U.S. Private Sector Jobs Shrink; Refi Index Up

Arthi Gupta
01 Sep, 2010
New York City

U.S. stocks gain after private sector employment fell 10,000 in August and mortgage applications rose for a fifth week in a row. 3M proposed to acquire Attenti for $230 million. BP agreed to sell Malaysian operations to Petronas for $363 million.

[R]9:35 AM New York – U.S. stocks gain after private sector employment fell 10,000 in August and mortgage applications rose for a fifth week in a row. 3M proposed to acquire Attenti for $230 million. BP agreed to sell Malaysian operations to Petronas for $363 million.[/R]

Asian and European markets gained on positive global economic data.

The minutes from the August Fed meeting revealed that a number of Fed policy makers called for further stimulus should the economy show additional weakness but offered no additional insight into the direction of the economy.

Automatic Data Processing, Inc’s survey showed that private sector employment unexpectedly showed a modest decrease in the month of August. The report showed that private sector employment fell by 10,000 jobs in August following a downwardly revised increase of 37,000 jobs in July.

U.S. mortgage applications rose for a fifth week in a row as borrowers took advantage of exceedingly low interest rates, according to industry data published today.

The Mortgage Bankers Association''s survey for the week ending August 27 showed overall mortgage volume increased 2.7% on a seasonally adjusted basis from one week earlier.

The Refinance Index increased 2.8 percent from the previous week and the seasonally adjusted Purchase Index increased 1.8% from one week earlier.

The Australian Bureau of Statistics reported that the Australian economy grew 1.2% in the April-June quarter, compared to the 0.7% growth in the previous quarter. On a year-over-year basis, the economy grew 3.3%.

China reported that manufacturing activity rose slightly in August, ending a two-month contraction. Markit Economics said the HSBC manufacturing purchasing managers'' index was at a seasonally adjusted 51.9, up from 49.4 in July.

Deere & Co., the farm machine maker agreed to sell its wind energy business to a subsidiary of Exelon Corp. for $900 million.

The initial deal is for $860 million, plus a provision for up to an additional $40 million payment upon commencement of construction on the advanced development projects. The transaction is expected to close before the end of this year.

3M Co. agreed to acquire Attenti Holdings S.A. from an investor group led by Francisco Partners, for a purchase price of $230 million in cash. The transaction is expected to be completed in the fourth quarter.

“This acquisition will position our track and trace business as a leader in the high growth electronic offender monitoring market and add Global Positioning System and active Radio Frequency technology and capability to our portfolio,” said Rory Yanchek, General Manager, 3M Track and Trace Solutions. “The addition of Attenti’s location tracking capability enhances the value we can deliver to our customers around the world.”

On a GAAP reported basis, 3M estimates the acquisition to be slightly dilutive to earnings in the first 12 months following completion of the transaction.

Based in Tel Aviv, Israel, Attenti is a leading supplier of remote people monitoring technologies used for a variety of offender monitoring applications, such as people awaiting trial or on probation; and to assist eldercare facilities in monitoring and enhancing the safety of patients.

BP agreed to sell its interests in ethylene and polyethylene production in Malaysia to Petronas. The agreement for 15% interest in Ethylene Malaysia Sdn Bhd and 60% interest in Polyethylene Malaysia Sdn Bhd, both of which are operated by Petronas, and are located at Kertih, on the east coast of Malaysia.

Under the terms of the agreement, Petronas will pay $363 million in cash to BP, inclusive of a balance sheet adjustment of $13 million and the repayment of a shareholder loan of $53 million. BP will also receive an EMSB pre-closing dividend payment amounting to $48 million, subject to EMSB Board approval.

Burger King Holdings Inc., the burger chain is in discussions with private equity firms for a possible sale of the company, the Wall Street Journal reported, quoting people familiar with the matter.

British private equity firm 3i Group PLC is said to be interested in the hamburger chain, but the status of the talks is not yet clear. ""It''s uncertain whether these discussions will result in a sale,"" the report added.

Earnings Review

ABM Industries, Inc. ((ABM)), the provider of facility services stated third quarter revenues declined 0.2% to $869.02 million, compared to $870.63 million in the same quarter last year. Net income in the quarter surged 71% to $21.0 million or 40 cents per share compared to net income of $12.3 million or 24 cents per share in the prior-year quarter.

Accuray Incorporated ((ARAY)), the robotic cancer-surgery system maker said fourth quarter revenue rose 5.1% to $61.8 million from $58.8 million in the prior-year quarter. Net income in the quarter surged 317% to $5.0 million or 8 cents per diluted share compared to net income of $1.2 million or 2 cents per share in the same quarter last year.

