U.S. Stocks Gain; Bristol-Myers Deal

Arthi Gupta
08 Sep, 2010
New York City

U.S. stocks rose after concerns eased regarding European banks. BP released report on causes of Gulf of Mexico tragedy. Bristol-Myers Squibb proposed to buy ZymoGenetics for $9.75 per share. Ciena third quarter revenue surged 137%.

[R]9:35 AM New York – U.S. stocks rose after concerns eased regarding European banks. BP released report on causes of Gulf of Mexico tragedy. Bristol-Myers Squibb proposed to buy ZymoGenetics for $9.75 per share. Ciena third quarter revenue surged 137%.[/R]

U.S. stocks gained, Asian markets fell and European markets pared losses.

A report released by BP today concludes that decisions made by “multiple companies and work teams” contributed to the accident which it says arose from “a complex and interlinked series of mechanical failures, human judgments, engineering design, operational implementation and team interfaces.”

Based on its key findings, the investigation team proposed a total of 25 recommendations designed to prevent a recurrence of such an accident.

Bristol-Myers Squibb Co. signed an agreement to acquire ZymoGenetics for $9.75 per share in cash. The transaction, with an aggregate purchase price of approximately $885 million, or approximately $735 million net of cash acquired, has been unanimously approved by the boards of directors of both companies.

Following the acquisition, Bristol-Myers Squibb will gain full ownership of pegylated-interferon lambda, a novel interferon in Phase IIb development for the treatment of Hepatitis C infection.

Bristol-Myers said the transaction is expected to be dilutive to earnings about 3 cents a share in 2010 and about 7 cents a share in 2011.

Hewlett-Packard Co. is suing its former Chief Executive Officer Mark Hurd for breach of contract and threatened misappropriation of trade secrets following Hurd''s decision to join business software maker Oracle Corp. as co-president and a director.

""In his new positions, Hurd will be in a situation in which he cannot perform his duties for Oracle without necessarily using and disclosing HP''s trade secrets and confidential information to others,"" HP said in its lawsuit.

Vodafone plc, the British telecom giant agreed to sell its entire 3.2% interest in China Mobile Limited for £4.3 billion, or $6.6 billion, before tax and transaction costs, through an accelerated book-built offering. Vodafone will continue its commercial and technology cooperation with China Mobile.

Earnings Review

Altera Corporation ((ALTR)), the programmable chipmaker estimates third quarter revenue to grow 10% to 14% sequentially stating third quarter sales would be between $516.23 million and $535.002 million.

Ciena Corporation ((CIEN)), the network specialist reported third quarter revenue soared 137% to $389.67 million compared with $164.76 million in the comparable period. Net loss in the quarter widened 315% to $109.85 million or $1.18 per diluted share compared with net loss of $26.45 million or 29 cents per share in the prior-year period.

Navistar International Corporation ((NAV)), the trucks and other vehicles maker reported third quarter sales and revenues increased 28.3% to $3.22 billion from $2.51 billion in the previous year. Net income in the quarter was $137 million or $1.83 per diluted share compared with a net loss of $12.0 million or 16 cents per share last year.

Phillips-Van Heusen Corporation ((PVH)), the apparel maker reported second quarter total revenue doubled 1915% to $1.10 billion from $529.28 million in the same quarter last year. Net loss in the quarter was $54.6 million or 83 cents per diluted share, compared to net income of $26.6 million or 51 cents per share in the prior-year quarter.

Smithfield Foods, Inc. ((SFD)), the manufacturer and marketer of fresh meat as well as packaged meat products stated first quarter sales edged higher 6.6% to $2.9 billion from $2.72 billion in the year-ago quarter. Net income generated in the quarter was $76.3 million or 46 cents per diluted share, compared to a net loss of $107.7 million or 75 cents per share last year.

The Pep Boys-Manny, Moe & Jack ((PBY)), the automotive service and retail chain said second quarter sales increased 3.3% to $504.9 million from $488.9 million for the comparable period last year. Comparable sales increased 1.8%. Net earnings in the quarter rose 38% to $10.6 million or 20 cents per diluted share, compared to net earnings of $7.7 million or 15 cents per share in the same period last year.

Tyco Electronics Ltd. ((TEL)), the engineered electronic component maker said it expects fourth quarter GAAP earnings below its previously estimated range, however maintained its adjusted earnings outlook, as well as revenue guidance. Additionally, the company said it was selling its mechatronics business.

The company continues to anticipate net sales for the fourth quarter in the range of $3.05 billion to $3.15 billion. For the fourth quarter, the company expects GAAP earnings in the range of $0.58 to $0.62 per share.