U.S. PPI Rises 0.4%; Home Depot, Wal-Mart Earnings Up

Arthi Gupta
16 Nov, 2010
New York City

U.S. stocks fell amid speculation that China will raise interest rates and PPI rose 0.4% in October. GM lifted IPO price range between $32.00 and $33.00 a share. Juniper Networks agreed to buy Trapeze Networks for $152 million. Wal-Mart net rose 9% on strong international sales.

[R]9:35 AM New York – U.S. stocks fell amid speculation that China will raise interest rates and PPI rose 0.4% in October. GM lifted IPO price range between $32.00 and $33.00 a share. Juniper Networks agreed to buy Trapeze Networks for $152 million. Wal-Mart net rose 9% on strong international sales.[/R]

World markets declined on concerns over the Irish debt crisis and possible policy tightening measures from China.

The U.S. Labor Department released a report on Tuesday showing that total producer prices rose by much less than expected due in part to a drop in auto prices, while energy prices showed a substantial increase in the month of October.

The Labor Department said its producer price index rose 0.4% in October, matching the increases seen in each of the two previous months.

Excluding the increase in energy prices as well as a modest drop in foods prices, the core producer price index fell 0.6% in October after edging up 0.1% in September.

According to a report released by the Federal Reserve today, industrial production in the U.S. unexpectedly came in unchanged in the month of October, after falling 0.2% in September with a notable decrease in utilities output offsetting an increase in manufacturing output.

South Korea''s central bank unexpectedly hiked its benchmark interest rate by a quarter percentage point to contain rising inflation. The Bank of Korea raised the base rate to 2.5%.

Irish Prime Minister Brian Cowen insisted that his government has no intentions of asking for external aid from the European Union amid speculation that the Republic could be forced to accept a bailout to prevent uncertainty from spreading to other euro-zone countries.

Europgroup Chairman Jean-Claude Juncker said reporters in Frankfurt on Monday that Ireland has not yet requested for an emergency funding from the European Union to resolve the country''s debt issues.

General Motors Corp. increased the estimated price range for the offering of 365 million common shares to be sold by certain of its stockholders between $32.00 and $33.00 per share from the earlier estimated range of $26.00 to $29.00 per share.

Also, the company raised the proposed size of its Series B mandatory convertible junior preferred stock offering from $3 billion to $4 billion, consisting of 80 million shares, excluding the amount that the underwriters have the option to purchase to cover over-allotments, if any.

Juniper Networks announced it entered into an agreement with Belden Inc. under which Juniper will acquire Trapeze Networks in an all cash transaction valued at approximately $152 million. The acquisition will make WLAN infrastructure a key part of Juniper''s portfolio, accelerating the company''s growth in the enterprise market and advancing its vision for the new network.

El Paso Pipeline Partners, L.P., the natural gas pipeline system agreed to acquire additional interests in assets from its parent company, oil and gas producer El Paso Corp. for $1.133 billion.

The company said it will acquire the remaining 49% interest in both Southern LNG Co., L.L.C. or SLNG, and El Paso Elba Express Co. L.L.C. as well as an additional 15% interest in Southern Natural Gas Co. or SNG from El Paso Corp. Following the acquisition, El Paso Pipeline will own 100% of SLNG as well as Elba Express, and a 60% interest in SNG.

Chesapeake Energy Corp. and CNOOC Ltd. announced the closing of a project cooperation agreement whereby CNOOC''s subsidiary purchased a 33.3% undivided interest in Chesapeake''s 600,000 net oil and natural gas leasehold acres in the Eagle Ford Shale project in South Texas.

Dynegy, Inc., the electric utility urged its shareholders to vote for a proposed merger with an affiliate of private equity firm Blackstone Group L.P. The Blackstone affiliate offered $4.50 for each Dynegy share, valuing the deal at about $4.7 billion, including the assumption of existing debt.

General Growth Properties, Inc. priced its public offering of 135 million shares of its common stock at $14.75 per share.

Rolls-Royce Group Plc, the UK-based defense and aerospace company, which is facing complaints related to its Trent 900 engines on A380s asked Airbus maker European Aeronautic Defence and Space Co. to return some Airbus A380 engines from production lines, according to reports released on Tuesday.

BHP Billiton Plc announced that it continues to believe that the potential returns from its failed bid of Potash Corp. of Saskatchewan Inc. outweighed the risk of not being in the position to proceed.

