Smaller Increase in U.S. Payrolls; Stocks Fall

Arthi Gupta
03 Dec, 2010
New York City

U.S. stocks declined in the early trading after employers added less than anticipated staff in November. Pending home sales soared in October. Walter Energy and Western Coal in C$3.3 billion merger deal. Sunoco agreed to sell Toledo Refinery for $400 million.

[R]9:35 AM New York – U.S. stocks declined in the early trading after employers added less than anticipated staff in November. Pending home sales soared in October. Walter Energy and Western Coal in C$3.3 billion merger deal. Sunoco agreed to sell Toledo Refinery for $400 million.[/R]

U.S. stocks opened lower after employers’ added less than expected staff in November and unemployment rate increased to 9.8% from 9.6% in October. European markets traded lower after the release of employment data.

China is expected to pursue prudent monetary policy that is expected to restrict lending and lead to higher interest rates.

Non-farm Payrolls Rise

Employment in the U.S. increased by much less than anticipated in the month of November, according to a report released by the Labor Department today.

The report showed that non-farm payroll employment increased 39,000 jobs in November following an upwardly revised increase of 172,000 jobs in October.

Despite the increase in employment, the unemployment rate ticked up to 9.8% in November from 9.6% in October.

Pending Home Sales Surge

Pending home sales unexpectedly jumped in the month of October, according to a report released by the National Association of Realtors. The NAR said its pending home sales index increased 10.4% in October after declining 1.8% in September.

US Fed Officials Comments

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

Federal Reserve Bank of Philadelphia President Charles Plosser said he was ""still somewhat skeptical"" about the benefits of the U.S. central bank''s new round of bond buying, adding any benefits from the program are likely to be modest.

However, Federal Reserve Bank of St. Louis President James Bullard defended the central bank''s decision to restart its quantitative easing program, saying the economic benefits of more asset purchases outweighed the risks.

A Federal Reserve Governor Elizabeth Duke said the recent period of economic weakness is causing U.S. consumers to shift to debit cards from credit cards as a source of payment.

Walter Energy and Western Coal Merges

Walter Energy, Inc. and Western Coal Corp. announced a deal by which Walter Energy will acquire all of the outstanding common shares of Western Coal for a total enterprise value of C$3.3 billion, net of cash on the balance sheet for Western Coal.

The transaction is expected to create the world''s leading, publicly traded, ""pure-play"" metallurgical coal producer with total coal reserves of about 385 million tons.

Amazon.com Invests in LivingSocial

LivingSocial secured a $175 million investment from Amazon.com Inc., and an additional $8 million from Lightspeed Venture Partners. Because of LivingSocial''s rapid expansion, the company is currently booking revenues of more than $1 million a day on average and is projected to book well over $500 million in revenue in 2011.

Groupon Inc based in Chicago, Illinois is in talks to be acquired by Google Inc for as much as $6 billion.

Madoff Trustee Sues JPMorgan

Irving Picard, the court-appointed trustee overseeing the liquidation of Bernard Madoff''s estate sued JPMorgan Chase & Co. for $6.4 billion, alleging that the bank played a central role in enabling Madoff''s fraud.

Irving Picard wants to reclaim $1 billion in fees and receive $5.4 billion in damages from JP Morgan for its alleged assistance in fraudster Madoff’s $65 billion Ponzi scheme.

Sunoco Sells Toledo Refinery

Sunoco, Inc., the oil refiner agreed to sell its 170,000 barrel-per-day refinery in Toledo, Ohio to Toledo Refining Company LLC, a wholly owned subsidiary of PBF Holding Company LLC for about $400 million in cash and notes.

The selling price consists of $200 million in cash and a $200 million two-year note. In addition, the purchase agreement includes a participation payment of up to $125 million based on the future profitability of the refinery.

Earnings Review

Big Lots, Inc. ((BIG)), the closeout retailer reported third quarter net sales increased 2% to $1.06 billion from last year''s $1.04 billion. Net income in the quarter decreased 42% to $17.69 million or 23 cents per diluted share from prior year''s net income of $30.33 million or 37 cents per share, mainly reflecting higher expenses.

Coldwater Creek Inc. ((CWTR)), the specialty retailer reported third quarter net sales declined 13% to $232.4 million from $266.7 million in the prior-year quarter. Net loss in the quarter narrowed 68% to $10.9 million or 12 cents per diluted share, compared to net loss of $34.0 million or 37 cents per share in the year-ago quarter.

Novell, Inc. ((NOVL)), the software solutions provider reported fourth quarter net revenue declined 4.2% to $207 million from $216 million in the same quarter last year. Net income generated in the quarter was $322 million or 91 cents per diluted share, compared to a net loss of $256 million or 74 cents per share in the prior-year quarter, helped by non-cash tax provision benefits, and lower operating expenses.

For the fiscal year 2010, revenue decreased 6% to $812 million from $862 million a year ago. Annual net income was $378 million or $1.07 per share, compared to a net loss of $213 million or 0.62 per share in the previous year.

Owens & Minor, Inc. ((OMI)), the distributor of medical and surgical supplies to the acute-care market provided the company''s financial outlook for 2011 at its annual Investor Day meeting. For 2011, the company is targeting revenue growth in a range of 3% to 5%, from 2010 and net income per diluted share in a range of $1.95 to $2.10.

Phillips-Van Heusen Corporation ((PVH)), the apparel maker said third quarter total revenue more than doubled 118% to $1.52 billion from $697.44 million in the same quarter last year on solid contribution from Tommy Hilfiger that was acquired in May. Net income in the quarter rose 95% to $111.3 million or $1.55 per share compared to net income of $57.0 million or $1.08 per share in the prior-year quarter.

Quanex Building Products Corporation ((NX)), the provider of engineered products and aluminum sheet products reported fourth quarter net sales increased 14% to $222.30 million from $194.94 million in the year-ago quarter. Net income in the quarter declined 46% to $8.31 million or 22 cents per diluted share compared to net income of $15.33 million or 41 cents per share in the year-ago quarter.

Net sales for fiscal year 2010 rose 36% to $798.31 million from $585.01 million a year ago. For, the year net income was $23.10 million or $0.61 per share compared to net loss of $137.09 million or $3.67 per share in the prior year.

Royal Bank of Canada ((RY)), the financial services provider reported fourth quarter revenue declined 3% to C$7.20 billion from C$7.43 billion a year ago. Net in the quarter fell 8% to C$1.06 billion or C$0.74 per share, compared with net income of C$1.15 billion or C$0.82 per share last year hurt by a loss from the sale of Liberty Life Insurance.

VeriFone Systems, Inc. ((PAY)), the electronic payment solutions company reported fourth quarter net revenues rose 26.7% to $276 million from $217.8 million a year earlier. Net income generated in the quarter was $49.4 million or 55 cents per diluted share compared with loss of $2.1 million or 3 cents per share a year earlier.

For fiscal year 2010, the company reported revenues increased to $1 billion from $845 million. Net income in the period was $98.8 million or $1.13 per share compared with a loss of $157.4 million or $1.86 per share in the prior year.