U.S. Non-Farm Payroll Rises; Unemployment Rate Falls To 9.4%

Arthi Gupta
07 Jan, 2011
New York City

The U.S. indexes traded sideways after non-farm payrolls rose less than estimated. U.S. Defense Secretary Robert Gates pledged defense budget cuts. AIG agreed to issue 75 million warrants as dividend. Hologic acquired Interlace Medical for $125 million.

[R]9:35 AM New York – The U.S. indexes traded sideways after non-farm payrolls rose less than estimated. U.S. Defense Secretary Robert Gates pledged defense budget cuts. AIG agreed to issue 75 million warrants as dividend. Hologic acquired Interlace Medical for $125 million.[/R]

World markets declined after U.S. non-farm payroll employment rose less than estimated in December.

U.S. Treasury Secretary Timothy Geithner warned that the U.S. could reach its debt ceiling as early as March 31st and urging Congress to once again raise the debt limit or risk the nation defaulting on its obligations.

Geithner said that the outstanding debt that is subject to the limit currently stands at $13.95 trillion, leaving approximately $335 billion of ""headroom"" beneath the current debt limit of $14.29 trillion, which was established in February of 2010.

The People''s Bank of China on Thursday said it will give higher priority to curb inflation this year. The central bank said it will effectively manage liquidity and monetary conditions in order to control fast growth in prices.

U.S. Employment Rises, Unemployment Rate Falls

The U.S. Labor Department said non-farm payroll employment increased by 103,000 jobs in December following an upwardly revised increase of 71,000 jobs in November.

The report also showed that the unemployment rate fell to 9.4% in December from 9.8% in November.

Gates Announces Defense Budget Cuts

U.S. Defense Secretary Robert Gates on Thursday announced plans to reduce Pentagon''s budget by $78 billion over the next five years, including steep cuts in troop levels and scrapping of several expensive weapons programs.

The proposed cuts which will not come into force until 2015 include reducing the size of the Army and Marine Corps by 27,000 and 15,000 to 20,000 respectively.

In addition, Gates also pledged to save $100 billion from non-war defense spending over the next five years.

AIG Issues Warrants as Dividend

American International Group, Inc. announced that its board of directors conditionally declared a dividend of approximately 75 million warrants to purchase shares of AIG common stock at $45 per share, as part of a series of integrated transactions to recapitalize the company. The Treasury, however, will not receive warrants.

The warrants will be distributed on January 19 to AIG''s shareholders of record as of January 13.

Sara Lee Considers Splitting Business

Sara Lee Corp., the packaged food company is considering splitting itself into two after it rejected a more than $10 billion takeover offer from Brazilian beef producer JBS SA for the whole company, according to media reports on Thursday.

Sara Lee may possibly look to sell its beverage and meat businesses separately. The move to split the company into two is seen as an action to make it more attractive to potential buyers.

Salesforce.com Acquires Dimdim

Salesforce.com, the enterprise cloud computing company, completed its acquisition of Dimdim for approximately $31 million in cash, net of cash acquired.

Citigroup Proposes Selling CitiFinancial

Citigroup Inc., the financial services giant is looking for buyers for its U.S. consumer lending arm CitiFinancial, FT.com reported today. The bank had started contacting potential buyers for the business after months of restructuring, the report said citing people close to the situation.

Hologic Purchases Interlace Medical

Hologic, Inc. acquired Interlace Medical, Inc., the developer and manufacturer of the MyoSure hysteroscopic tissue removal system. Interlace''s operations will be integrated within Hologic''s GYN Surgical Products division.

The purchase price for the transaction was $125 million in cash, subject to adjustment, plus two annual contingent payments.

Earnings Review

Constellation Brands, Inc. ((STZ)), the wine and spirit distributor reported third quarter net sales declined 2% to $966.4 million from $987.7 million in the comparable period last year. Net income in the quarter surged 216% to $139.3 million or 65 cents per diluted share, compared with net income of $44.1 million or 20 cents per share last year.

Global Payments Inc. ((GPN)), the provider of electronic payments transaction processing reported second quarter revenues increased 8% to $443.53 million from $408.95 million last year. Net income for the quarter declined 15% to $53.50 million or 67 cents per diluted share, compared to net income of $62.83 million or 76 cents per share in the previous year.

IHS Inc. ((IHS)), the critical information and insight product service provider said fourth quarter revenue increased 15% to $296 million from $257 million in the same quarter last year. Net income in the quarter edged higher 0.7% to $41.5 million or 64 cents per diluted share, compared to net income of $41.2 million or $0.64 per share in the prior-year quarter.

Immucor, Inc. ((BLUD)), the blood-testing equipments maker said second quarter net sales fell 1% to $81.55 million from $82.57 million in the same quarter last year. Net income in the quarter rose 7.1% to $21.1 million or 30 cents per diluted share, compared to net income of $19.7 million or 28 cents per share for the year-ago quarter.

KB Home ((KBH)), the homebuilder reported fourth quarter revenues declined 33% to $451.0 million, from $674.6 million in the prior year. Net income in the quarter plunged 83% to $17.44 million or 23 cents per diluted share, compared to net income of $100.72 million or $1.31 per share a year ago.

Monsanto Company ((MON)), the provider of agricultural products for farmers said first quarter net sales grew 8% to $1.83 billion in the quarter from $1.69 billion a year ago. Net income generated in the quarter was $6 million or 1 cent per diluted share, compared with a loss of $19 million or 3 cents per share a year earlier.

Samsung Electronics Co., Ltd., the provider of consumer electronic products said that it estimates operating profit for the fourth quarter to be 3.0 trillion won or about $2.67 billion. The forecast is 12.79% lower than the company''s year-ago fourth quarter operating profit of 3.44 trillion won and a 38.27% drop from fiscal 2010 third quarter operating profit of 4.86 trillion won.

The company estimates sales for the quarter to be 41 trillion won, as against the prior-year quarter''s sales of 39.25 trillion won.

The Shaw Group Inc. ((SHAW)), the engineering and construction company said first quarter revenues declined 17% to $1.54 billion from $1.85 billion generated in the first quarter last year. Net loss in the quarter narrowed 20% to $16.4 million or 19 cents per diluted share, compared to net loss of $20.5 million or 25 cents per share in prior-year quarter.