GM Sells GMAC Stake for $14 B

Elena
03 Apr, 2006
New York City

Stocks opened higher at the beginning of the second quarter, lifted by merger deals and expectations of solid manufacturing growth. General Motors announced a plan to sell a majority stake in GMAC for $14 billion over three years. Alcatel rallied close to 5% after unveiling its $13.5 billion stock swap for Lucent.

[R] 9:45AM Stocks opened in the positive[/R]
Stocks showed a strong upward move at the start of the second quarter, with the positive sentiment generated by merger-and-acquisition activity and corporate news, involving Lucent Technologies which agreed to be bought by Alcatel and the General Motors-GMAC deal. GM ((GM)) announced a decision to sell a majority stake in GMAC for $14 billion over three years to investors led by Cerberus Capital Management. Also on the takeover front, Ameristar Casinos offered $2.25 billion for U.S. gaming operator Aztar, topping the offers of Colony and Pinnacle. The networking sector posted strength on news that Alcatel ((ALA)) agreed to acquire Lucent ((LU)) in a deal valued at $13.4 billion. Shares of Alcatel showed considerable move to the upside, up nearly 5%. Commodities stocks also moved to the positive territory. In the opening minutes, the Dow Jones industrial average is up 54.19 to 11,163.51, the Nasdaq Composite Index has gained 7.75 to 2,347.54 and the S&P 500 index is unchanged.

Crude oil prices advanced to $67 on strong buying interest from investment funds as tensions in major oil producers Iran and Nigeria continue. Light sweet crude May delivery gained 38 cents to $67.01 a barrel. London Brent climbed $1.09 to $67. Gold sharply rose Monday to lead a broad metals rally. Gold for June delivery advanced $4.80 to trade at $591.50 per troy ounce in electronic trading. Silver futures climbed 11 cents to $11.63 and copper rose to an all-time high of $2.525 a pound. The U.S. dollar hit a three-week high against the yen. The dollar bought 118.32, up from 117.78. The dollar advanced to $1.2069 from $1.2118.

Epicor Software Corp, software company, reported that it expects 2006 earnings to be between 69 cents and 70 cents a share, with revenue between $372 million and $377 million. If the company achieves the abovementioned goals, it will still be missing the analysts’ projections which stand 78 cents a share on revenue of $384 million.

Epicor Software also restated its figures for 2003 through to September 2005 to correct its revenue recognition policies with respect to allocating revenue derived from software licenses and maintenance agreements. Epicor Software added that the restatements negatively affected profit and revenue for those periods, but did not impact the total revenue or profit associated with the contracts in question over the lifetime of the contracts.

Sourcecorp Inc, ((SRCP)), business process outsourcing company, reported that its Q4 net loss was $1.48 a share, swinging from a net income of 11 cents a share in the year-ago period. The company added that quarterly pro forma per-share income came to 25 cents, compared with 15 cents in the previous year. Revenue for Q4 reached $98 million, up from $92 million in the previous year.

Imperial Industries Inc., ((IPII)), building products company, reported Q4 net earnings of 28 cents a share, up 58% from 19 cents a share in the year-earlier period on 31% revenue growth.

Progressive Gaming International Corp, ((PGIC)), provider of gaming technology and content, reported that Q4 net loss came to 22 cents a share, reversing from prior year net income of 9 cents a share, missing analyst expectations of a penny a share. Quarterly revenue was $19.2 million, down vs. $26.3 million in the prior year''s period.

Enesco Group Inc, ((ENC)), home and garden decorative products supplier, reported that Q4 net loss came to 99 cents a share, up from a net loss of $2.80 a share in the year-ago period despite revenue decline, compared with the same period last year.


[R] 8:15 AM European stocks rallied at mid-day.[/R]
European markets made a strong performance at the start of the second quarter, following a broad rally in the Asian-Pacific region. Merger-and-acquisition activity also provided support. The German DAX 30 reached a five-year high of 0.6% on news that Alcatel agreed to acquire Lucent Technologies for $14.45 billion in stock, a deal which will place the French mobile phone maker among the world’s two leading makers of communications equipment. The French CAC 40 advanced 0.6% and London FTSE 100 also gained 0.6%.


[R]7:45AM Asian markets finished higher, led by Japan and Hong Kong.[/R]
Asian-Pacific benchmarks sharply advanced Monday to reach multi-year highs. The Nikkei led gainers, reaching its highest level in six years of 1.6% to 17,333.31. The index rallied on business sentiment survey which showed broad economic recovery and strong buying interest in technology, banking and insurance stocks. Among the electronics makers, Toshiba rose 3.8% and Sony climbed 1.5%, while banking stocks Mitsubishi Financial Group gained 2.2% and Mizuho Financial Group rose 2.2%. Hong Kong’s Hang Seng hit a five-year high of 1.6% at 16063.75, lifted by 3.2% gain in China Mobile stock and improved demand for property blue-chip stocks, such as Hang Lung, up 5.1%. China Shanghai Composite also surged 1.6% and Taiwan Weighted index rose 0.7% on semiconductor and steel shares.