U.S., World Indexes Higher, Oil Jumps 2%; Ciena Net Loss Widens

Arthi Gupta
07 Mar, 2011
New York City

U.S. stocks struggle as crude oil reach to a new 30-month high. Western Digital agreed to acquire Hitachi Global Storage for about $4.3 billion. Japan-based Terumo agreed to purchase CaridianBCT for $2.63 billion. Travelport agreed to sell GTA business to Switzerland-based Kuoni for $720 million.

[R]9:50 AM New York – U.S. stocks edged up as crude oil reach to a new 30-month high and futures rise another 2% in London. Western Digital agreed to acquire Hitachi Global Storage for about $4.3 billion. Japan-based Terumo agreed to purchase CaridianBCT for $2.63 billion. Travelport agreed to sell GTA business to Switzerland-based Kuoni for $720 million.[/R]

Stocks in Asia declined and in Europe gained as the oil prices rise and tension in the Middle East remain high.

Markets were also jittery after Japanese Foreign Minister Seiji Maehara resigned over political donation from a foreign resident in violation of campaign financing law and India’s ruling coalition loses support a region party.

The policy makers at a national annual meeting focused on inflation and said domestic consumption will drive the economic expansion in the next five years.

Premier Wen Jiabao at the opening session of the National People’s Congress said that annual growth in the current year is expected to be 8% and in the next five years is targeted at 7%. He also said that government aims to limit the inflation to 4% in the current year and added that China is prepared to use its foreign reserves to rein in inflation.

Crude oil price is up 50% in the last eight months and investors are factoring elevated prices at least till the end of June. Standoff between Libyan army and rebels has deepened and begun to affect retail petrol prices in Europe.

Retail petro price this weekend in Italy and the Netherlands shot up to 1.67 euros a liter petrol prices.

Crude prices gained nearly 2% today after fighting between Libyan rebels and forces loyal to longtime leader Muammar Qaddafi intensified. In the last three weeks crude oil prices have increased $20 a barrel in New York and in London.

Nymex crude oil futures are now trading at $106.70 a barrel and in London futures price increased to $117.10 a barrel and gold futures soared $10 to $1440.90 an ounce in New York.

Western Digital Acquires Hitachi Global Storage

Western Digital Corp. and Hitachi Ltd. reached an agreement whereby WD would acquire Hitachi Global Storage Technologies, a wholly-owned unit of Hitachi, Ltd., in a cash and stock transaction valued at around $4.3 billion.

As per the deal terms, WD would purchase Hitachi GST for $3.5 billion in cash and 25 million WD common shares valued at $750 million, based on a WD closing stock price of $30.01 as of March 4, 2011.

Terumo Purchases CaridianBCT

Terumo Corp., the Japanese medical device maker agreed to buy Colorado-based blood transfusion technology firm CaridianBCT Holding Corp. from Swedish medical technology company Gambro AB for $2.63 billion.

With the acquisition, Terumo is expected to attain revenue of about 70 billion yen in the blood transfusion business and to achieve the long-term objective of target revenue of 1 trillion yen within 10 years.

Travelport Sells GTA Business to Kuoni

Travelport, the business services company agreed to sell GTA business to Swiss leisure travel organization Kuoni for $720 million.

GTA provides hotel accommodations and related ground travel services, with more than 35,000 hotel properties in over 130 countries.

Travelport noted that the sale is in line with its strategic plan to focus on maximizing the potential of its core business.

J&J Unit Faces Trial

A jury is set to hear claims against Janssen L.P., an unit of healthcare major Johnson & Johnson on charges that the drug maker used false marketing tactics to persuade the state's Medicaid officials to spend millions on its schizophrenia drug Risperdal. The suit, brought by the State of Texas and plaintiff Allen Jones, is currently set for June 21.

The company's total exposure in the anticipated jury trial, currently exceeds $1 billion in damages and other liabilities.

Accuray Buys TomoTherapy

Accuray Inc., the medical equipment company agreed to acquire TomoTherapy Inc. for $277 million, or $4.80 per share in cash and stock. The merged entity will offer advanced patient-focused technologies for the treatment of cancer and other diseases.

Earnings Review

Ciena Corporation ((CIEN)), the telecommunications networking equipment maker said first quarter total revenue increased 146% to $433.31 million from $175.88 million in the prior year. Net loss in the quarter widened 48.2% to $79.06 million or 84 cents per common share compared to net income of $53.33 million or 58 cents per common share a year ago.

Madison Square Garden, Inc. ((MSG)), the sports, entertainment and media business reported fourth quarter revenues grew 5% to $432.67 million from the prior year's $412 million, primarily reflecting an increase in revenues in the company's MSG Media and MSG Sports segments. Net income in the quarter increased 40% to $32.72 million or 42 cents per diluted share compared to net income of $23.39 million or 32 cents per share in the previous year.

MCG Capital Corporation ((MCGC)), the asset manager said fourth quarter revenues fell 0.8% to $23.5 million compared to $23.7 million a year earlier. Net loss in the quarter was $17.75 million or 23 cents per diluted share compared to net profit of $1.56 million or 2 cents per share a year earlier.

PDL BioPharma Inc. ((PDLI)), the company engaged in the management of its antibody humanization patents and royalty assets announced revenue guidance for the first quarter ending March 31 of around $83 million, as compared with actual results of $62 million for the first quarter of 2010.

Sasol Limited ((SSL)), the integrated energy and chemicals company reported first-half turnover grew 16% to 67.23 billion rands from 58.07 billion rands in the prior year. Profit for the half year increased 21% to 7.6 billion rands or 12.69 rands per share from 6.3 billion rands or 10.57 rands per share last year, helped by higher prices for crude oil and chemical products.