U.S. Durable Goods Orders Rise 3.3%; P&G Net Falls 7%

Arthi Gupta
27 Oct, 2010
New York City

U.S. stocks declined ahead of the Federal Reserve meeting next meeting. U.S. durable goods orders increased in September and mortgage demand rose as interest rates dropped. Pacific Biosciences priced its public offering at $16.00 a share.

[R]9:35 AM New York – U.S. stocks declined ahead of the Federal Reserve meeting next meeting. U.S. durable goods orders increased in September and mortgage demand rose as interest rates dropped. Pacific Biosciences priced its public offering at $16.00 a share.[/R]

The Federal Open Market Committee, the monetary policy setting arm of the Fed, is due to meet next week to decide on the near term monetary policy and the possible expansion of asset purchase plan.

Asian stocks edged lower and European markets traded mixed.

Confidence among U.S. consumers improved in the month of October, according to a report released by the Conference Board on Tuesday. The Consumer confidence index rose to 50.2 in October from a revised 48.6 in September.

A separate report showed that the S&P/Case-Shiller 20-City Composite Home Price Index rose at an annual rate of 1.7% in August compared to the 3.2% growth seen in July.

Home prices in 15 of the 20 metropolitan areas saw monthly decreases in August, with only prices in Chicago, Detroit, Las Vegas, New York and Washington D.C rose.

The Mortgage Bankers Association''s weekly mortgage applications survey for the week ending October 22 showed that overall mortgage demand increased 3.2% on a seasonally adjusted basis from one week earlier.

Refinancing activity rose along with demand for new purchase applications. The Refinance Index increased 3.0% from the previous week, while the seasonally adjusted Purchase Index increased 3.9%.

Orders for U.S. manufactured durable goods increased by much more than expected in September, according to a report released by the U.S. Commerce Department today, with the increase largely due to a rebound in orders for transportation equipment.

Durable goods orders surged 3.3% in September following a revised 1.0% decrease in August.

Excluding a 15.7% rise in orders for transportation equipment, durable goods orders fell 0.8% in September compared to a 1.9% increase in August.

Oracle Corp.''s CEO Larry Ellison said that he has evidence to prove that Hewlett-Packard''s incoming chief executive Leo Apotheker, a former CEO of Oracle''s rival SAP AG, oversaw an industrial espionage scheme by the German software maker that stole Oracle''s software.

Boston Scientific Corp., the medical devices maker announced the completion of its acquisition of Asthmatx, Inc., a privately-held medical device company. Under the terms of the agreement, Boston Scientific purchased all outstanding Asthmatx shares for a total of $193.5 million. Additional payments of up to $250 million are contingent upon achievement of specified revenue-based criteria through 2019.

Pacific Biosciences of California Inc., a developer of innovative tools for biological research priced its initial public offering of 12.5 million shares at $16.00 per share. All shares are being sold by the company.

CommScope Inc. entered into a definitive merger agreement with global alternative asset manager The Carlyle Group in a transaction valued at about $3.9 billion. The transaction is expected to close in the first quarter of 2011.

As per the terms of the merger deal, Carlyle will acquire all of the outstanding shares of CommScope common stock for $31.50 per share in cash. This represents a premium of approximately 36% over CommScope''s closing stock price on October 22, 2010, the last trading day prior to the deal announcement.

EDF S.A. and Constellation Energy Group Inc. announced that they have reached comprehensive agreement regarding full ownership of UniStar Nuclear Energy. Under deal terms, EDF will acquire Constellation''s 50% ownership in UniStar for $140 million.

GlaxoSmithKline plc finalized a £500 million or $750 million previously reported settlement with the U.S. Attorney''s Office for the District of Massachusetts and the U.S. Department of Justice related to the investigations by the U.S. Government on manufacturing issues at its Cidra facility.

Airgas sent a letter to Air Products reaffirming that Air Products'' $65.50 per share offer is grossly inadequate. In a response to the release of Airgas Inc.''s fiscal 2011 second quarter earnings and letter, Air Products said that there is nothing in the Airgas earnings or letter that changes its view of value.

Airgas noted that its board reiterated its willingness to authorize negotiations if Air Products indicates that discussions would lead to valuation meaningfully above $70 per share.

Earnings Review

AFLAC Incorporated ((AFL)), the health and life insurance service provider said third quarter total revenues increased 19.2% to $5.4 billion from $4.5 billion in the same quarter last year. Net earnings in the quarter soared 90% to $690 million or $1.46 per diluted share, compared to net earnings of $363 million or 77 cents per share in the prior-year quarter, driven mainly by a stronger yen/dollar exchange rate.

Allegheny Technologies Incorporated ((ATI)), the specialty metals producer reported third quarter sales grew 52% to $1.06 billion from $697.6 million last year, reflecting higher demand from aero-engine market. Net income in the quarter declined 29% to $1.0 million, compared to net income of $1.4 million in the same quarter of last year, as charges related to ""significantly"" higher nickel costs and a tax charge nearly offset the benefit from a sharp rise in sales. On a per share basis, earnings were $0.01, flat with the prior year.

DreamWorks Animation SKG, Inc. ((DWA)), the animation film maker said third quarter total revenues rose 39% to $188.88 million from $135.45 million in the same quarter last year. n Net income in the quarter soared 103% to $39.8 million or 47 cents per diluted share, compared to net income of $19.6 million or 23 cents per share for the year-ago quarter, driven mainly by the international box office success of ""Shrek Forever After"".

Office Depot, Inc. ((ODP)), the supplier of office products and services reported third quarter sales declined 4.3% to $2.9 billion from $3.03 billion in the same period last year. Net income generated in the quarter was $54.29 million or 18 cents per diluted share, compared to a net loss of $412.97 million or $1.51 per share last year.

TD Ameritrade Holding Corp. ((AMTD)), the brokerage services provider reported fourth quarter net revenues declined 7.5% to $608.84 million from $657.93 million in the year-ago quarter. Net income in the quarter declined 27.3% to $113.96 million or 20 cents per diluted share, compared to net income of $156.74 million or 26 cents per share in the same period a year ago, as reduced trading activity brought down its commissions and transaction fees.

Tellabs, Inc. ((TLAB)), the telecommunications equipment maker reported third quarter total revenue for the quarter grew 10.2% to $429.2 million from $389.3 million in the same quarter last year. Net earnings for the quarter soared 93% to $56.5 million or 15 cents per diluted share, compared to net earnings of $29.3 million or 7 cents per share in the previous year.

The Procter & Gamble Company ((PG)), the provider of consumer packaged goods reported first quarter net sales rose 1.6% to $20.122 billion, from $19.807 billion in the prior-year quarter. Net earnings in the quarter declined 6.8% to $3.081 billion or $1.02 per share, compared to net earnings of $3.307 billion or $1.06 per share in the same quarter last year, as increased sales and volume gains were more than offset by lower margins amid higher commodity costs.

Whirlpool Corporation ((WHR)), the home appliance maker stated third quarter sales edged higher 0.5% to $4.519 billion from the previous year''s $4.497 billion. Net income in the quarter declined 9.2% to $79 million or $1.02 per share, compared to net income of $87 million or $1.15 per share in the year-ago quarter, reflecting higher interest and sundry expense, besides a significant slowing in sales growth. The company backed its full-year earnings forecast.