Dow Declines on Bernanke Comments; AutoZone Net Up, Youku Loss Narrows

Arthi Gupta
01 Mar, 2011
New York City

U.S. indexes trade lower and Fed Chairman Bernanke said rates are likely to remain low. Health Care REIT agreed to buy real estate assets of Genesis for $2.4 billion. Range Resources sold Barnett Shale Assets for $900 million. Japan-based Daiichi Sankyo purchased Plexxikon for $805 million.

[R]10:05 AM New York – U.S. indexes trade lower and Fed Chairman Bernanke said rates are likely to remain low. Health Care REIT agreed to buy real estate assets of Genesis for $2.4 billion. Range Resources sold Barnett Shale Assets for $900 million. Japan-based Daiichi Sankyo purchased Plexxikon for $805 million.[/R]

U.S. stocks turned lower after Chairman Bernanke indicated that recent increase in prices are not expected to spill over in broader economy. His comments also suggested that bond buying program will remain in place.

Separately, construction spending fell in January and manufacturing index showed an expansion.

Asian markets extended gains and the European markets climbed on easing global crude oil prices despite the ongoing crisis in Libya.

China's manufacturing sector grew at the slowest pace in seven months in February amid tighter credit conditions, according to a private survey. The government survey also indicated slowest expansion in manufacturing in three months and the index dropped to a six-month low.

The Markit/HSBC manufacturing purchasing managers' index fell to 51.7 in February from 54.5 in January.

The U.S. and its allies have held talks on possible military options to deal with the Libyan crisis, media reports quoted Washington's Ambassador to the United Nations as saying. Susan Rice said the UN is ""looking at all options,"" including the creation of a no-fly zone over Libya to prevent the Moammar Qadhafi regime from killing its own people.

U.S. Grants Deepwater Drilling Permit

The U.S. government approved the first deepwater drilling permit in the Gulf of Mexico more than four months after a moratorium on all deepwater offshore drilling in the country was lifted.

The Bureau of Ocean Energy Management, Regulation & Enforcement approved Noble Energy Inc.'s application for a permit to continue its work on a well in Mississippi Canyon Block 519, approximately 70 miles south east of Venice, Los Angeles.

Health Care REIT Buys Real Estate Assets of Genesis

Health Care REIT, Inc. signed an agreement to acquire a majority of the real estate assets of privately-owned Genesis HealthCare for $2.4 billion.

Health Care REIT will acquire from Genesis 147 post-acute, skilled nursing and assisted living facilities located in 11 states in the Northeast and Mid-Atlantic. The deal paves way for HCN to tap the nursing and assisted living facilities in Northeast and Mid-Atlantic regions.

Range Resources Sells Barnett Shale Assets

Range Resources Corp. agreed to sell its Barnett Shale properties in the Fort Worth Basin to a private company for $900 million. The sale is expected to close in late April and is subject to customary closing conditions and purchase price adjustments. Range Resources also said its capital expenditure budget for 2011 has been set at $1.38 billion.

Daiichi Sankyo Purchases Plexxikon

Daiichi Sankyo Co. Ltd, the Japanese pharmaceutical firm said it concluded an agreement to acquire Plexxikon Inc., a California-based privately-held pharmaceutical company, for about $805 million on a debt-free basis.

Daiichi Sankyo said Plexxikon has a late-stage oncology product, PLX4032, as well as a promising pipeline and technology platform.

Earnings Review

AutoZone Inc. ((AZO)), the auto parts retailer said second quarter net sales rose 10.3% to $1.66 billion from $1.51 billion in the comparable period. Domestic same store sales increased 7.1% for the quarter. Net income in the quarter increased 20% to $148.06 million or $3.34 per share compared to net income of $123.33 million or $2.46 per share last year.

Fresh Del Monte Produce Inc. ((FDP)), a fruits and vegetables provider reported fourth quarter net sales declined 6.4% to $816.7 million from prior year's $872.1 million. Net loss in the quarter was $9.6 million or 16 cents per diluted share compared to prior year's profit of $28.2 million or 44 cents per share.

General Growth Properties, Inc. ((GGP)), the mall owner reported fourth quarter total revenues declined 1.1% to $726.14 million from $734.21 million in the year-ago period. Net loss for the quarter widened 86.2% to $1.14 billion from $612.36 million or $1.96 per share in the prior-year period.

Range Resources Corp. ((RRC)), the independent oil and gas producer reported fourth quarter revenues declined 3% to $238.72 million from $246.83 million in the same quarter of last year. Net loss in the quarter widened to $317.72 million or $2.02 per diluted share compared to net loss of $16.78 million or 11 cents per share in the prior-year quarter.

Southwest Gas Corporation ((SWX)), the natural gas utility said fourth quarter consolidated operating revenues fell 6.2% to $468.1 million from $498.8 million in the prior-year quarter. Net income in the quarter dropped 3% to $45.0 million or 98 cents per diluted share compared to net income of $46.4 million or $1.02 per share in the similar quarter last year.

Sotheby's ((BID)), the auctioneer of decorative art and jewelry reported fourth quarter total revenues surged 46% to $318 million from $218.3 percent a year earlier. Net income in the quarter rose 31% to $96.2 million or $1.38 per share compared to net income of $73.6 million or $1.09 per share a year before.

The Warnaco Group, Inc. ((WRC)), the apparel designer reported fourth quarter net revenues increased 17% to $591.49 million from $505.44 million last year. Net income in the quarter surged 74% to $19.17 million or 42 cents per diluted share compared to net income of $11.01 million or 23 cents per share in the previous year.

Universal Health Services, Inc. ((UHS)), the healthcare management companies said fourth quarter net revenues rose 21% to $1.56 billion from $1.29 billion in the same quarter last year, mainly due to the revenues generated at the behavioral health care facilities acquired from Psychiatric Solutions. Net income in the quarter fell 39% to $37.2 million or 38 cents per diluted share compared to net income of $60.9 million or 62 cents per share for the year-ago quarter.

URS Corporation ((URS)), the engineering services company said fourth quarter revenues rose 13% to $2.38 billion from $2.11 billion in the year-ago quarter. Net income in the quarter soared 78% to $60.0 million or 75 cents per diluted share compared to net income of $33.8 million or 41 cents per share a year earlier.

Youku.com Inc. ((YOKU)), the China-based Internet television company reported fourth quarter net revenues surged 183% to RMB152.47 million from RMB53.84 million in the year-ago period. Net loss in the quarter narrowed 18% to RMB37.72 million or RMB0.05 per share compared to net loss of RMB45.99 million or RMB0.13 per share in the prior-year period.