U.S. Indexes Higher; AT&T, Colgate-Palmolive, P&G Net Drops

Arthi Gupta
27 Jan, 2011
New York City

The U.S. indexes gained after the Fed maintained bond purchase plan and left key rates near zero. ProLogis confirmed merger discussions with AMB. PepsiCo got Russian regulatory approval for Wimm-Bill-Dann acquisition. Procter & Gamble net declines.

[R]9:00 AM New York – The U.S. indexes gained after the Fed maintained bond purchase plan and left key rates near zero. ProLogis confirmed merger discussions with AMB. PepsiCo got Russian regulatory approval for Wimm-Bill-Dann acquisition. Procter & Gamble net declines.[/R]

U.S. stocks gained in early trading after the U.S. Fed left its bond purchase plan and left its interest rate near zero. Markets in Asia traded mixed and in Europe gained in the early trading.

Japan''s sovereign credit rating was lowered one notch by Standard & Poor''s on Thursday, citing the country''s mounting debt load. The credit rating was cut to AA-, with the outlook on the rating seen as ""stable.""

Fed Maintains Bond Purchase Plan

The Fed on Wednesday held its key interest rate in a historically low range of zero to 0.25% and pledged to move forward with its plan to purchase $600 billion of longer-term Treasury securities by the end of the second quarter of 2011.

The Fed said that overall inflation remains subdued despite a recent pickup in commodity prices and that current economic conditions although improved, have still not been enough to lift the labor market from the doldrums.

The economic recovery is continuing, though at a rate that has been insufficient to bring about a significant improvement in labor market conditions, the Fed said in announcing its unanimous decision on monetary policy.

The Congressional Budget Office released a report on Wednesday forecasting a record $1.5 trillion federal budget deficit in fiscal 2011 or at 9.8% of gross domestic product.

With regard to the economy, the CBO said it expects economic growth to remain moderate this year and next, forecasting 3.1% GDP growth this year and 2.8% GDP growth next year.

The CBO said the unemployment rate to show a gradual decline in the near term, slipping to 9.2% in the fourth quarter of 2011, 8.2% in the fourth quarter of 2012, and 7.4% at the end of 2013.

U.S. Foreclosure Activity Rises

RealtyTrac said foreclosure activity in 2010 declined in hardest-hit markets, while high unemployment drove activity up in 72% of the nation''s metro areas. Foreclosure activity increased from 2009 in 149 of the nation''s 206 metropolitan areas.

ProLogis Confirms Merger Discussions with AMB

ProLogis and AMB Property Corporation are in discussions regarding a potential merger, in which the two companies would combine in an all-stock at-market price transaction, based on the pre-announcement price of two stocks.

ProLogis and AMB have issued press releases in response to media reports and intend to make no further comment regarding their discussions or negotiations unless and until an agreement is reached or discussions are terminated.

PepsiCo Wins Russian Approval for Wimm-Bill-Dann

PepsiCo, Inc. said that the Federal Antimonopoly Service of the Russian Federation issued approvals for PepsiCo''s previously announced acquisition of Wimm-Bill-Dann Foods OJSC.

Under the deal, a subsidiary of PepsiCo will buy about 66% of Wimm-Bill-Dann from a group of shareholders and subsidiaries of Wimm-Bill-Dann for about $3.8 billion.

PepsiCo stated that the acquisition will raise its annual global revenues from nutritious and functional foods from about $10 billion to nearly $13 billion.

Earnings Review

AT&T Inc. ((T), the provider of telecommunications services said fourth quarter consolidated revenues rose 2.1% to $31.36 billion from $30.71 billion in the year-earlier period. Net income in the quarter dropped 60% to $1.09 billion or 18 cents a diluted share compared to net income of $2.73 billion or 46 cents per share a year earlier.

Citrix Systems, Inc. ((CTXS)), the virtualization and infrastructure software developer reported fourth quarter revenue rose 17% to $530 million from $451 million last year. Net income in the quarter increased 7.2% to $94.4 million or 49 cents per diluted share compared to net income of $88.1 million or 47 cents per share a year earlier.

Revenue for the full year 2010 grew to $1.87 billion from $1.61 billion a year ago. For the full year, the company''s net income rose to $277 million or $1.46 per share from $191 million or $1.03 per share in the prior year.

Colgate-Palmolive Company ((CL)), the consumer goods company said fourth quarter net sales declined 2.5% to $3.98 billion from $4.08 billion last year. Net income in the quarter slipped 1.1% to $624 million or $1.24 per share compared to net income of $631 million or $1.21 per share a year ago.

Murphy Oil Corporation ((MUR)), the oil and natural gas company said fourth quarter revenue rose 11.7% to $6.51 billion from $5.83 billion in the same quarter last year. Net income in the quarter slumped 45% to $174.1 million or 90 cents per diluted share compared to net income of $318.9 million or $1.65 per share for the year-ago quarter.

Revenue for the full year 2010 increased 23% to $23.35 billion from $19.01 billion the prior year. For the full year 2010, the company reported net income of $798.1 million or $4.13 per share, compared to $837.6 million or $4.35 per share for the full year 2009.

Netflix, Inc. ((NFLX)), the movie rental company reported fourth quarter revenues increased 34.1% to $595.92 million from $444.54 million last year. Net income in the quarter increased 52.3% to $47.09 million or 87 cents per diluted share compared to net income of $30.91 million or 56 cents per share in the previous year.

Revenue for the full year 2010 increased to $2.16 billion from $1.67 billion a year ago. For fiscal year 2010, net income increased to $160.85 million or $2.96 per share from $115.86 million or $1.98 per share in the previous year. Revenues

QUALCOMM, Inc. ((QCOM)), the chip maker reported first quarter total revenues increased 25% to $3.35 billion from $2.67 billion last year. Net income in the quarter increased 39% to $1.17 billion or 71 cents per diluted share compared to net income of $0.84 billion or 50 cents per share in the previous year.

Starbucks Corporation ((SBUX)), the coffee house operator said first quarter total net revenues increased 8% to $3.0 billion from $2.7 billion in the same quarter last year. Net earnings in the quarter surged 43.5% to $346.6 million or 45 cents per diluted compared to net earnings of $241.5 million or 32 cents per share in the prior-year quarter.

The Procter & Gamble Company ((PG)), consumer packaged goods maker reported second quarter net sales grew 1.5% to $21.35 billion from $21.03 billion in the prior-year quarter. Net income in the quarter declined 28.5% to $3.33 billion or $1.11 a share compared to net income of $4.66 billion or $1.49 a share last year.