U.S. Stocks Lower, Dell Net Soars; Ireland Inches Closer to Bailout

Arthi Gupta
19 Nov, 2010
New York City

U.S. stocks traded lower after China raised commercial banks'' reserve requirement ratio. Ireland inched closer to bailout. Chevron agreed to sell its aviation fuel marketing business in Caribbean to France-based Rubis. Dell net surged amid strong corporate demand. Cisco expands stock buyback plan.

[R]9:35 AM New York – U.S. stocks traded lower after China raised commercial banks'' reserve requirement ratio. Ireland inched closer to bailout. Chevron agreed to sell its aviation fuel marketing business in Caribbean to France-based Rubis. Dell net surged amid strong corporate demand. Cisco expands stock buyback plan.[/R]

World markets declined after China took yet another step in cooling real estate market. Banks were asked to hold higher reserves and restrict lending for the remainder of the year.

Irish Republic Edges Closer To Bailout

The Republic of Ireland is edging closer to accepting a multi-billion-euro cash injection into its loss making banking sector, after the nation''s finance minister admitted that Dublin will have to accept external aid.

Ireland had been reluctant to accept aid on its sovereign debt earlier in the week, insisting that it is fully funded through the first half of next year and that the terms of any rescue would be unacceptable.

Fellow EU members have urged Ireland to accept aid as a way to contain the debt crisis that may once again threaten the viability of the euro.

Talks between officials of Ireland and the EU, ECB and the IMF are expected to intensify today towards determining the size of the loan and the conditions Dublin will have to fulfill to access it.

China Central Bank Raises Reserve Requirements

People’s Bank of China raised commercial banks'' reserve requirement ratio by 50 basis points for the second time this month. The fifth rate hike of this year will be effective from November 29.

The measure is intended to dry up additional liquidity from the country''s financial system and to halt surging property prices and rising inflation.

U.S. Fed Officials Comments

The Federal Reserve Chairman Ben Bernanke launched a strong defense of the central bank''s new asset purchase program amid a barrage of criticism at home and abroad. He argued more monetary easing was necessary to bring down high unemployment in U.S., even as he admitted there were limits to what can be achieved by the central bank alone.

The Fed chief went on to take aim at China and other emerging economies that keep their currencies artificially low for creating a two-speed global recovery that was unsustainable.

The Federal Reserve Bank of Philadelphia President Charles Plosser said in Washington D.C. on Thursday that he was ""more optimistic than many"" about the outlook for the U.S. economy, and downplayed the possibility of the economy falling into a deflationary spiral.

Plosser said monetary policy should primarily focus on price stability and economic growth rather than targeting asset bubbles.

Narayana Kocherlakota, President of the Federal Reserve Bank of Minneapolis said at a conference in Chicago, Illinois on Thursday the Federal Reserve''s new $600 billion quantitative easing scheme will help lower long-term interest rates and is likely to stimulate the U.S. economy in a number of ways.

Sandra Pianalto, President of the Federal Reserve Bank of Cleveland said the U.S. economy faced enough negative risks to growth and disinflation to merit further accommodation from the Federal Reserve in the form of the quantitative easing.

Cisco Expands Stock Repurchase Plan

Cisco Systems, Inc., the largest computer networking gear maker announced on Thursday that its Board of Directors have authorized a new $10 billion share repurchase program with no fixed termination date. As of date, the company has authorized up to $82 billion in stock repurchases, including the current authorization.

GM Debut as Public Company

General Motors Co successfully priced its offering and traded higher on the first day of trading. The stock gained 3.6% on a heavy volume where nearly 70% of the offering size changed hands.

General Motors success on the first day shows that investors are expecting a steady economic recovery and rising domestic auto sales at the company.

Chevron Sells Assets to Rubis

Chevron Corp., the integrated energy company agreed to sell its fuels marketing and aviation businesses in parts of the Caribbean and Central America to a subsidiary of France-based petroleum company Rubis.

