U.S., World Stocks Fall on Korean Tension; GDP Revised Up 2.5%

Arthi Gupta
23 Nov, 2010
New York City

U.S. stocks traded lower following firing incidences in Korean Peninsula. U.S. GDP revised higher 2.5% in the third quarter. Potash One agreed to a takeover by Germany based K+S for C$434 million. Scotiabank agreed to acquire DundeeWealth.

[R]9:35 AM New York – U.S. stocks traded lower following firing incidences in Korean Peninsula. U.S. GDP revised higher 2.5% in the third quarter. Potash One agreed to a takeover by Germany based K+S for C$434 million. Scotiabank agreed to acquire DundeeWealth.[/R]

World markets declined after debt problems in Ireland raised worries of a contagion effect to Portugal and Spain and after tensions ran high following exchange of fire between the North and the South Korea troops.

Deal making was alive on the Wall Street as market indexes in China and India fell sharply. Indexes in Europe were on the decline with France leading the losers with a loss of 1.7%.

Coty Inc, the fragrance company agreed to buy Philosophy controlled by the private equity manager Carlyle Group. Humana Inc agreed to acquire privately held Concentra for $790 million. And, K+S agreed to acquire Canada based Potash One.

U.S. GDP Revised Up

According to a report released by the Commerce Department today, U.S. economic activity in the third quarter increased, with the upward revision reflecting stronger than previously reported growth in consumer spending, exports, and state and local government spending.

Gross domestic product increased at an annual rate of 2.5% in the third quarter compared to the initially reported 2.0% growth.

FBI Raids Hedge Funds

The Federal Bureau of Investigation raided the offices of hedge funds Level Global Investors LP, Diamondback Capital Management LLC and Loch Capital Management LLC on Monday, reports said.

The raid was part of insider trading investigations by the U.S. government agents and seized documents from the offices in the cities of New York, Connecticut and Massachusetts.

Potash One Agrees To Takeover by K+S Aktiengesellschaft

K+S Aktiengesellschaft and Potash One Inc. announced that they have entered into a Support Agreement pursuant to which K+S will make an offer to acquire all of the outstanding common shares of Potash One at a price of C$4.50 per share in cash for approximately C$434 million.

K+S has production capacity of up to 2.7 million tons of potassium chloride per year. The realization of this production capacity would represent an approximately $2.5 billion capital investment into Saskatchewan and create up to 300 jobs.

Attachmate Acquires Novell

Novell, Inc., the networking software developer entered into a merger agreement under which Attachmate Corporation would acquire Novell for $6.10 per share in cash in a transaction valued at approximately $2.2 billion.

Scotiabank Acquires DundeeWealth

The Bank of Nova Scotia agreed to acquire 82% stake in DundeeWealth, which it already doesn''t own for around C$2.3 billion. The offer announced jointly by Scotiabank, Dundee Corp. and DundeeWealth Inc., represents an enterprise value of around C$3.2 billion or C$21.00 per share to DundeeWealth shareholders.

Coty Agrees to Buy Philosophy, Inc.

Carlyle Group, the private equity fund manager said Coty Inc., the fragrance company agreed to acquire its skincare and cosmetics company Philosophy, Inc. for undisclosed terms.

Humana Acquires Concentra

Humana Inc. agreed to buy privately held healthcare provider Concentra Inc. for about $790 million in cash. Humana believes the acquisition would reinforce its core businesses, and provide revenue diversification and opportunities for strategic expansion in the long term.

Hess Corp., the integrated energy company agreed on Monday to acquire an additional 167,000 acres in the Bakken oil shale play in North Dakota from TRZ Energy, LLC for $1.05 billion in cash.

Earnings Review

Analog Devices, Inc. ((ADI)), the chipmaker said fourth quarter revenue increased 35% to $770 million from $571.6 million in the same quarter last year. Net income in the quarter soared 113% to $225.0 million or 73 cents per diluted share, compared to net income of $105.6 million or 36 cents per share in the prior-year quarter.

Annual revenue increased 37% to $2.8 billion from $2.0 billion in the year-ago. For fiscal year 2010, the company reported net income surged 187% to $712.1 million or $2.33 per share, compared to net income of $247.8 million or $0.85 per share in the previous year.

Brocade Communications Systems, Inc. ((BRCD)), the supplier of data center networking solutions said fourth quarter revenue rose 5.5% to $550.3 million from $521.7 million a year earlier. Net income in the quarter dropped 28% to $23 million or 5 cents per diluted share, compared to net income of $32 million or 7 cents per share last year.

For the full year of 2010, the company stated total revenues grew 7.2% to $2.09 billion from $1.95 billion. Net income generated in fiscal year 2010 was $118.8 million or 25 cents per diluted share, compared with net loss of $81.3 million or 20 cents per share last year.

Cracker Barrel Old Country Store, Inc. ((CBRL)), the operator of a restaurant chain stated first quarter total revenue increased 3% to $598.69 million from $581.18 million last year. Net income in the quarter rose 32% to $23.73 million or $1.01 per diluted share, compared to net income of $18.02 million or 78 cents per share in the prior year.

Hewlett-Packard Company ((HPQ)), the information technology corporation said fourth quarter net revenue rose 8% to $33.28 billion from $30.78 billion in the same quarter last year. Net income for the quarter rose 5% to $2.5 billion or $1.10 per diluted share, compared to net income of $2.4 billion or 99 cents per share for the year-ago quarter.

Net revenue for the fiscal year 2010 increased 10% to $126.03 billion from $114.55 billion last year. For the fiscal year 2010, net income increased 14.3% to $8.8 billion or $3.69 per share, compared to net income of $7.7 billion or $3.14 per share for the fiscal year 2009.

Medtronic, Inc. ((MDT)), the medical technology company said second quarter worldwide revenue rose 2% to $3.90 billion compared with $3.84 billion reported in the second quarter of fiscal 2010. Net earnings in the quarter slid 35% to $566 million or 52 cents per diluted share, compared to net earnings of$868 million or 78 cents per share in the prior-year period.

Nuance Communications Inc. ((NUAN)), the speech, imaging, and keypad solutions provider reported fourth quarter revenue soared 17.7% to $309.8 million, from $263.3 million in the fourth quarter of fiscal 2009. Net income in the quarter plunged 53.3% to $2.1 million or 1 cent per diluted share, compared with net income of $4.5 million or 2 cents per share in the same quarter last year.

Pacific Sunwear of California, Inc. ((PSUN)), the specialty retailer said third quarter net sales declined 4% to $258 million from $268 million last year on same store sales fall of 3%. Net loss in the quarter narrowed 36.4% to $7 million or 11 cents per diluted share, compared with a net loss of $11 million or 17 cents per share a year earlier.