On Sunday, BHP Billiton Group said it has withdrawn its $40 billion unsolicited tender offer to acquire Canadian fertilizer maker Potash Corp. The decision was made a week after the Canadian government blocked the deal as it does not provide a """"""""net benefit"""""""" to the country.

AWB Ltd., the Australian grain marketer announced Monday that its shareholders have overwhelmingly approved the acquisition by Canadian fertilizer and agricultural products distributor Agrium, Inc. under a proposed Scheme of Arrangement.

AWB shareholders approved the deal agreed in mid-August with 97.8% votes in favor of the deal which will see Agrium acquire all of the issued capital of AWB under a scheme of arrangement at a price of A$1.50 per share or for A$1.24 billion or $1.1 billion in cash.

Earnings Review

Abercrombie & Fitch Co. ((ANF)), the teen apparel retailer reported third quarter net sales increased 18% to $885.8 million from $753.7 million generated a year earlier on comparable store sales rise of 7%. Net Income in the quarter rose 29% to $50.04 million or 56 cents per diluted share, compared to net income of $38.78 million or 44 cents in the prior year.

Honeywell International Inc. ((HON)),the diversified technology and manufacturing company announced changes in its accounting pattern for pension expense, which has led the company to slash its earnings forecast for the fourth quarter and for the full-year 2010. The company also plans additional pension funding in 2011.

The company noted that change in pension expense accounting will see the estimated net income for fiscal 2010 being reduced by $512 million or $0.66 per share.

Illinois Tool Works Inc. ((ITW)), the industrial products manufacturer reaffirmed its earnings forecasts for the fourth quarter as well as full-year 2010.

The company forecasts fourth-quarter income per share from continuing operations to be in a range of $0.74 to $0.82, assuming a total revenue growth range of 7% to 9%, unchanged from the forecast issued in late October. Revenues for the quarter are estimated to be $4.09 billion.

For full-year, the company projects income per share from continuing operations in a range of $2.99 to $3.07, which assumes a total revenue growth range of 13% to 14%.

Jacobs Engineering Group, Inc. ((JEC)), the technical services provider reported fourth quarter total revenues declined 8.2% to $2.34 billion from $2.55 billion in the same quarter last year. Net earnings in the quarter fell 3% to $76.99 million or 61 cents per diluted share, compared to net earnings of $79.32 million or 63 cents per share in the prior-year quarter, reflecting lower revenues and higher expenses.

For fiscal year 2010, revenues declined 13.5% to $9.92 billion from $11.47 billion in the previous year. Net earnings for the year dropped 38% to $245.97 million or $1.96 per share, from $399.85 million or $3.21 per share in the prior year.

Nordstrom, Inc. ((JWN)), the fashion specialty retailer said third quarter net sales rose 11.7% to $2.09 billion from $1.87 billion in the same quarter last year. Same-store sales for the quarter increased 5.8%. Net income in the quarter surged 43% to $119 million or 53 cents per diluted share, compared to net income of $83 million or 38 cents per share for the year-ago quarter.

The Gymboree Corporation ((GYMB)), the children''s clothing retailer stated third quarter total net sales increased 4% to $280.85 million, from $269.08 million for the third fiscal quarter last year. Net earnings in the quarter declined 1% to $34.40 million, compared to net earnings of $34.76 million last year. On a per share basis, earnings grew to $1.26 from $1.15 in the prior year.

The Home Depot, Inc. ((HD)), the home improvement retailer reported third quarter sales increased 1.4% to $16.6 billion, from $16.36 billion in the third quarter of fiscal 2009. Net earnings in the quarter rose 21% to $834 million or 51 cents per diluted share, compared to net earnings of $689 million or 41 cents per share last year.

Urban Outfitters, Inc. ((URBN)), the lifestyle specialty retailer said third quarter net sales increased 13% to $573.6 million from $505.9 million in the same quarter last year. Net earnings in the quarter rose 17% to $73.1 million or 43 cents per diluted share, compared to net earnings of $62.4 million or 36 cents per share in the prior-year quarter, helped by higher sales and improved growth in comparable store net sales.

Wal-Mart Stores, Inc. ((WMT)), the operator of retail stores stated third quarter net sales increased 2.6% to $101.2 billion, from $98.7 billion in the third quarter last year. Net income in the quarter rose 9.3% to $3.436 billion or 95 cents per diluted share, compared to net income of $3.144 billion or 81 cents per share in the same quarter last year.