Libya Worries Drag U.S., World Indexes; Home Depot, Wal-Mart Net Surge

Arthi Gupta
22 Feb, 2011
New York City

U.S. indexes fell and world markets decline. Crude oil surged as oil companies begin to evacuate staff from Libya and European markets worry of energy supply disruptions. Chesapeake agreed to sell its shale assets to BHP for $4.75 billion. Home Depot and Wal-Mart earnings rose.

[R]9:30 AM New York – U.S. indexes fell and world markets decline. Crude oil surged in London trading as oil companies begin to evacuate staff and European markets worry of energy supply disruptions. Chesapeake agreed to sell its shale assets to BHP for $4.75 billion. Home Depot and Wal-Mart earnings rose.[/R]

World stocks declined following unrest in the Middle East, especially Libya. The unrest in Libya has turned violent with more than 200 dead. The second largest city Benghazi saw its largest demonstration in decades.

Muammar Gaddafi said on Tuesday during a brief appearance on state television that he was “in Tripoli and not in Venezuela.” There were speculations that the Libyan leader had fled following the turbulent situation in the country.

Moody''s Investors Service said today that it changed the outlook on Japan''s Aa2 rating to negative from stable, as the administration of Prime Minister Naoto Kan struggle to pass austerity measures in the latest budget.

Chesapeake Sells Fayetteville Shale Assets

Chesapeake Energy Corporation agreed to sell all of the company''s interests in approximately 487,000 net acres of leasehold and producing natural gas properties in the Fayetteville Shale play in central Arkansas to BHP Billiton Petroleum, a wholly owned subsidiary of BHP Billiton Limited for $4.75 billion in cash.

The deal, which includes existing net production of about 415 million cubic feet of natural gas equivalent per day and midstream assets with about 420 miles of pipeline, is expected to close in the first half of this year.

Best Buy Plans Overhaul

Best Buy plans to take a series of actions to improve financial performance of its international segment and to boost growth in key strategic businesses. The retailer said these restructuring actions will see it closing branded stores in China and Turkey as part of its plan to generate savings of up to $70 million by fiscal 2013.

Best Buy currently plans to close nine branded stores in China, but intends to reopen two of them at a later date.

Dynegy Top Executives Resign

Dynegy, Inc. announced on Monday that President and CEO Bruce Williamson as well as Executive Vice President and CFO Holli Nichols will resign from the company, effective March 11. This follows a mutual agreement with the board after the company failed to sell itself recently on two occasions amid strong shareholder opposition.

GE Healthcare Acquires Orbotech

GE Healthcare, a unit of General Electric Co. completed the acquisition of Orbotech Medical Solutions Ltd. Orbotech Medical Solutions, a subsidiary of Orbotech Ltd., makes cadmium zinc telluride detectors, which is used in GE Healthcare''s Alcyone nuclear medicine technology.

Kirby Purchases United Holdings

Kirby Corporation signed an agreement to purchase United Holdings LLC, a distributor and service provider of engine and transmission related products for the oil and gas services, power generation and transportation industries, and manufacturer of oilfield service equipment.

The base purchase price is $270 million in cash, plus a three-year earnout provision for up to an additional $50 million payable in 2014.

Blockbuster Initiates Sale Process

Blockbuster Inc., the video-rental chain agreed to sell itself to a group of debt holders for $290 million in a """"stalking horse"""" bid. In addition, the company filed a motion seeking authorization from the U.S. Bankruptcy Court for the Southern District of New York to start an auction process for the company.

Blockbuster said it entered into an asset-purchase agreement with Cobalt Video Holdco, LLC, formed by secured noteholders Monarch Alternative Capital LP, Owl Creek Asset Management LP, Stonehill Capital Management LLC and Värde Partners, Inc. The transaction is subject to the bankruptcy court''s approval.

Earnings Review

Choice Hotels International, Inc. ((CHH)), the hotel franchisor reported fourth quarter total revenue rose 10% to $155.01 million from $140.70 million in the same quarter last year. Net income for the quarter improved 2.2% to $24.14 million or 40 cents per diluted share from $23.63 million or 40 cents per share in the fourth quarter of the previous year.

Cracker Barrel Old Country Store, Inc. ((CBRL)), the restaurant chain operator said second quarter total revenue increased 1.2% to $640.28 million from $632.62 million in the previous year. Net income in the quarter rose 13.4% to $28.78 million or $1.20 per share compared to last year''s net income of $25.39 million or $1.09 per share.

Digital Realty Trust, Inc. ((DLR)), the company which owns and operates data centers reported fourth quarter total operating revenues surged 40.6% to $238.7 million from $169.8 million in the same quarter last year. Net income for the quarter grew 73.4% to $24.8 million or 27 cents per diluted share compared to net income of $14.3 million or 18 cents per share a year before.

Huron Consulting Group Inc. ((HURN)), a business consulting services provider reported fourth quarter revenues increased 1.6% to $144.2 million from $141.9 million last year. Net loss in the quarter was $4.87 million or 23 cents per diluted share compared to net income of $9.51 million or 47 cents per share in the prior-year period.

Kaiser Aluminum Corp. ((KALU)), the semi-fabricated specialty aluminum products manufacturing company reported fourth quarter net sales rose 12.2% to $ 265.8 million from $237.0 million a year earlier. Net loss in the quarter was $0.4 million or 2 cents per diluted share compared to net income of $23.9 million or $1.19 per share for the year-ago quarter.

Office Depot, Inc. ((ODP)), the supplier of office products and services said fourth quarter sales declined 4% to $2.96 billion from $3.07 billion in the prior-year quarter. Net loss in the quarter narrowed 25% to $57.8 million or 21 cents per diluted share compared to net loss of $76.71 million or 28 cents per share last year.

ONEOK, Inc. ((OKE)), the diversified energy company reported fourth quarter revenues declined 10% to $3.36 billion from $3.73 billion in the prior-year period. Net income in the quarter fell 11.1% to $83.07 million or 76 cents per diluted share compared to net income of $93.44 million or 87 cents per share in the same period last year.

R.R. Donnelley & Sons Company ((RRD)), the provider of integrated communications reported fourth quarter net sales improved 5% to $2.71 billion from $2.58 billion last year. Net profit generated in the quarter was $27 million or 13 cents per share compared to a loss of $79.5 million or 39 cents per share a year earlier.

The Home Depot, Inc. ((HD)), the home improvement retailer stated fourth quarter sales rose 3.8% to $15.13 billion for the fourth quarter of fiscal 2010 from $14.57 billion in the fourth quarter of fiscal 2009. Net earnings in the quarter surged 72% to $587 million or 36 cents per diluted share compared to net earnings of $342 million or 20 cents per share last year.

Comparable store sales, or sales from stores open for at least a year, increased 3.9% with a 4.8% rise in comp sales for U.S. stores.

Wal-Mart Stores, Inc. ((WMT)), the largest retailer said fourth quarter revenues grew 2.4% to $116.36 billion from $113.62 billion in the prior-year quarter. Consolidated net income in the quarter soared 27.3% to $6.06 billion or $1.70 per diluted share compared to net income of $4.76 billion or $1.25 per share last year.