U.S. GDP Expands 2.6%; U.S. Revises Internet Access Rules

Arthi Gupta
22 Dec, 2010
New York City

U.S. stock futures declined after third quarter GDP expanded at 2.6% but mortgage refinancing activity fell. TD Bank acquired Chrysler Financial for $6.3 billion. Jacobs Engineering agreed to buy Aker Solutions'' business unit for $675 million. Teradata agreed to acquire Aprimo for $525 million.

[R]9:30 AM New York – U.S. stock futures declined after third quarter GDP expanded at 2.6% but mortgage refinancing activity fell. TD Bank acquired Chrysler Financial for $6.3 billion. Jacobs Engineering agreed to buy Aker Solutions'' business unit for $675 million. Teradata agreed to acquire Aprimo for $525 million.[/R]

U.S. stock futures declined after mortgage and refinancing activity declined and Asian and European markets traded mixed. The third quarter GDP expanded at 2.6% ahead of widely expected growth of 2.5% and economists also lifted the estimate for the current quarterly growth.

U.S. Q3 GDP Expands

U.S. economy expanded at 2.6% in the third quarter after surging at 1.7% in the second. The price index of gross domestic purchases increased 0.4% in the quarter compared to 0.8% in the second. Change in private inventories added 1.61% compared to 0.82% in the second.

For the week ending December 17, the Mortgage Bankers Association''s Weekly Mortgage Applications Survey showed overall mortgage demand in the U.S. decreased 18.6% on a seasonally adjusted basis from one week earlier.

Refinancing applications dropped 24.6% from the previous week. The MBA''s refinancing index is at its lowest level since the week ending April 30.

Purchase applications fell 2.5% from one week earlier.

FCC Approves Net Neutrality Rules

In a move intended to ensure equal access to the Internet, a divided Federal Communications Commission voted on Tuesday in favor of adopting net neutrality rules.

Under the rules, Internet service providers are prohibited from blocking access to lawful websites or apps that compete with their services or slowdown the access to data intensive applications or Web sites.

TD Bank Acquires Chrysler Financial

Toronto-Dominion Bank, the Canadian lender announced a deal with Cerberus Capital Management, L.P. to acquire auto lender Chrysler Financial for about $6.3 billion in cash. TD stated that the purchase is comprised of net assets of $5.9 billion and about $400 million in goodwill.

Jacobs Engineering Buys Aker Solutions'' Business Unit

Jacobs Engineering Group Inc., the technical services provider reached an agreement with Norwegian oilfield engineering services company Aker Solutions ASA to purchase several operations within Aker''s process and construction business unit. The cash purchase price is estimated to be $675 million, adjusted for cash and debt acquired.

Deutsche Bank Resolves U.S. Fraud Probe

Deutsche Bank AG, Germany''s investment bank agreed to pay $553.6 million to settle a U.S. criminal investigation related to its participation in financial transactions between 1996 and 2002 which furthered fraudulent tax shelters that generated billions of dollars in U.S. tax losses. The bank also admitted criminal wrongdoing.

Teradata Acquires Aprimo

Teradata Corporation, the world’s largest company solely focused on data warehousing and business analytics, today announced the signing of an agreement to acquire Aprimo, the cloud-based integrated marketing software for approximately $525 million including the assumption of approximately $25 million of cash at closing.

Earnings Review

Carnival Corporation ((CCL)), the cruise operator reported fourth quarter revenues increased 7% to $3.50 billion from $3.28 billion in the same quarter last year. Net earnings in the quarter soared 28.5% to $248 million or 31 cents per diluted share, compared to net earnings of $193 million or 24 cents per share in the prior-year period.

For fiscal year 2010, revenues grew 7.4% to $14.5 billion from $13.5 billion in the previous year. Net income for the full year rose 11.1% to $2.0 billion or $2.47 per share, compared to net income of $1.8 billion or $2.24 per share in the prior year.

Cintas Corporation ((CTAS)), the business services company said second quarter revenue grew 5.9% to $936.5 million from $884.5 million in the same quarter a year ago. Net income in the quarter fell 2.3% to $55.8 million from $57.17 million last year. However, on a per share basis, earnings rose to $0.38 from $0.37 reflecting lower share count for the quarter.

Hovnanian Enterprises, Inc. ((HOV)), the home builder reported fourth quarter total revenues dropped 19.3% to $353.01 million from $437.39 million in the same quarter a year ago. Net loss in the quarter narrowed 47.3% to $132.11 million or $1.68 per share, compared to a net loss of $250.76 million or $3.21 per share in the year-ago quarter.

For the full year, total revenues decreased 14% to $1.37 billion from $1.59 billion in the prior year. Net income generated for the full year was $2.58 million or $0.03 per share, compared with a net loss of $716.71 million or $9.16 per share in the prior year.

Navistar International Corporation ((NAV)), the trucks and other vehicles maker reported fourth quarter sales and revenues rose 2.4% to $3.37 billion, from $3.29 billion last year. Net profit in the quarter declined 55% to $39 million or 54 cents per diluted share compared to net profit of $86 million or $1.19 per share a year ago.

Nike, Inc. ((NKE)), the maker of athletic shoes and apparel said second quarter revenues increased 10% to $4.84 billion from $4.41 billion in the same quarter last year. Net income in the quarter rose 22% to $457 million or 94 cents per diluted share, compared to net income $375 million or 76 cents per share for the year-ago quarter.

Red Hat, Inc. ((RHT)), the open source software solutions provider reported third quarter total revenues increased 21% to $235.58 million from $194.35 million last year. Net income in the quarter surged 59% to $26.02 million or 13 cents per diluted share, compared to net income of $16.41 million or 8 cents per share in the previous year.

Walgreen Company ((WAG)), the drugstore chain operator stated first quarter net sales rose 6% to a record $17.34 billion from $16.36 billion in the same quarter last year. Net earnings in the quarter increased 19% to $580 million or 62 cents per diluted share, compared to net earnings of $489 million or 49 cents per share in the prior-year quarter.