U.S. Bonds Yields Rise Ahead of Auction; J&J Bids for Crucell

Arthi Gupta
08 Dec, 2010
New York City

U.S. stocks trade sideways after mortgage and refinancing activity fell. BofA agreed to pay $137 million to settle municipal bidding practices probe. Johnson & Johnson launched

[R]9:35 AM New York – U.S. stocks trade sideways after mortgage and refinancing activity fell. BofA agreed to pay $137 million to settle municipal bidding practices probe. Johnson & Johnson launched €24.75 a share offer to acquire Crucell. Salesforce.com agreed to buy Heroku for $212 million.[/R]

U.S. stocks trade sideways and markets in Europe are lackluster in the late afternoon and in Asia closed mixed. Japan index closed at a seven-month high on the expectations of rising exports and China and India reported surging sale of autos in November.

U.S. Treasury yields were on the rise ahead of the 10-year Treasury bonds auction of $21 billion today.

Apax Partners LLP is in direct talks with ISS Holding A/S for as much as €6.4 billion. The talks confirmed by two London based bankers were first reported by Bloomberg News and the company has indicated that it has been looking for strategic alternatives including a public offering.

The European Union finance ministers agreed to conduct a new round of more stringent stress tests on the banking sector from February next year to assess the health of the banks. The first stress tests conducted before the Ireland bailout indicated banks were “healthy” and since then the banks peripheral nations faced rising credit qualities and losses.

The new test will take account of liquidity pressures and will be even more comprehensive than the last examination in July, EU economics and monetary affairs commissioner Olli Rehn was quoted as saying after a meeting of EU finance ministers in Brussels.

Brian Lenihan, Ireland’s Finance Minister unveiled a historic €6 billion austerity package as the country seeks to receive loans from the European Union and International Monetary Fund.

The budget measures included departmental spending cuts, a reduction in public sector pensions, and a widening in the tax net in an attempt to bridge a budget deficit of 11.6% of gross domestic product. “The scale of this adjustment is demanding, but it demonstrates the seriousness of our intent,” as quoted in the UK based Times.

U.S. Consumer Credit Increases

Consumer credit in the U.S. unexpectedly increased by about $3.4 billion in October following a revised $1.2 billion increase in September, according to a report released by the Federal Reserve on Tuesday.

The unexpected increase in consumer credit was largely due to a notable increase in non-revolving credit, such as car loans, which rose $9.0 billion in October following a revised increase of $10 billion in September.

U.S. Mortgage Applications Fall

National mortgage loan delinquencies will drop nearly 20% by the end of next year, according to industry data released on Tuesday.

TransUnion said the ratio of borrowers 60 or more days past due is forecast to fall to 4.98% by the end of 2011 from an expected 6.21% at the end of 2010.

U.S. mortgage applications declined slightly last week, according to the Mortgage Bankers Association''s latest survey. For the week ending December 3, the Market Composite Index, a measure of mortgage loan application volume, declined 0.9% on a seasonally adjusted basis from one week earlier.

Refinancing activity fell 1.4% from the previous week. The four-week average for refinancing applications dropped 10.9%.

BofA Settles Municipal Bid Rigging Probe

Bank of America Corp. agreed to pay $137 million to settle probes by state and federal authorities into its conduct in the bidding process in connection with the investment of proceeds of municipal securities, the U.S. Securities and Exchange Commission said.

J&J Launches Public Offer to Acquire Crucell

Johnson & Johnson''s subsidiary JJC Acquisition Company B.V. is launching the €24.75 per share offer for all shares of biopharmaceutical company Crucell NV. The offer represents a premium of 58% over the €15.70 closing price of the ordinary shares as of September 16, the day before both the companies announced they were in negotiations for the offer.

Fortune Brands to Separate into Three Businesses

Fortune Brands, Inc. announced that its Board unanimously approved in principle a separation of the company''s three strong consumer businesses - distilled spirits, home and security, and golf products.

The company said each business has “leading consumer brands and excellent growth and returns potential,” and is now “very well positioned” to create a “significant value” for shareholders on its own.

Mattel Acquires Phase 10 and iMAGiNiff Games

Mattel, Inc. acquired the license for the exclusive, worldwide rights to classic rummy style card game Phase 10 from Fundex Games, Ltd. and in a separate transaction, acquired the rights to party game favorite iMAGiNiff from Blue Opal Australia Pty Ltd.

