U.S. Jobless Claims Drop; Chinese IPOs Surge on Debut

Arthi Gupta
09 Dec, 2010
New York City

U.S. stocks gained after weekly jobless claims fell 17,000. AIG filed master transaction agreement to repay bailout. Two Chinese IPOs surged in New York debut. XenoPort priced 4 million shares at $7.15 a share.

[R]9:35 AM New York – U.S. stocks gained after weekly jobless claims fell 17,000. AIG filed master transaction agreement to repay bailout. Two Chinese IPOs surged in New York debut. XenoPort priced 4 million shares at $7.15 a share.[/R]

U.S. stocks rose after weekly jobless claims fell more than estimated and Asian and European markets traded mixed on economic concerns.

U.S. Weekly Jobless Claims Drop

First-time claims for unemployment benefits in the U.S. fell by more than anticipated in the week ended December 4th, according to a report released by the Labor Department. The report showed that initial jobless claims fell to 421,000 from the previous week''s revised figure of 438,000.

The preliminary insured unemployment rate in the week ending November 27 changed to 3.2% from the prior week''s unrevised rate of 3.4%.

The Bank of England on Thursday maintained the size of the quantitative easing at £200 billion and left its key interest rate unchanged at a record low of at 0.5%.

The Bank of Korea left its benchmark base rate at 2.5% after delivering a quarter percentage point hike last month to contain inflation.

Japan''s economy expanded 1.1% in the third quarter of 2010 compared to the previous three months, the Cabinet Office said in its final report. On an annualized basis, gross domestic product expanded 4.5%.

The Australian Bureau of Statistics reported the country''s unemployment rate declined 0.2% in November to 5.2% and the number of employed Australians increased by 54,600 or 0.5% from October.

AIG Signs Master Transaction Agreement

American International Group, Inc. signed a master transaction agreement in order to repay its Federal Reserve credit line as it intends to be free from government ownership. The company owes about $20 billion to the Federal Reserve under the credit facility, which was created in 2008.

AIG plans to repay the amount from net cash proceeds of $27 billion following the sale of two non-U.S. life insurance units. The remaining net cash proceeds of about $7 billion will be distributed by the special purpose vehicles to the Federal Reserve, in accordance with the terms of the special purpose vehicles'' limited liability company agreements.

Chinese IPOs Surge in New York Listings

Youku.com Inc., a leading Chinese Internet television company’s initial public offering on December 8 raised approximately $203 million in gross proceeds after the company sold 15.8 million shares at $12.80 a piece.

E-Commerce China Dangdang Inc., the Chinese e-commerce company offered 17 million American Depositary shares at $16 per ADS as part of its initial public offering to raised more than $200 million in proceeds. Each ADS represents five Class A common shares.

XenoPort Prices IPO

XenoPort, Inc., the biopharmaceutical firm disclosed the pricing of an underwritten offering of 4 million shares of its common stock at a price to the public of $7.15 per share.

Morgan Stanley Sells Stake in CICC

Morgan Stanley received approval from Chinese authorities to sell its 34.3% stake in China International Capital Corp. The company said its stake will be sold to investors Kohlberg Kravis Roberts & Co., TPG Capital, Government of Singapore Investment Corp. Pte Ltd, and The Great Eastern Life Assurance Co. Limited.

Earnings Review

Diamond Foods, Inc. ((DMND)), the packaged food company reported first quarter net sales grew 40% to $252.5 million from $180.6 million in the year-ago period. Net income in the quarter dropped 5% to $14.21 million or 64 cents per diluted share, compared to net income of $14.93 million or 88 cents per share last year.

Forest City Enterprises, Inc. ((FCE.A)), the real estate company reported third quarter revenue slipped 0.3% to $303.3 million from $304.2 million in the prior-year period. Net income in the quarter widened 1050% to $50.6 million, or 33 cents a share, compared with a loss of $4.4 million, or 3 cents a share, in the same period last year.

Greif, Inc. ((GEF)), the industrial packaging products company reported fourth quarter net sales increased 31% to $993.9 million from $760.5 million last year. Net income in the quarter climbed 4% to $76.6 million or $1.30 per Class A share, compared to net income of $73.6 million or $1.25 per Class A share in the previous year.

SAIC, Inc. ((SAI)), the scientific, engineering and technology applications company said third quarter revenue rose 3.8% to $2.87 billion from $2.77 billion in the same quarter last year. Net income in the quarter surged 27% to $172 million or 46 cents per diluted share, compared to net income of $135 million or 34 cents per share for the year-ago quarter, driven by strong program execution and improved returns on fixed-price contracts.

Southwest Airlines Co. ((LUV)), the low-fare airline operator reported an increase in load factor for November, with traffic and capacity rising from last year. The airline''s load factor for the month of November rose 3.6 percentage points to 80.1% from the year-ago month''s 76.5%.

Traffic, measured in revenue passenger miles or RPMs, increased 10.7% to 6.51 billion from 5.88 billion in the same month last year. Capacity, measured in available seat miles or ASMs, grew 5.7% to 8.13 billion from last year''s 7.69 billion.

Spectra Energy Corp. ((SE)), the natural gas company said that it is on track to meet its financial goals for fiscal year 2010, including exceeding its earnings outlook for the year. In addition, the company projects a 15% increase in earnings per share for fiscal year 2011 and a 4% increase in the quarterly dividend, effective from the first quarter.

Transcontinental Inc. ((TCL_A.TO)), the Canadian printing and publishing company reported fourth quarter consolidated revenues were C$570 million, flat with the year-ago quarter. Net income in the quarter rose 3.2% to C$44.5 million or C$0.55 per share, compared to net income of C$43.1 million or C$0.53 per share last year.

Verint Systems Inc. ((VRNT)), the business software and services company reported third quarter revenues rose marginally to $186.64 million from $186.48 million last year. Net income in the quarter surged 81% to $17.58 million or 36 cents per diluted share, compared to net income of $9.7 million or 29 cents per share last year.