Jobless Claims Rise; Intel to Buy McAfee

Arthi Gupta
19 Aug, 2010
New York City

U.S. stocks fell after weekly jobless claims rose 12,000 to 500,000. GM filed for IPO. Intel agreed to acquire McAfee for $7.68 billion. MasterCard agreed to buy DataCash for $520 million. Las Vegas Sands agreed to pay $1 billion in debt.

[R]9:35 AM New York – U.S. stocks fell after weekly jobless claims rose 12,000 to 500,000. GM filed for IPO. Intel agreed to acquire McAfee for $7.68 billion. MasterCard agreed to buy DataCash for $520 million. Las Vegas Sands agreed to pay $1 billion in debt.[/R]

Asian and European markets advanced.

First time claims for unemployment benefits increased in the week ended August 14 according to a report released by the Labor Department today. Initial jobless claims rose to 500,000 from the previous week''s revised figure of 488,000.

Intel Corp. entered into an agreement to acquire McAfee Inc. through the purchase of all of the company''s common stock at $48 per share in cash, for around $7.68 billion. McAfee would become a wholly-owned unit of Intel, reporting into Intel''sSoftware and Services Group.

The company stated that the acquisition enables a combination of security software and hardware from one company to ultimately better protect consumers, corporations and governments as billions of devices, and the server and cloud networks that manage them, go online.

On a GAAP basis, Intel anticipates the combination to be slightly dilutive to earnings in the first year of operations and approximately flat in the second year.

General Motors Co. filed a registration statement with the U.S. Securities and Exchange Commission for a proposed initial public offering. The IPO will consist of common stock to be sold by certain of its shareholders, including the U.S. Treasury Department, and Series B mandatory convertible junior preferred stock issued by the company.

Furthermore, the company stated the amount of securities offered will be determined by market conditions and other factors at the time of the offering. Also, the number of shares to be offered and the price range have not yet been determined.

The company said in the filing that it will have 500 million shares outstanding after the offering is completed.

GM also said it will not receive any proceeds from the sale of its common stock in the offering, and that it will use the anticipated net proceeds from the sale of its Series B preferred stock for general corporate purposes.

The company said it plans to list its shares on the New York Stock Exchange under the ticker symbol ""GM"" and the Toronto Stock Exchange under a ticker symbol that has yet to be determined.

Additionally, the company said in the filing that it has no plans to pay dividends on its common stock.

MasterCard Inc., the credit card services provider announced a deal to acquire DataCash Group plc, the payment service provider for 360 pence per share in cash or £333 million or $520 million and the transaction is expected to close by the end of October.

MasterCard stated that the transaction is expected to be about $0.05 dilutive to its fourth-quarter earnings per share due to amortization and one-time transaction costs. The company further believes the DataCash acquisition will drive its growth in the e-commerce category and expand its gateway business currently operating in the Asia Pacific region.

Las Vegas Sands Corp. said it would pay down more than $1 billion in outstanding debt in conjunction with the prior announced proposed amendment of its United States credit facility.

The amendment of the credit facility extended the maturity of nearly 75% of the company''s around $3.9 billion of outstanding United States term loans to 2015 and 2016. After the $1.0 billion pay down of the extended term loans, the interest rate on the remaining principal balance of the extended term loans would be LIBOR plus 2.75%.

Additionally, the amendment also extended to 2014 over $530 million of revolving commitments from certain of the lenders at an interest rate of LIBOR plus 2.5%. The company has no amounts outstanding on the revolving portion of the credit facility at this time.

Earnings Review

Applied Materials Inc. ((AMAT)), the semiconductor equipment maker said third quarter net sales increased 123% to $2.52 billion from $1.13 billion in the same quarter last year. Net income generated in the quarter was $123 million or 9 cents per diluted share, compared to a net loss of $55 million or 4 cents per share in the prior-year quarter.

Brocade Communications Systems, Inc. ((BRCD)), the data storage solutions provider reported third quarter revenues increased 2.07% to $503.51 million from $493.28 million last year. Net income in the quarter was $21.96 million or 5 cents per diluted share compared to a net loss of $23.49 million or 6 cents per share the prior-year quarter.

Dollar Tree, Inc. ((DLTR)), the discount retailer reported second quarter net sales grew 12.7% to $1.38 billion from $1.22 billion in the same quarter last year. Net income in the quarter rose 37% to $78.0 million or 61 cents per diluted share compared to net income of $56.9 million or 42 cents per share in the prior-year quarter.

Limited Brands, Inc. ((LTD)), the women''s apparel and personal care products retailer stated second quarter net sales climbed 8.2% to $2.24 billion from $2.07 billion in the prior-year quarter. Net income in the quarter rose 140.5% to $178.7 million or 54 cents per diluted share, compared to net income of $74.3 million or 23 cents per share in the year-ago quarter.

NetApp Inc. ((NTAP)), the data management solutions provider said first quarter net revenues surged 35.7% to $1.14 billion from $0.84 billion last year. Net income in the quarter soared 174.3% to $141.8 million or 38 cents per diluted share from net income of $51.7 million or 15 cents per share in the previous year.

PetSmart, Inc. ((PETM)), the specialty pet retailer stated second quarter total sales increased 6.2% to $1.39 billion from $1.30 billion a year ago on comparable store sales rise of 4.6%. Net income grew 24% to $48.4 million or 41 cents per diluted share from net income of $39.0 million or 31 cents per share in the second quarter last year.

Staples, Inc. ((SPLS)), the office products company reported second quarter sales totaled $5.53 billion, unchanged from last year. Net income in the quarter soared 40% to $129.8 million or 18 cents per diluted share from net income of $92.4 million or 13 cents per share in the prior-year period.

The Bon-Ton Stores, Inc. ((BONT)), the regional department store operator second quarter net sales slipped marginally 0.1% to $608.6 million from $609.2 million in the same quarter of last year on comparable store sales rise of 0.2%. Net loss in the quarter narrowed 3.2% to $33.7 million or $1.91 per share, compared to a net loss of $34.8 million or $2.04 per share in the prior year period.

The Children''s Place Retail Stores, Inc. ((PLCE)), the children''s apparel and accessories retailer said second quarter net sales advanced 9.4% to $345.30 million from $315.68 million in the previous year. Net loss in the quarter widened 16.7% to $8.23 million or 30 cents per diluted share versus a net loss of $7.05 million or 24 cents per share last year.

Williams-Sonoma, Inc. ((WSM)), the specialty retailer of products for the home reported second-quarter net revenues increased 15.4% to $775.55 million from $672.11 million in the second quarter of fiscal 2009. Net income in the quarter surged 7,590% to $30.76 million compared to net income of $0.40 million last year. Earnings per share were $0.28 compared with a break-even a year ago.