U.S. Jobless Claims Falls to 3-Month Low; Visa Net Soars

Arthi Gupta
28 Oct, 2010
New York City

U.S. stocks traded higher after weekly jobless claims fell 21,000 to 434,000. Oracle acquired 10.2% stake in Mellanox. Williams Partners agreed to buy Williams Companies

[R]9:35 AM New York – U.S. stocks traded higher after weekly jobless claims fell 21,000 to 434,000. Oracle acquired 10.2% stake in Mellanox. Williams Partners agreed to buy Williams Companies’ assets for $782 million. Visa profit surged 51% and Colgate-Palmolive net rose 5%.[/R]

Asian markets traded mixed and European markets advanced on strong earnings.

Visa profit surged 51% amid increasing consumer demand for credit card usage and Colgate-Palmolive net climbed 5% on cost savings.

U.S. Labor Department said today first-time claims for unemployment benefits unexpectedly saw a modest decrease in the week ended October 23.

Initial jobless claims fell to 434,000 from the previous week''s revised figure of 455,000. The preliminary insured unemployment rate in the week ending October 16 changed to 3.5% from the prior week''s revised rate of 3.6%.

The U.S. Federal Reserve asked its primary bond dealers to estimate the desired size and impact of a potential second round of quantitative easing, Bloomberg News reports citing the copy of the survey document distributed by the New York branch of the Fed.

The survey is reported to have asked dealers to estimate changes in nominal and real 10-year Treasury yields ""if the purchases were announced and completed over a six-month period.""

The amount dealers can choose from are zero, $250 billion, $500 billion and $1 trillion.

William Dudley, President of the Federal Reserve Bank of New York, said despite the best efforts of the central bank, the U.S. recovery is likely to be a slow and protracted one.

Dudley said that he supported a second round of quantitative easing because both the current levels of unemployment and inflation and the timeframe over which they are likely to return to more normal levels are ""unacceptable.""

Oracle Corp. acquired 10.2% of Mellanox Technologies, Ltd.''s ordinary shares in the open market to further align product vision and maximize partnership efforts. Mellanox supplies end-to-end connectivity solutions for servers and storage systems.

Williams Partners L.P., the natural gas processor and oil transporter said it would buy Williams Companies, Inc.''s gathering and processing assets in Colorado''s Piceance Basin for $782 million. Williams Partners'' total consideration for the assets will include $702 million in cash and $80 million in WPZ limited-partner and general-partner units.

Apple Inc. said that it expects its gross margin to decrease in future periods, compared to 2010, due mainly to higher costs involved with its new and innovative products as well as potential future component cost and other cost increases. The company expects gross margin levels of about 36% in the first quarter of 2011, below analysts'' estimate of 37.5%.

Wells Fargo & Co., the financial service company said it identified some flaws in its foreclosure procedures. The bank identified instances where a final step in its processes relating to the execution of the foreclosure affidavits did not strictly adhere to the required procedures.

Pfizer Inc. announced the publication of data showing that 57% of ALK-positive advanced non-small cell lung cancer patients treated with crizotinib, an investigational oral anaplastic lymphoma kinase inhibitor, had either a complete or partial response to treatment.

Rio Tinto Finance (USA) Ltd., a subsidiary of Rio Tinto plc announced the extension of its previously announced tender offer for any and all of its 5.875 percent Notes due July 15, 2013.

CKx, Inc., the entertainment company, owner of the ""American Idol"" television show, said on Wednesday that it ended talks on a potential sale of the company or a controlling stake.

Earnings Review

Akamai Technologies, Inc. ((AKAM)), the provider of Internet applications and content delivery solutions said third quarter revenue increased 23% to $253.6 million from $206.5 million in the same quarter last year. Net income in the quarter increased 21% to $39.7 million or 21 cents per diluted share, compared to net income of $32.7 million or 18 cents per share in the prior-year quarter, due to the growing demand for cloud-based services.

Colgate-Palmolive Company ((CL)), the consumer products company stated third quarter worldwide sales declined 1.5% to $3.94 billion, from $3.998 billion in the third quarter of 2009. Net income in the quarter increased 5% to $619 million or $1.21 per share, compared to net income of $590 million or $1.12 per share last year.

FMC Technologies, Inc. ((FTI)), the technology solutions provider stated third quarter revenues slipped 12% to $960 million from $1.08 billion, due mainly to lower subsea systems revenue. Net income in the quarter dropped 12% to $81 million or 67 cents per diluted share, compared to net income of $91.6 million or 73 cents per share last year.

Las Vegas Sands Corp. ((LVS)), the resorts and casinos operator reported third quarter net revenue soared 67.3% to $1.91 billion, from $1.14 billion in the third quarter of 2009. Net income generated in the quarter was $168.01 million or 21 cents per diluted share, compared to a net loss of $122.99 million or 19 cents per share in the previous year.

Motorola, Inc. ((MOT)), the telecommunications company reported third quarter net sales rose 13% to $4.890 billion, from $4.336 billion in the prior-year quarter. Net earnings in the quarter surged 808% to $109 million, or 5 cents per diluted share, compared to net earnings of $12 million or 1 cent per share, in the third quarter 2009.

Norfolk Southern Corp. ((NSC)), the rail transportation company reported third quarter operating revenues increased 19% to $2.46 billion, from $2.06 billion last year, primarily as the result of a 15% increase in traffic volume. Net profit in the quarter increased 47% to $445 million or $1.19 per diluted share, compared to net profit of $303 million or 81 cents per share in the same quarter last year.

Stericycle, Inc. ((SRCL)), the waste management company said third quarter revenues gained 21.9% to $363.0 million, from $297.8 million in the same quarter last year. Net income in the quarter rose 21.8% to $56.7 million or 65 cents per diluted share, compared to net income of $46.5 million or 54 cents per share in last year period.

Symantec Corporation ((SYMC)), the security software maker said second quarter total net revenue edged higher 0.6% to $1.48 billion, compared to $1.47 billion in the same quarter last year. Net income in the quarter fell 12% to $136 million or 17 cents per diluted share, compared to net income of $155 million or 19 cents per share for the year-ago quarter, as costs and expenses increased while revenue remained essentially flat.

The Allstate Corporation ((ALL)) said third quarter revenues rose 4.3% to $7.91 billion from $7.58 billion a year ago. Net income in the quarter surged 66% to $367 million or 68 cents per diluted share, compared to net income of $221 million or 41 cents per share in the same quarter a year ago, as revenues improved helped by lower investment losses.

Visa Inc. ((V)), the credit card service provider said fourth quarter total operating revenue rose 13% to $2.12 billion, compared to the prior year total operating revenue of $1.88 billion. Net income in the quarter surged 51% to $774 million or $1.06 per share, compared to net income of $514 million or 69 cents per share in the prior-year quarter, reflecting strong contributions across all revenue categories amid increasing consumer demand for credit card usage.

For the full-year 2010, operating revenues increased to $8.07 billion from $6.91 billion in the year-ago and net income was $3.0 billion or $4.01 per share, compared to $2.4 billion or $3.10 per share in the previous year.