

WiLAN initiated litigation in the U.S. District Court for the Eastern District of Texas on June 19, 2008 against a number of major handset suppliers alleging infringement of certain patents owned by the company. But on July 7, 2008, UTStarcom completed the sale of its wholly-owned subsidiary, UTStarcom Personal Communications LLC, to Personal Communications Devices Holdings, LLC, which was added to this litigation on August 31, 2009.

Earnings Review

CareFusion Corp., a medical technology company stated fourth quarter revenues edged higher 19.9% to $1.04 billion from $867 million in the prior-year quarter. Net income in the quarter slumped 45.8% to $52 million or 23 cents per diluted share, compared to net income of $96 million or 44 cents per share in the year-ago quarter.

Cree, Inc., the LED lighting solution provider reported fourth quarter revenue soared 79% to $264.6 million compared to $148.1 million a year ago quarter. Net income in the quarter surged 445% to $52.8 million, or 48 cents per diluted share, compared to net income of $9.7 million, or 11 cents per diluted share, for the fourth quarter of fiscal 2009.

Computer Sciences Corporation, the IT and business process outsourcing service provider said first-quarter revenues rose 1.1% to $3.942 billion, compared to $3.898 billion in the prior-year quarter. Net income in the quarter advanced 9.2% to $143 million or 91 cents per diluted share compared to net income of $131 million or 85 cents per share in the same quarter last year.

LDK Solar Co. Ltd., a maker of multicrystalline solar wafers reported second quarter net sales surged 147.6% to $565.3 million from $228.3 million the previous year. Net income generated in the quarter was $45.0 million or 36 cents per American Depositary Share compared with a net loss of $216.9 million or $2.03 per ADS in the same quarter last year.

Macy''s, Inc., the department store holding company reported second-quarter sales rose 7.2% to $5.537 billion from $5.164 billion in the second quarter of 2009. On a same-store basis, the company’s sales rose 4.9%. Net earnings in the quarter surged 2000% to $147 million or 35 cents per diluted share, from $7 million or 2 cents per share in the same quarter last year.

The Walt Disney Company, the diversified media and entertainment conglomerate said third quarter revenue increased 16% to $10.00 billion from $8.60 billion in the same quarter last year. Net income in the quarter rose 40% to $1.331 billion or 67 cents per diluted share, compared to net income of $954 million or 51 cents per share for the year-ago quarter.