U.S. GDP Expands 2%; Microsoft Net Soars

Arthi Gupta
29 Oct, 2010
New York City

U.S. stocks traded lower after third quarter GDP expanded at 2%. GM planned to cut debt and pension obligations by $11 billion ahead of IPO. Le Gaga priced IPO of 10.87 million ADS at $9.50 each. MetLife agreed to a sell stake in Japan venture for $275 million. Microsoft earnings surged 51%.

[R]9:55 AM New York – U.S. stocks traded lower after third quarter GDP expanded at 2%. GM planned to cut debt and pension obligations by $11 billion ahead of IPO. Le Gaga priced IPO of 10.87 million ADS at $9.50 each. MetLife agreed to a sell stake in Japan venture for $275 million. Microsoft earnings surged 51%.[/R]

Asian markets traded sideways and European markets declined.

Stryker agreed to buy Boston Scientific''s neurovascular unit for $1.5 billion and Baxter divested U.S. generic injectables business to Hikma for $112 million.

The Commerce Department reported today that economic activity in the United States expanded for the fifth consecutive quarter in the third quarter of 2010. Gross domestic product increased at an annual rate of 2.0% in the third quarter following the 1.7% growth in the second quarter.

General Motors Co. said that it is taking several steps to pare its debt and pension obligations by $11 billion. The moves are aimed at strengthening the company''s balance sheet ahead of its planned IPO in November.

Further, GM said it had reached an agreement with a syndicate of banks for a $5 billion, five-year revolving credit facility the automaker. GM noted that the credit facility will provide an additional source of backup liquidity and is expected to remain generally undrawn.

GM also said it will make a contribution of at least $4 billion in cash and $2 billion in common stock to its U.S. hourly and salaried employee pension plans.

Le Gaga Holdings Ltd., a Chinese greenhouse vegetable producer, said that it priced its initial public offering of 10.87 million American Depositary Shares at $9.50 per ADS.

The offering comprises an IPO of 9.20 million ADSs by Le Gaga, and an additional offering of 1.67 million ADSs by selling shareholders of Le Gaga.

Le Gaga currently operates 16 farms with an aggregate area of 1,257 hectares in the Chinese provinces of Fujian, Guangdong and Hebei.

MetLife, Inc. said its subsidiary MetLife Worldwide Holdings, Inc. would sell its stake in its Japanese joint venture, Mitsui Sumitomo MetLife Insurance Co., Ltd. to its joint venture partner, MS&AD Insurance Group Holdings, Inc. for around $275 million.

Further, the company said that the deal would help it to focus on American Life Insurance Co., or Alico integration.

Stryker Corp., the surgical equipment provider agreed to acquire the assets of the neurovascular division of Boston Scientific Corp. in an all cash transaction for $1.5 billion, which includes $100 million of milestone payments.

The company said that the milestone events include the commercialization of the next generation of Target detachable coils used to treat hemorrhagic stroke, and the transfer of specific manufacturing facilities related to the Neurovascular operation to Stryker, which is anticipated to occur over a 24-month period following the closing.

Baxter International Inc. said it inked a definitive agreement to divest its U.S. generic injectables business to Hikma Pharmaceuticals Plc. The consideration for the divestiture arrangement totals around $112 million, subject to closing adjustments.

As part of the agreement, Hikma will acquire Baxter''s high-volume, generic injectable products in vials and ampoules, which are sold mainly in US including chronic pain, anti-infective and anti-emetic products, along with the Cherry Hill, N.J., manufacturing facility, and Memphis, Tennessee warehouse and distribution center.

Halliburton Co., the oilfield services provider sought to allay criticism unleashed by a panel report that found that faulty cementing by the company may have been a contributing factor to the Gulf of Mexico oil well disaster. BP plc had hired Halliburton for the cementing job on the Macondo well.

According to a letter from the Deputy Chief Counsel of the Commission sent to the commissioners of the National Commission it was noted that Chevron''s laboratory personnel were unable to generate stable foam cement using the materials Halliburton provided and suggests that the foam cement used on the Macondo well was unstable which may have contributed to the incident.

Pfizer Inc. said the Japanese Ministry of Health, Labor and Welfare approved Lyrica or pregabalin capsules for the treatment of peripheral neuropathic pain.

