U.S. Stocks Flat; Apple Net Surges 78%, Goldman Net Falls 53%

Arthi Gupta
19 Jan, 2011
New York City

U.S. indexes traded sideways after Goldman Sachs reported 10% decline in revenues. Fairholme sold its stake in General Growth to Brookfield for $1.7 billion. Fluor awarded $3.5 billion contract by Santos. Apple profit surged 78%. Northern Trust and State Street quarterly net declined.

[R]9:00 AM New York – U.S. indexes traded sideways after Goldman Sachs reported 10% decline in revenues. Fairholme sold its stake in General Growth to Brookfield for $1.7 billion. Fluor awarded $3.5 billion contract by Santos. Apple profit surged 78%. Northern Trust and State Street quarterly net declined.[/R]

U.S. stocks traded sideways ahead of earnings and European markets traded higher. The dollar traded firm as Chinese President arrived in the U.S. for a four-day visit to discuss trade, currency and economy.

U.S. housing starts declined 4.3% in December but building permits soared 16.7%.

Asian markets rose on better-than-estimated earnings from Apple and IBM. Shanghai and Taiwan indexes rose after the earnings as most of the Apple gadgets are built in Asia.

U.S. Builder Confidence Remains Unchanged

U.S. Builder’s confidence index for newly built, single-family homes held unchanged at a relatively low level of 16 for a third consecutive month in January, according to the latest National Association of Home Builders/Wells Fargo Housing Market Index.

Economic optimism among US consumers is at its highest level in eight years, a fresh survey suggested on Tuesday.

A third of consumers now believe the economy is getting better, while 23% say it is worsening, according to the ABC News-Langer Research survey. The ten-point edge in optimism is the largest gap since March 2002.

U.S. Refinancing Activity Improves

The Mortgage Bankers Association''s seasonally adjusted index of mortgage application activity in the U.S. climbed 5% in the week ended January 14. The four week moving average for the seasonally adjusted Market Index rose 1.4%.

The Refinance Index increased 7.7% from the previous week. However, the seasonally adjusted Purchase Index decreased 1.9% from one week earlier.

The average contract interest rate for 30-year fixed-rate mortgages decreased to 4.77% from 4.78%.

Alcoa Signs MoU with China Power

Alcoa, Inc. and China Power Investment Corp. agreed to collaborate on a slew of aluminum and energy projects with a potential investment of about $7.5 billion over the next few years.

The Memorandum of Understanding between the two companies was signed in the presence of U.S. Secretary of Energy Steven Chu, Chinese Minister of Science and Technology Wan Gang, during the U.S. visit of the Chinese President Hu Jintao.

Fairholme Sells General Growth Stake

Fairholme Funds Inc., an investment fund, agreed to sell its entire holding of 113.3 million common shares in mall operator General Growth Properties, Inc. to Toronto-based Brookfield Asset Management Inc. for about $1.7 billion. The transaction value is based on the General Growth''s January 14 closing price of $15.10 per share.

Under the deal, Brookfield will pay about $804 million in cash and $907 million in Class A limited voting shares of the company valued at the January 14 closing stock price of $32.99.

Fluor Wins Santos'' GLNG Project Contract

Fluor Corp., the engineering and construction services provider said on Tuesday that it received an engineering, procurement and construction contract from Australian based Santos Ltd. worth $3.5 billion for its Gladstone Liquefied Natural Gas project in Queensland, Australia.

RightNow Acquires the Netherlands-based Q-go

RightNow, the customer service experience company acquired the Dutch natural language search company Q-go.com B.V. for $34 million. The acquisition is expected to improve customer experience in web search and site experience for RightNow clients.

The company estimated that the acquisition will add $8 million in revenue for 2011 and improve earnings for 2012.

Earnings Review

Apple Inc. ((AAPL)), the personal gadgets said first quarter net sales surged 71% to $26.74 billion from $15.58 billion in the same quarter last year. Net income in the quarter soared 78% to $6.00 billion or $6.43 per share, compared to net income of $3.38 billion or $3.67 per share for the year-ago quarter, driven by record sales of Macintosh computers, iPhones and iPad multimedia devices due to strong demand during the holiday period.

Cree, Inc. ((CREE)), the manufacturer of semiconductor materials and devices said second quarter revenues grew 29% to $257 million from $199.5 million a year earlier. Net income in the quarter soared 47% to $49.8 million or 45 cents per diluted share, compared to net income of $33.8 million or 32 cents a year ago helped by continued growth in LED lighting products.

International Business Machines Corp. ((IBM)), information technology company reported fourth quarter total revenue increased 6.6% to $29.02 billion from $27.23 billion last year. Net income in the quarter increased 9.1% to $5.25 billion or $4.18 per share, compared to net income of $4.81 billion or $3.59 per share in the previous year.

Revenues for 2010 rose 4% to $99.9 billion, from $95.8 billion in 2009. For the full-year 2010, net income was $14.8 billion or $11.52 per share, compared with $13.4 billion or $10.01 per share in the year-ago period.

Linear Technology Corporation ((LLTC)), the IC maker Tuesday reported second quarter revenues increased 50% to $383.62 million from $256.36 million last year. Net income in the quarter increased 90% to $143.74 million or 62 cents per diluted share, compared to net income of $75.54 million or 33 cents per share in the previous year.

Northern Trust Corporation ((NTRS)), the financial holding company reported fourth quarter total revenue declined 5% to $906.4 million from $950.2 million in the prior-year quarter. Net income in the quarter fell 22% to $157.1 million or 64 cents per diluted share, compared to net income of $200.3 million or 82 cents per share last year.

State Street Corporation ((STT)), the financial holding company stated fourth quarter total revenue declined 11% to $2.04 billion from $2.28 billion in the prior-year period. Net income in the quarter slumped 84% to $81 million or 16 cents per diluted share, compared to net income of $498 million or $1.00 in the year-ago period.

The Bank of New York Mellon Corporation ((BK)), the global financial services company reported fourth quarter total fee revenue grew 16% to $2.97 billion from $2.56 billion in the year-ago quarter. Net income in the quarter rose 15% to $679 million or 54 cents per diluted share, compared to net income of $593 million or 49 cents per share in the prior-year quarter.

Western Digital Corp. ((WDC)), the hard drive maker reported second quarter revenue dropped 5.4% to $2.47 billion from $2.61 billion last year. Net income in the quarter plunged 48% to $225 million or 96 cents per diluted share, compared to net income of $429 million or $1.85 per share in the year-ago period.