U.S. Stocks Rise; VimpelCom Deal

Arthi Gupta
05 Oct, 2010
New York City

U.S. stocks rose after unexpected key rate decisions from Australia and Japan. The Fed Chairman Bernanke urged for well-designed rules to improve U.S. fiscal performance. Boston Properties acquired John Hancock Tower for $930 million. VimpelCom agreed to merge with Weather Investments.

[R]9:35 AM New York – U.S. stocks rose after unexpected key rate decisions from Australia and Japan. The Fed Chairman Bernanke urged for well-designed rules to improve U.S. fiscal performance. Boston Properties acquired John Hancock Tower for $930 million. VimpelCom agreed to merge with Weather Investments.[/R]

Mixed trends were observed in the Asian markets and the European markets advanced on positive global economic data.

Visa and MasterCard settled anti-trust probe by the U.S. Department of Justice. Equifax agreed to buy Anakam.

The Reserve Bank of Australia surprisingly decided to keep interest rates on hold at 4.5% at the conclusion of its policy board meeting for the fifth straight month, defying widespread expectations for a quarter percentage point hike. However, the central bank cautioned about further hikes before the end of the year.

The Bank of Japan cut its benchmark interest rate to zero to 0.1% from 0.1%. The central bank also unveiled a new asset purchase scheme to buy up government bonds and boost liquidity in the deflation-wracked economy. As much as 5 trillion yen, or $60 billion, has been earmarked by the central bank to purchase government bonds, treasury bills and corporate bonds in an effort to weaken the local currency and improve liquidity in the world''s third largest economy.

The Federal Reserve Chairman Ben Bernanke said that well designed rules can help promote improved fiscal performance in the United States, taking the economy to a path of sustainable growth and prosperity.

He cited the aging of the U.S. population and rapidly rising health-care costs as two most important factors challenging the country''s fiscal position. Further, Bernanke noted that the importance of achieving long-term fiscal stability calls for further discussion of fiscal rules and frameworks.

The National Association of Realtors released a report showing that pending home sales increased by much more than expected in the month of August. NAR said its pending home sales index rose 4.3% in August following a revised 4.5% increase in July.

The U.S. Commerce Department reported factory orders showed a modest decrease in the month of August, with the drop due in large part to a steep decline in orders for transportation equipment. The report showed that factory orders fell 0.5% in August following an upwardly revised 0.5% increase in July.

Rating agency Moody''s said it was placing Ireland''s Aa2 rating under review for a possible downgrade, but any action would likely be only by one notch.

Boston Properties Inc., the real estate investment trust agreed to acquire the John Hancock Tower and Garage in Boston for an aggregate purchase price of about $930 million. The purchase price consists of around $289.5 million of cash and the assumption of about $640.5 million of indebtedness.

Vimpel-Communications and Weather Investments S.p.A. said they reached an agreement to combine the two groups. Under the deal, VimpelCom Ltd would own, through Weather, 51.7% of Orascom Telecom Holding S.A.E. and 100% of Wind Telecomunicazioni S.p.A. Weather shareholders will get 325.6 million shares of newly issued VimpleCom stock and $1.8 billion in cash.

On completion of the merger, VimpelCom will become the fifth largest mobile platform in the world by subscribers, with an estimated net present value of $21.5 billion, operating in a total of 20 countries in Europe, Asia, Africa and North America.

Visa Inc. and MasterCard Inc. reached a settlement with the U.S. Department of Justice and the attorneys general of seven states to resolve antitrust investigations into the firms'' merchant acceptance rules.

The two companies disclosed in late 2008 that the DOJ issued a civil investigative demand, seeking information about certain of the company''s'' acceptance rules, including those related to surcharging and discounting. Each time consumers use a credit card, the merchant must pay a fee.

According to the Justice Department, certain policies of these companies prevent merchants from encouraging customers to use cards with lower processing fees.

Equifax Inc., the information solutions company acquired Anakam, Inc., a provider of large-scale, software-based, multi-factor authentication solutions. The transaction closed on October 1, while the terms were not disclosed.

The acquisition is expected to help Equifax to position itself and broaden its portfolio of solutions in the growing global identity management market, spurred by increases in online commerce and information sharing.

Toshiba Corp., the Japanese electronic devices maker announced the introduction of the world''s first LCD TVs that offer comprehensive 3D capabilities without any need for dedicated glasses.

Earnings Review

Datalink Corporation ((DTLK)), the company that assesses designs, deploys and supports infrastructures said that it still expects its guidance for the third quarter of 2010. The company projected third quarter 2010 revenues to be in the range of $69.0 million to $70.0 million, compared to its earlier revenue outlook of $42.7 million in the third quarter of 2009, up 62%.

Electro Rent Corporation ((ELRC)), the organization devoted to the rental, leasing and sales of general purpose electronic test equipment, personal computers and servers stated first quarter revenues rose 58% to $50.8 million from $32.2 million for the same period last year. Net income in the quarter soared 152% to $5.2 million or 22 cents per diluted share, compared to net income of $2.1 million or 9 cents per share in the year-ago period.

MaxLinear, Inc. ((MXL)), the provider of integrated radio-frequency analog and mixed-signal semiconductor solutions for broadband communications applications said that it currently expects revenue for the third quarter to be between $18.4 million and $18.6 million, compared with prior guidance between $20.0 million and $20.5 million.

The Mosaic Company ((MOS)), the fertilizer producer said first quarter net sales rose 50% to $2.19 billion from $1.46 billion in the same quarter last year. Net income in the quarter surged 196% to $297.7 million or 67 cents per diluted share, compared to net income of $100.6 million or 23 cents per share for the year-ago quarter.

The Talbots, Inc. ((TLB)), the specialty retailer and direct marketer of women’s apparel, accessories and shoes reiterated its third-quarter expectations for adjusted earnings per share from continuing operations in the range of about $0.22 to $0.28 per share, excluding special items.

Wolverine World Wide, Inc. ((WWW)), the footwear manufacturer stated third quarter revenue increased 11.7% to $320.4 million versus $286.76 million in the prior year. Net earnings in the quarter increased 27.4% to $34.14 million or 70 cents per diluted share, compared to net earnings of $26.79 million or 54 cents per share last year.