Salesforce.com Agrees to Buy Heroku

Salesforce.com agreed to buy San Francisco-based Heroku for around $212 million in cash and hopes to increase its share in cloud services market.

Heroku is the leading Ruby application platform-as-a-service, powering more than 105,000 next-generation social and mobile cloud applications.

Earnings Review

3M Company ((MMM)), the diversified technology company confirmed earnings for fiscal 2010 to range between $5.59 and $5.63 per share.

For fiscal year 2011, the company said it expects earnings per share of between $5.90 and $6.10, including a $0.27 per share year-on-year increase in pension expense and sales to be $29 billion to $30.5 billion, with organic sales volumes growing 5.5% to 7.5%.

Canadian Western Bank ((CWB.TO)), the financial services provider reported fourth quarter revenue grew 24% to C$111.57 million from C$90.10 million in the same period last year. Net income for the quarter increased 29% to C$39.11 million or C$0.48 per share from C$30.36 million or C$0.39 per share in the prior-year period.

For fiscal year 2010, revenues rose 32% to C$434.26 million from C$327.97 million last year. Net income for the year surged 54% to C$163.62 million or C$2.05 per share from C$106.29 million or C$1.47 per share in the previous year.

Casey''s General Stores, Inc. ((CASY)), the convenience stores operator said second quarter total revenue increased 17.4% to $1.35 billion from $1.15 billion last year. Net earnings for the quarter declined 35.4% to $21.69 million or 51 cents per diluted share, compared to net earnings of $33.59 million or 66 cents per share in the previous year.

Costco Wholesale Corporation ((COST)), the membership warehouse club operator reported first quarter net sales increased 11% to $18.82 billion from $16.92 billion in the same quarter last year. Net income in the quarter rose 17.3% to $312 million or 71 cents per diluted share compared to net income of $266 million or 60 cents per share last year.

H&R Block, Inc. ((HRB)), the tax consulting service provider said second quarter total revenues declined 1.0% to $322.9 million from $326.9 million in the same quarter last year. Net loss in the quarter narrowed 15.2% to $109.0 million or 36 cents per diluted share, compared to a net loss of $128.6 million or 38 cents per share in the prior-year quarter.

Korn/Ferry International ((KFY)), the talent management solutions provider reported second quarter total revenue grew 35% to $193.20 million from $143.55 million generated in last year. Net income in the quarter surged 398% to $13.65 million or 30 cents per diluted share, compared to net income of $2.74 million or 6 cents per share in the prior year.

McDonald''s Corporation ((MCD)) said global comparable sales rose 4.8% in November.

Texas Instruments Incorporated ((TXN)), the semiconductor company narrowed its earnings and revenue outlook for the fourth quarter of fiscal 2010 in a mid-quarter update. The company stated quarterly earnings are currently estimated to range from $0.61 to $0.65 per share and revenues for the fourth quarter are currently expected to range from $3.43 billion to $3.57 billion.

The Cooper Companies, Inc. ((COO)), the specialty medical products company reported fourth quarter revenues rose 11% to $313.3 million from $283.4 million a year earlier. Net income in the quarter rose 60% to $48.2 million or $1.03 per share from $30.1 million or 66 cents per share last year.

For the full year, revenues rose 6.5% to $1.15 billion from $1.08 billion. Net income in the period increased 12.2% to $112.8 million or $2.43 per share from $100.5 million or $2.21 per share the prior year.

The Men''s Wearhouse, Inc. ((MW)), the specialty retailer of men’s suits said third quarter net sales rose 19% to $550.10 million from $462.02 million in the same quarter last year, helped by strong growth in clothing products and Tuxedo rentals. Net income in the quarter surged 31% to $25.3 million or 47 cents per diluted share, compared to net income of $19.3 million or 36 cents per share for the year-ago quarter.

The New York Times Company ((NYT)), the media firm estimates adjusted operating profit for the full year to improve from last year, helped by cost control, as print advertising trends have improved and the company is witnessing growth in digital advertising.

Vail Resorts, Inc. ((MTN)), the mountain resorts operator reported first quarter net revenue soared 190.3% to $234.42 million from $80.76 million in the prior year. Net loss in the quarter widened 4.5% to $43.02 million or $1.20 per share from $41.17 million or $1.14 per share in the previous year.