U.S. Indexes Lower; Morgan Stanley Profit Surges 60%

Arthi Gupta
20 Jan, 2011
New York City

U.S. indexes traded lower as commodities prices declined. China

[R]9:00 AM New York – U.S. indexes traded lower as commodities prices declined. China’s economy expanded at 10.3% in 2010 despite an increase in lending restrictions but inflation edged lower. China ordered 200 Boeing planes. K+S Canada acquired stake in Potash One. Boston Scientific agreed to buy Atritech.[/R]

U.S. indexes trade flat and indexes in Europe decline sharply on lower commodities prices. Resources price sensitive markets like Russia and UK dropped more than 1%.

Asian markets generally declined following weak housing starts in the U.S.

President Barack Obama on Wednesday speaking in a joint press conference with Chinese President Hu Jintao said that their meeting showed that cooperation between the U.S. and China can provide both countries with substantial benefits.

Obama said that he stressed to Hu that the competition between the U.S. and China must be fair. He welcomed Hu''s assurances that American companies will not be discriminated against and that China would take more steps to crack down on intellectual property theft.

Currency also played a role in the discussion between the two presidents. President Hu referred to his discussions with Obama as “candid, pragmatic and constructive.”

Several U.S. lawmakers from both parties boycotted the State dinner hosted to welcome Hu Jintao and more lawmakers in the U.S. Congress are expected to voice their opposition during China’s President’s scheduled address.

China''s economy grew 9.8% between October and December compared to the same period a year ago, according to official data released today. That followed a 9.6% expansion in the preceding three months. Gross domestic product rose 10.3% in 2010.

Consumer price inflation index slowed to 4.6% in December from 5.1% in November.

Fifth Third Bancorp Announces Public Offering

Fifth Third Bancorp announced the commencement of a public offering of $1.7 billion of its common stock.

Fifth Third intends to use the proceeds of equity and senior debt offering and other available funds, to repurchase all 136,320 shares of its Series F Preferred Stock issued to the U.S. Treasury under its Troubled Asset Relief Program Capital Purchase Program.

Boeing Gets Chinese Approval

Boeing Co. received final approval from the Chinese Government confirming a $19 billion agreement for 200 aircraft orders.

The orders for Boeing 737s and 777s are to be delivered over a three-year period, 2011-2013. The approval is expected to help Boeing maintain and expand its market share in the world''s fastest growing commercial aircraft market.

K+S Canada Acquires Stake in Potash One

Potash One Inc. said about 78.8 million of its common shares have been deposited with K+S Canada Holdings Inc., following the K+S offer to acquire all of the issued and outstanding Potash One shares for C$4.50 in cash.

K+S Canada is an indirect wholly-owned subsidiary of K+S Aktiengesellschaft.

Boston Scientific Buys Atritech

Boston Scientific Corp., the medical device maker agreed to acquire privately held Atritech, Inc., which would help it gain access to a device that reduces the risk of stroke by closing the left atrial apendage in patients with atrial fibrillation.

The terms of the deal requires Boston to make an upfront payment of $100 million, and may pay $275 million upon meeting certain regulatory and revenue-based milestones through 2015.

Career Education Slashes Jobs

Career Education Corp., a for-profit educational services provider, said that it will cut 600 jobs across its U.S. operations. The move follows slowing student enrollments across the private-sector post-secondary education industry.

Earnings Review

eBay Inc. ((EBAY)), the online auctioneer reported fourth quarter net revenue increased 5% to $2.5 billion from $2.4 billion in the same quarter last year. Net income in the quarter plunged 59% to $559 million or 42 cents per diluted share compared to net income of $1.4 billion or $1.02 per share in the prior-year quarter, mainly due to the absence of a hefty gain from the sale of Skype recorded in the year ago period.

Annual net revenue increased 5% to $9.2 billion from $8.7 billion a year ago. For the full-year 2010 net income fell to $1.8 billion or $1.36 per share, from $2.4 billion or $1.83 per share in the previous year.

F5 Networks, Inc. ((FFIV)), the networking appliances company reported first quarter revenues soared 41% to $268.9 million from $191.2 million in the same quarter of last year. Net income in the quarter surged 90% to $55.7 million or 68 cents per diluted share compared to net income of $29.3 million or 36 cents per share last year.

Fifth Third Bancorp ((FITB)), the diversified financial services company reported fourth quarter revenues rose 2.6% to $1.57 billion compared with $1.53 billion last year. Net income generated in the quarter was $270 million or 33 cents per diluted share compared to a net loss of $160 million or 20 cents per share in the fourth quarter of 2009.

Johnson Controls Inc. ((JCI)), the automotive seating systems and interior components provider said first quarter net sales climbed 13% to $9.5 billion compared to $8.4 billion in last year period. Net income in the quarter increased 7.1% to $375 million or 55 cents per diluted share compared to net income of $350 million or 52 cents per share in the prior-year quarter.

Morgan Stanley ((MS)), the financial services company reported fourth quarter net revenues rose 14% to $7.8 billion, compared to $6.8 billion last year Net earnings in the quarter surged 60% to $600 million or 41 cents per diluted share compared to net earnings of $376 million or 29 cents per share in the same quarter last year.

SLM Corporation ((SLM)), the student lender commonly known as Sallie Mae, said fourth quarter net income increased 45% to $447 million or 84 cents per diluted share, compared to net income of $309 million or 52 cents per share in the year-ago quarter. Net interest income for the quarter rose 43% to $856.81 million from $598.79 million in the same quarter last year.

Sony Ericsson Mobile Communications AB, the provider of mobile multimedia devices for mobile operators and end users worldwide reported fourth quarter sales declined 13% to €1.53 billion from €1.75 billion in the year-ago quarter. Net income in the quarter was €8 million compared to net loss of €167 million last year.

UnitedHealth Group Inc. ((UNH)), the diversified health and well-being company reported fourth-quarter total revenues grew 10.3% to $24.03 billion from $21.78 billion in the prior-year quarter. Net earnings in the quarter rose 10.2% to $1.04 billion or 94 cents per diluted share compared to net earnings of $944 million or 81 cents per share last year.

Xilinx, Inc. ((XLNX)), the programmable logic device maker reported third quarter net revenues increased 10% to $567.19 million from $513.35 million last year. Net income in the quarter increased 42.5% to $152.34 million or 58 cents per diluted share compared to net income of $106.91 million or 38 cents per share in the previous year.