Pfizer and Bristol-Myers Discontinue Blood Thinner Study

Pfizer Inc. and Bristol-Myers Squibb Co. have discontinued a late stage trial of their experimental blood thinner Apixaban as an increase in bleeding among high-risk patients with recent Acute Coronary Syndrome or ACS outweighed benefits of the drug.

Amgen Inc., the biotechnology giant announced that the U.S. Food and Drug Administration approved Xgeva or denosumab, a subcutaneous RANK Ligand inhibitor, for the treatment of bone metastases to reduce skeletal related events in patients with cancer. The treatment is estimated to fetch $2.5 billion in global sales by the middle of the decade, according to analysts.

Earnings Review

AnnTaylor Stores Corp. ((ANN)), the specialty retailer of women’s apparel, shoes and accessories reported third quarter total net sales rose 9.3% to $505.3 million, from $462.4 million in the third quarter of fiscal 2009. Total company comparable sales for the quarter increased 11.7%, versus a decline of 13.0% in the prior year. Net income in the quarter surged ten-fold to $24.2 million, or 41 cents per diluted share, compared to net income of $2.1 million or 3 cents per share, in the third quarter of 2009.

Autodesk, Inc. ((ADSK)), the design software maker said third quarter revenue increased 14% to $477 million from $417 million in the same quarter of last year. Net income in the quarter soared 82% to $53.6 million or 23 cents per diluted share, compared to net income of $29.5 million or 13 cents per share in the prior-year quarter, driven by strong revenue growth in all of its segments.

Dell Inc. ((DELL)), the PC maker said third quarter revenue rose 19% to $15.39 billion from $12.90 billion in the same quarter last year, as commercial and enterprise sectors continue to be solid. Net income for the quarter surged 144% to $822 million or 42 cents per diluted share, compared to net income of $337 million or 17 cents per share for the year-ago quarter, as revenue surged and margins improved amid strong corporate demand and solid supply-chain execution.

Foot Locker, Inc. ((FL)), the retailer of athletic footwear and apparel reported third quarter sales increased 6% to $1.28 billion from $1.21 billion in the prior year. Comparable store sales increased 8.1%. Net income generated in the quarter was $52 million or 33 cents per diluted share, compared with a net loss of $6 million or 4 cents per share in the prior-year period.

Intuit Inc. ((INTU)), the business software and services company stated first quarter revenue increased 12% to $532 million from $474 million in the same quarter a year ago. Net loss in the quarter widened 3% to $70 million or 22 cents per diluted share, compared to a net loss of $68 million or 21 cents per share last year.

Marvell Technology Group Ltd. ((MRVL)), the chip maker third quarter said net revenue rose 20% to $959.33 million from $803.10 million in the same quarter last year. Net income for the quarter rose 27% to $255.7 million or 38 cents per diluted share, compared to net income of $201.6 million or 31 cents per share for the year-ago quarter, helped by higher revenue and improved margins due to solid demand in its mobile and wireless end market.

Nike, Inc. ((NKE)), the sportswear and equipment supplier said that its board declared a quarterly cash dividend of $0.31 per share on the company''s outstanding Class A and Class B Common Stock.

salesforce.com, Inc. ((CRM)), the provider of enterprise cloud computing applications reported third quarter total revenues increased 30% to $429.1 million from $330.5 million in the year-ago quarter. Net income in the quarter rose 2% to $21.1 million, compared to net income of $20.7 million in the prior-year quarter. On a per share basis, net income declined to $0.15 from $0.16 on higher share count.

The Dress Barn, Inc. ((DBRN)), the women''s apparel retailer reported first quarter sales advanced 77% to $713.28 million from $404.09 million in the comparable quarter a year ago. Net income for the quarter rose 121% to $47.97 million or 60 cents per diluted share, compared to net income of $21.67 million or 33 cents per share in the previous year''s first quarter.

The Gap Inc. ((GPS)), the specialty retailer reported third quarter net sales increased 2% to $3.65 billion from $3.58 billion last year. Net income for the quarter declined 1% to $303 million from $307 million in the previous year. On a per share basis, net income increased 9% to $0.48 from $0.44 per share, on a lower share count.