Verizon Wireless agreed to pay the U.S. Federal authorities a fine of $25 million, while it will spend $52.8 million paying back customers for erroneous collection of data charges.

The Federal Communications Commission Enforcement Bureau in its investigation found that Verizon had charged around 15 million of its customers incorrectly for data usage over a period of three years as ""pay-as-you-go"" data fees.

Earnings Review

CIGNA Corporation ((CI)), the healthcare benefits provider reported third quarter total revenues increased 17% to $5.27 billion from $4.52 billion in the year-ago quarter. Net income in the quarter declined 6.7% to $307 million or $1.13 per share, compared to net income of $329 million or $1.19 per share in the previous year, hurt by a loss due to lower interest rates at two benefits businesses in the Run-off Reinsurance segment.

Deckers Outdoor Corporation ((DECK)), the footwear maker reported third quarter net sales increased 21.7% to $277.9 million versus $228.4 million last year. Net income in the quarter rose 25% to $42.14 million or $1.07 per diluted share, compared to net income of $33.83 million or 86 cents per share last year.

First Solar, Inc. ((FSLR)), the thin-film solar panel maker reported third quarter net sales surged 66% to $797.90 million from $480.85 million last year. Net income in the quarter increased 15% to $176.87 million or $2.04 per diluted share, compared to net income of $153.34 million or $1.79 per share last year, driven by higher module production, lower cost per watt and increased system sales, offset partially by reduced module average selling prices.

Honda Motor Co., Ltd. ((HMC)), the Japanese automaker reported second quarter net sales and other operating revenue grew 9.5% to 2.252 trillion yen from 2.056 trillion yen. Net income in the quarter surged 152% to 135.93 billion yen or 75.24 yen per basic share from last year''s 54.04 billion yen or 29.78 yen per basic share, helped by strong revenue growth, especially in its automobile business, despite unfavorable foreign exchange impact.

Microsoft Corporation ((MSFT)), the software company said first quarter revenue rose 25% to $16.20 billion from $12.92 billion in the same quarter last year. Net income in the quarter soared 51% to $5.41 billion or 62 cents per diluted share, compared to net income of $3.57 billion or 40 cents per share for the year-ago quarter, driven by solid enterprise growth and continued strong consumer demand for its Windows 7 operating system and Office 2010 software suit.

Panasonic Corporation ((PC)), the manufacturer of electronic and electric products stated second-quarter consolidated group sales increased 27% to 2.21 trillion yen from 1.74 trillion yen in the previous year. Net income in the quarter surged 408% to 31.04 billion yen from 6.11 billion yen a year ago. Basic net income attributable to Panasonic per common share was 14.99 yen, significantly higher than 2.95 yen last year.

Samsung Electronics Co. Ltd. ((SSNLF.PK)), the South Korean conglomerate reported third quarter total sales increased 12% to 40.23 trillion won from 35.89 trillion won in the same quarter last year. Net profit in the quarter rose 17% to 4.46 trillion won, compared to net profit of 3.81 trillion won in the prior-year quarter, driven by growing demand for imbedded products amid the strong demand for smartphones and Tablet PCs.

Sony Corporation ((SNE)), the Japanese multinational conglomerate reported second quarter sales and operating revenue rose 4.2% to 1.73 trillion yen from 1.66 trillion yen last year, primarily due to an increase in sales in all segments other than Music, partially offset by unfavorable foreign exchange rates. Net income generated in the quarter was 31.15 billion yen or 31.00 yen per share, compared to a net loss of 26.31 billion yen or 26.22 yen per share last year.

Sunoco, Inc. ((SUN)), the oil refiner said third quarter revenue rose 12% to $9.48 billion from $8.45 billion in the same quarter last year. Net income generated in the quarter was $65 million or 54 cents per diluted share, compared to a net loss of $312 million or $2.67 per share for the year-ago quarter.

VeriSign, Inc. ((VRSN)), the Internet infrastructure service provider said third quarter revenue rose 10.2% to $173 million, compared to $157 million in the same period a year-ago. Net income in the quarter surged 1,354% to $785 million or $4.48 per diluted share, compared to net income of $54 million or 28 cents per share in the same quarter last year, due to a hefty gain on sale of its Authentication Services business.