U.S. Stocks Edge Lower; Buffett Appoints Investment Manager

Arthi Gupta
26 Oct, 2010
New York City

U.S. stocks fell after rising to a 6-month high yesterday ahead of key home prices and consumer confidence data. Warren Buffett appoints investment manager to run a significant portion of investment portfolio of Berkshire Hathaway Inc. Texas Instruments earnings soared 60% and Ford net surged 70%.

[R]9:35 AM New York – U.S. stocks fell after rising to a 6-month high yesterday ahead of key home prices and consumer confidence data. Warren Buffett appoints investment manager to run a significant portion of investment portfolio of Berkshire Hathaway Inc. Texas Instruments earnings soared 60% and Ford net surged 70%.[/R]

Asian markets traded mixed, while the European markets edged lower.

The Federal Reserve Bank of Kansas President Thomas Hoenig warned against a second round of quantitative easing in the U.S., saying more easing was a ""dangerous gamble.""

Reports quoted Hoenig as saying that pumping more liquidity into the economy would push up inflation expectations, and controlling them could prove a difficult task.

According to a report released by the National Association of Realtors on Monday, existing home sales in the U.S. increased more than expected in September, although sales remain notably lower compared to a year ago.

NAR said existing home sales jumped 10% to a seasonally adjusted annual rate of 4.53 million in September from a downwardly revised 4.12 million in August, but the annual rate plunged 19.1% below the 5.60 million-unit rate in the month a year ago.

India’s Prime Minister Manmohan Singh said in Tokyo on Monday that the Indian economy would be back into high growth rate path by next fiscal year. India’s economy grew 8.8% in the first quarter of the current fiscal and the government forecast a growth of 8.5% for the fiscal year 2011.

Brit Insurance Holdings N.V. agreed to sell itself to a consortium, including U.S. private equity firm Apollo Management VII, L.P. and CVC Capital Partners Ltd. for up to £888 million or about $1.4 billion. As per the terms of the offer, all accepting Brit shareholders would be entitled to receive £10.45 in cash plus a contingent value payment of up to £0.25 in cash per Brit share.

AIG stated that its CEO Robert Benmosche is being treated for cancer. Benmosche took many radical steps, including divestments and repayment of treasury loans, to revive the company''s stock price.

Berkshire Hathaway, Inc. announced on Monday that 39-year old Todd Combs has been hired as an investment manager. He will be managing “significant portion” of the investment portfolio according to the statement released by the company.

Former Florida State regulator and hedge fund manager based in Connecticut runs Castle Point Capital that invests in several insurance and financial services companies.

Warren Buffett has said in the past that after his retirement or death three people will be responsible for different activities. His son, Howard Buffett will be non-executive chairman and one person will be responsible for managing investment portfolio and one person to manage several businesses.

Walgreen Co., the drugstore chain is seeking to sell its pharmacy-benefits management business and hired Bank of America Corp. as an adviser to run an auction, Bloomberg reported on Monday, citing people with knowledge of the matter.

Earnings Review

Amgen, Inc. ((AMGN)), the biotechnology company said third quarter revenue edged higher 0.3% to $3.82 billion, compared to $3.81 billion in the same quarter last year. Net income in the quarter declined 11% to $1.24 billion or $1.28 per diluted share, compared to net income of $1.39 billion or $1.36 per share in the prior-year quarter. Earnings declined on higher R&D costs and flat sales.

Biogen Idec Inc. ((BIIB)), the biotechnology company said third quarter revenue grew 5.4% to $1.18 billion from $1.12 billion a year ago. Net income in the quarter fell 8.5% to $254.12 million, compared to net income of $277.66 million last year. Earnings per share rose to $1.05 from 95 cents per share in the prior year.

Edwards Lifesciences Corp. ((EW)), the medical devices and equipment maker reported third quarter sales rose 7.1% to $348.9 million, from $325.7 million last year. Net income in the quarter declined 35% to $48.0 million or 40 cents per diluted share, compared to net income of $73.5 million or 63 cents per share in the previous year.

E. I. du Pont de Nemours & Company ((DD)), the chemical maker reported third quarter total sales grew 17% to $7 billion from $5.96 billion in the same period last year. Net earnings in the quarter declined 10% to $367 million or 40 cents per diluted share, compared to net earnings of $409 million or 45 cents per share last year, reflecting higher expenses and lower pharmaceuticals income.

Ford Motor Company ((F)) third quarter revenues fell 1.3% to $29.9 billion versus $30.3 billion in the comparable period last year. Net income in the quarter surged 70% to $1.69 billion or 43 cents per diluted share, compared to net income of $997 million or 29 cents per share last year.

Harris Corporation ((HRS)), the communications and information technology company stated first quarter revenue grew 17% to $1.40 billion from $1.20 billion in the prior-year quarter. Net income in the quarter soared 57% to $163.9 million or $1.27 per diluted share, compared to net income of $104.5 million or 79 cents per share in the year-ago quarter. Revenues from the RF Communications segment surged 34% on strong demand for its Tactical Radio Communications offerings.

Plum Creek Timber Co. Inc. ((PCL)), the timberland owner reported third quarter revenues fell 12% to $259 million versus $294 million last year. Net income in the quarter soared 68% to $32 million or 20 cents per diluted, compared to net income of $19 million or 12 cents per share last year.

ProLogis ((PLD)), the real estate investment trust stated third quarter revenues grew slightly 0.3% to $270.1 million from $269.3 million a year earlier. Net loss in the quarter widened 28% to $15.1 million or 3 cents per diluted share, compared to a net loss of $11.8 million or 3 cents per share in the year-ago quarter.

Staples, Inc. ((SPLS)), the office products company estimates expects GAAP earnings in the range of $0.38 to $0.40 per share and for fiscal year 2011, the company forecast earnings in the range of $1.50 to $1.60 per share.

Texas Instruments Incorporated ((TXN)), the designer and supplier of digital signal processors said third quarter revenue rose 30% to $3.74 billion from $2.88 billion in the same quarter last year. Net income in the quarter surged 60% to $859 million or 71 cents per diluted share, compared to net income of $538 million or 42 cents per share for the year-ago quarter, helped by higher revenue and improved margins amid growth in all of its business segments.