U.S. Retail Sales, Producer Price Index Rise

Arthi Gupta
14 Dec, 2010
New York City

U.S. stocks traded sideways ahead of the last Fed meeting in the year. U.S. retail sales and PPI rose more than anticipated in November. HCP agreed to acquire real estate assets of HCR ManorCare for $6.1 billion. Regal Beloit agreed to acquire electric motor division of A.O. Smith for $875 million.

[R]9:35 AM New York – U.S. stocks traded sideways ahead of the last Fed meeting in the year. U.S. retail sales and PPI rose more than anticipated in November. HCP agreed to acquire real estate assets of HCR ManorCare for $6.1 billion. Regal Beloit agreed to acquire electric motor division of A.O. Smith for $875 million.[/R]

Asian markets rose on optimism of global economic recovery and European markets declined.

The Federal Open Market Committee will be convening a 1-day meeting today to review the developments following its $600 billion asset purchase program and interest rate decision.

U.S. Retail Sales, PPI Rise

U.S. retail sales increased by more than anticipated in the month of November, according to a report released by the Commerce Department.

The report showed that retail sales rose 0.8% in November following an upwardly revised 1.7% increase in October.

Excluding a 0.8% drop in sales by motor vehicle and parts dealers, retail sales increased 1.2% in November compared to a revised 0.8% increase in October.

The U.S. Labor Department said its producer price index increased 0.8% in November after rising 0.4% in each of the two previous months, with energy prices showing another substantial increase in the month of November

Excluding the increase in energy prices as well as an increase in food prices, the core producer price index increased 0.3% in November compared to a 0.6% drop in October.

IATA Revises Outlook

The International Air Transport Association revised its industry outlook for 2010 to a net profit of $15.1 billion, from the $8.9 billion forecast in September.

IATA also revised upwards its projections for 2011 to a net industry profit of $9.1 billion, from the $5.3 billion forecast in September.

IATA noted that net margins remained weak at 2.7% for 2010 and added that net margins will fall to 1.5% in 2011.

HCP Acquires Assets of HCR ManorCare

HCP, Inc., the real estate investment trust agreed to acquire the real estate assets of privately-owned HCR ManorCare, Inc. for a total consideration of $6.1 billion in cash and stock.

The total consideration consists of $3.528 billion in cash, $1.72 billion reinvested from the payoff of HCP''s existing debt investments in HCR ManorCare, and $852 million in HCP common stock.

Regal Beloit Acquires Electrical Products

Regal Beloit Corporation entered into an agreement to acquire 100% of the stock and assets of the Electrical Products Company from A.O. Smith Corporation. The total consideration for the transaction is approximately $875 million, including $700 million of cash and approximately $175 million in shares of Regal Beloit common stock.

Franco-Nevada Buys Gold Wheaton

Franco-Nevada Corp., the mineral royalty company agreed to acquire Gold Wheaton Gold Corp. for about C$830 million, or $825.71 million, in a stock and cash deal.

Under the terms of a binding letter agreement, the transaction Gold Wheaton’s common shareholders will receive C$5.20 per share, payable 60% in shares and 40% in cash.

BP Sells Pakistan Assets to United Energy Group

BP plc, the British international oil and gas explorer agreed to sell almost all of its exploration and production assets in Pakistan to China-based United Energy Group Limited for $775 million. The sale is part of BP''s plan to divest up to $30 billion of assets by the end of 2011.

Earnings Review

Best Buy Co., Inc. ((BBY)), the specialty retailer of consumer electronics stated third quarter revenue decreased 1.1% to $11.89 billion from $12.02 billion in the comparable period. Net earnings in the quarter slipped 4.4% to $217 million from $227 million a year ago. However, earnings per share for the quarter increased to $0.54 from $0.53 in the previous year.

Edwards Lifesciences Corp. ((EW)), the medical devices maker estimated fiscal year 2011 net income growth of 6% to 8% and underlying sales growth of 11% to 15%.

FactSet Research Systems Inc. ((FDS)), the provider of global financial and economic information reported first quarter revenues climbed 12% to $173.29 million from $155.24 million in the prior year. Net income in the quarter rose 15% to $41.60 million or 88 cents per diluted share, compared to net income of $36.14 million or 74 cents per share in the prior year.

Hexcel Corporation ((HXL)), the defense contractor provided its guidance for fiscal year 2011. Excluding one-time items, earnings for 2011 are estimated to range from $0.90 to $0.98 per share and full-year sales are anticipated in the range of $1.22 billion to $1.30 billion.

Sanderson Farms, Inc. ((SAFM)), the poultry processor said fourth quarter net sales increased 13% to $529.1 million from $469.0 million for the same period last year. Net income for the quarter surged 141% to $47.8 million or $2.08 per diluted share, compared to net income of $19.8 million or 95 cents per share in the year-ago period.

Orvana Minerals Corporation ((ORV.TO)), the Canada-based gold producer reported fiscal year 2010 revenues fell 42% to C$32.3 million from C$56.0 million a year earlier. The company posted net loss of C$2.4 million or C$0.02 per share compared with net income of C$13.4 million or C$0.12 per share last year.