U.S. Stocks Struggle; Novartis Completes $12.9 B Alcon Merger

Arthi Gupta
15 Dec, 2010
New York City

U.S. stocks fell after mortgage refinancing declined but inflation rose. The U.S. Senate voted in favor of a bill to extend the Bush-era tax cuts. HP inked $1.4 billion infrastructure technology outsourcing contract with E.ON. Simon Property raised bid offer to

[R]9:35 AM New York – U.S. stocks fell after mortgage refinancing declined but inflation rose. The U.S. Senate voted in favor of a bill to extend the Bush-era tax cuts. HP inked $1.4 billion infrastructure technology outsourcing contract with E.ON. Simon Property raised bid offer to £3 billion for UK-based CSC.[/R]

World markets traded lower after Spain was warned of a possible downgrade by Moody’s leading to fears of another sovereign debt crisis. Greece labor unions called for a general strike.

The benchmark index in Spain dropped 1.8% after the rating agency raised its concerns that the country may face a difficult time in raising funds and regional governments and smaller banks are exposed to real estate collapse in the country.

U.S. Senate Votes in Favor of Tax Cut Bill

The U.S. Senate voted in favor of a bill to extend the Bush-era tax cuts, which includes an extension of unemployment benefits for the long-term unemployed.

The Senate voted 83 to 15 in favor of a motion to cut off debate on the bill, paving the way for a final vote on the bill within the next few days.

U.S. Mortgage Activities Fall, CPI Rises

The U.S. Mortgage Bankers Association's seasonally adjusted composite index of mortgage application activity declined 2.3% in the week ended December 10, as interest rates soared to six months high.

Refinancing declined 0.7% for a fifth straight week.

The U.S. Labor Department said its consumer price index edged higher 0.1% in November following an unrevised 0.2% increase in October.

Core consumer prices, which exclude food and energy prices, also rose 0.1% in November.

HP Inks Contract with E.ON

E.ON AG, Germany based utility company signed a five-year, $1.4 billion infrastructure technology outsourcing services contract with a subsidiary of Hewlett Packard.

E.ON has chosen HP to provide data center operations and workplace services in support of its global growth.

Dynegy Agrees for Takeover by Icahn

Dynegy Inc., the electric utility agreed to be acquired by Icahn Enterprises, L.P. for $5.50 per share in cash, or a total of about $665 million. Dynegy has approximately $3.95 billion of outstanding debt net of cash.

Novartis Completes Alcon Merger

Novartis AG, the Swiss pharmaceutical firm announced a definitive deal to merge with eye care company Alcon, Inc. for a total consideration of $12.9 billion or $168 per share for the Alcon shares it does not currently own. The total merger consideration comprises up to 215 million Novartis shares and a potential contingent value amount.

Agrium Sells AWB's Commodity Management Businesses

Agrium Inc., the Canadian crop nutrients maker entered into a deal with privately held Cargill, Inc., pursuant to which Cargill will acquire a majority of the commodity management businesses of Australian grain marketer AWB Ltd.

Simon Property Raises Bid Offer

Simon Property Group, Inc., the U.S.'s largest shopping-mall owner proposed a 425 pence per shares or about £3 billion in cash for the shares of UK-based regional mall operator, Capital Shopping Centres Group Plc.

Yahoo! Cuts Workforce

Yahoo! Inc. planned to reduce about 4% of its total workforce or about 600 jobs, in an effort to boost its revenue growth and margin expansion amid. The Internet directory and portal is struggling to develop new products.

Earnings Review

Broadcom Corporation ((BRCM)), the provider of semiconductors for wired and wireless communications estimates fourth quarter net revenue at the top end of its prior estimate at $1.9 billion.

Charles River Laboratories International, Inc. ((CRL)), the provider of drug discovery and development services said it now estimates 2010 GAAP earnings per share to range between $0.28 and $0.33 from its earlier guidance of $0.25 to $0.30.

In addition, the company revised down its sales forecast to $1,115 million to $1,125 million from its prior view of $1,135 million to $1,145 million.

Cubist Pharmaceuticals, Inc. ((CBST)), the biopharmaceutical company anticipates total net revenues for 2010 in the range of $634 million to $640 million. The company lowered its revenue guidance for 2010 based on lowered expectation U.S. net product revenues from its antibiotic Cubicin and cost pressures in U.S. hospital continue to impact sales of branded therapies in the hospital setting.

First Solar, Inc. ((FSLR)), the world's largest maker of thin-film solar modules said it estimates full-year 2011 net sales to be the range of $3.7 billion to $3.9 billion and earnings to be in the range of $8.75 to $9.50 a share. Operating income for the full year is expected to be $875 million to $975 million.

General Electric Company ((GE)), the diversified technology, media and financial services company said it expects to deliver solid earnings growth for fiscal year 2011 and thereafter, as it sees higher demand for its industrial products.

Joy Global Inc. ((JOYG)), the worldwide mining machinery and services company reported fourth quarter net sales grew 9% to $1.05 billion from $963.53 million in the fourth quarter of fiscal 2009, primarily due to greater aftermarket sales across both divisions. Net income in the quarter increased 18% to $146.34 million or $1.39 per share compared to net income of $124.02 million or $1.20 per share last year.

Telus Corporation ((TU)), the Canada-based telecommunication products provider confirmed its guidance range for fiscal 2010. The company continues to expect fiscal 2010 earnings of C$3.10 to C$3.30 per share, revenues of C$9.7 billion to C$9.95 billion and EBITDA of C$3.6 billion to C$3.7 billion.

The Boston Beer Company, Inc. ((SAM)), the low alcohol beverages producer lifted its earnings outlook for fiscal year 2010. The company estimates 2010 earnings per share to range between $3.30 and $3.60.