AssuranceAmerica Corp. ((ASAM.OB)), the insurance holding company reported second-quarter revenues plunged 54% to $15.6 million from $33.8 million in the same quarter last year. Net loss in the quarter was $161 thousand or $0.002 per share, compared with a net income of $182 thousand or $0.003 per share in the year-ago quarter.

Applied Signal Technology, Inc. ((APSG)), the defense contractor stated third quarter revenues increased 14% to $56.41 million from $49.50 million last year. Net income in the quarter climbed 9.1% to $3.6 million or 26 cents per diluted share, compared to net income of $3.3 million or 25 cents per share in the same period last year.

Baldwin Technology Company, Inc. ((BLD)), the leader in process automation technology for the printing industry reported fourth quarter net sales declined 2.3% to $37.4 million from $38.3 million in the prior year. Net profit in the quarter was $1.41 million compared to a net loss of $37 thousand in the previous year. For the three months, the company’s earnings were 9 cents per diluted share as against a breakeven per share last year.

Charming Shoppes, Inc. ((CHRS)), the apparel retailer reported second quarter net sales dropped 1.8% to $517.56 million from $527.22 million in the prior-year quarter. Net loss in the quarter was $8.64 million or 7 cents per diluted share compared to a net profit of $4.98 million or 4 cents per share in the previous year.

Culp Inc. ((CFI)), the manufacturers and distributors of textile fabrics reported first quarter revenues rose 23% to $55.9 million from $45.5 million in the prior-year quarter. Net income in the quarter soared 95% to $3.7 million or 28 cents per diluted share, compared to net income of $1.9 million or 15 cents per share in the year-ago quarter.

Envestnet, Inc. ((ENV)), the provider of technology-enabled, Web-based investment solutions and services to financial advisors said second quarter revenue increased 37% to $24.3 million from $17.7 million in the prior year quarter. Net income in the quarter fell 50% to $0.1 million or 1 cent per share, compared to net income of $0.2 million or 1 cent per share in the same quarter last year.

First Acceptance Corporation ((FAC)), the retailer, servicer and underwriter of non-standard personal automobile insurance reported fourth quarter revenues declined 9.2% to $56.0 million from $61.7 million in the year-ago quarter. Net income for the quarter was $0.7 million or 2 cents per share compared with a net loss of $71.5 million or $1.50 per share in the same quarter a year ago.

H.J. Heinz Company ((HNZ)), the food products firm reported first quarter sales edged higher 1.6% to $2.48 billion from $2.44 billion in the prior-year quarter. Net income in the quarter rose 13.1% to $240.43 million or 75 cents per share compared to net income of $212.56 million or 67 cents per share in the same quarter last year.

Isle of Capri Casinos, Inc. ((ISLE)), the operator of branded gaming facilities reported first quarter net revenues declined 2.3% to $251.9 million from $257.9 million last year. Net loss in the quarter was $2.65 million or 8 cents per diluted share, compared to a net profit of $0.9 million or 3 cents per share in the year-ago period.

Joy Global Inc. ((JOYG)), the manufacturer and servicer of mining equipment stated third quarter net sales fell 11% to $850 million compared with $956 million in the third quarter of prior year. Net income in the quarter slipped 4% to $119 million or $1.13 per share compared to net income of $124 million or $1.21 per share last year.

JoS. A. Bank Clothiers, Inc. ((JOSB)), the men''s apparel retailer reported second quarter net sales increased 12.3% to $188.41 million from $167.74 million in the prior year. Net profit in the quarter soared 31.7% to $16.48 million or 59 cents per diluted share as against net profit of $12.51 million or 45 cents per share a year earlier.

Silicon Graphics International Corp. ((SGI)), the provider of servers, storage, and data center solutions reported fourth quarter revenue rose 74% to $101.6 million from $58.4 million a year-ago quarter. Net loss in the quarter widened 4540% to $27.7 million or 91 cents per diluted share, compared to a net loss of $597,000 or 2 cents per share in the prior-year quarter.

Unify Corporation ((UNFY)), the application development and data management solutions provider reported first quarter revenues more-than-doubled 119% to $9.89 million from $4.51 million in the comparable quarter a year ago. Net loss in the quarter narrowed 61.4% to $0.86 million or 8 cents per diluted share as against a net loss of $2.23 million or 27 cents per share last year.