U.S. Jobless Claims Rise 26,000; Cumulus, Citadel in $2.4 Billion Deal

Arthi Gupta
10 Mar, 2011
New York City

U.S. indexes scaled lower after China reported a trade deficit. U.S. weekly jobless claims rose, trade deficit widened more than estimated and foreclosure filings declined. HCA Holdings raised $3.79 billion in IPO. Cumulus agreed to acquire Citadel Broadcasting for $2.4 billion.

[R]9:00 AM New York – U.S. indexes scaled lower after China reported a trade deficit. U.S. weekly jobless claims rose, trade deficit widened more than estimated and foreclosure filings declined. HCA Holdings raised $3.79 billion in IPO. Cumulus agreed to acquire Citadel Broadcasting for $2.4 billion.[/R]

Asian markets traded lower after China reported its first monthly trade deficit in a year and Japan said economy shrank more than previously expected.

European indexes declined after Moody’s downgraded Spain''s government bond ratings and the unrest in Libya is adding to investors’ woes contributing to the market anxieties is the elevated oil price and the prospect of the slowdown in global economic growth.

China reported a trade deficit of $7.3 in February, following the $6.45 billion surplus in January, the General Administration of Customs said today. The deficit was the largest since 2004 in February, as the Chinese New Year holiday distorted shipments.

Japan''s gross domestic product contracted by an annualized 1.3% in the fourth quarter of 2010, the Cabinet Office said in Thursday''s final reading. That marked a downgrade from last month''s initial reading of the decline of 1.1%.

Moody''s Investors Service on Thursday downgraded Spain''s government bond ratings by one notch to Aa2 from Aa1. The outlook on the ratings remained negative.

The Bank of England on Thursday left its key interest rate unchanged at a record low again as expected and maintained the size of the quantitative easing at GBP 200 billion.

Second Anniversary of Bull Markets

The U.S. stocks declined on Wednesday, the two-year anniversary of the beginning of a bull market. Concerns of oil prices and Middle East unrest continued to weigh on the minds of investors.

Wednesday, March 9 marked the two-year anniversary of the beginning of a bull market.

On March 9, 2009, the Dow Jones Industrial Average closed at 6,547 and the Standard & Poor''s 500 Index closed at 677. The Dow has since then rebounded above 12,000 and the S&P 500 index has almost doubled.

Since March 9, 2009, the S&P 500 surged more than 95%. That is the strongest two-year bull market since 1962, and one that added $6.2 trillion in market capitalization to the S&P 500 according to Birinyi Associates.

As of March 8, the MSCI world stock index gained 94% from March 9, 2009, gold prices rose 55%, while the price for a barrel of oil for future delivery surged more than 120% from two years ago.

U.S. Weekly Jobless Claims Increase

Seasonally adjusted weekly jobless claims increased 26,000 to 397,000 from the revised previous week claims of 371,000. The preliminary insured unemployment rate in the week ending February 26 was unchanged from the prior week''s unrevised rate of 3.0%.

U.S. Trade Deficit Widens

The U.S. trade deficit widened $6 billion in January according to data released by the Commerce Department today.

Total exports increased to $167.7 billion and imports were $214.1 billion, resulting in a trade deficit of $46.3 billion compared to a deficit of $40.3 billion in December.

U.S. Foreclosure Filings Decline

U.S. foreclosure filings in February declined 14% from the previous month and 27% from last year, according to RealtyTrac.

Foreclosure filings, which include default notices, scheduled auctions and bank repossessions, were reported on 225,101 U.S. properties in February, reflecting the biggest annual decrease since RealtyTrac began issuing its report in 2005.

Lenders foreclosed on 64,643 U.S. properties in February, down 18% from February 2010.

HCA Holdings Raises $3.79 Billion in IPO

HCA Holdings, Inc., the U.S.-based private hospital operator in its initial public offering sold 126.2 million shares for $30 each, at the top-end of its estimated offering price range.

The size of the offering was enhanced marginally from its earlier plan to offer 124.00 million shares at $27 to $30 each. HCA sold 87.72 million shares and selling stockholders offered 38.38 million shares.

HCA reportedly raised total proceeds of $3.79 billion from the offering and intends to use the net proceeds to repay certain of its existing indebtedness and other general corporate purposes.

Cumulus Inks Deal with Citadel Broadcasting

Cumulus Media Inc. entered into a merger agreement to purchase all of the outstanding common stock and warrants of Citadel Broadcasting Corporation at a price of $37.00 per share. The merger values Citadel as an enterprise at approximately $2.4 billion.

Earnings Review

Coca-Cola Bottling Co. Consolidated ((COKE)), the non-alcoholic beverages distributor reported fourth quarter net sales declined 0.01% to $354.38 million from $354.42 million in the previous-year quarter. Net income in the quarter surged 92% to $3.82 million or 41 cents per diluted share compared to net income of $1.99 million or 21 cents per share last year.

Coldwater Creek Inc. ((CWTR)), the specialty retailer reported fourth quarter net sales declined 20.8% to $252.10 million from $318.36 million last year. Net loss for the quarter widened 283% to $37.04 million or 40 cents per diluted share compared to net income of $9.68 million or 11 cents per share in the previous year.

H&R Block, Inc. ((HRB)), the largest U.S. tax preparer said third quarter total revenues fell 8.9% to $851.48 million from $934.85 million in the same quarter last year. Net loss for the quarter was $12.7 million or 4 cents per diluted share compared to net income of $50.6 million or 15 cents per share for the year-ago quarter.

Jo-Ann Stores, Inc. ((JAS)), the specialty retailer of fabrics and crafts reported fourth quarter net sales rose 3.6% to $624.1 million from $602.2 million last year. Net income in the quarter increased 8.9% to $40.4 million or $1.53 per share compared to net income of $37.1 million or $1.36 per share in the previous year.

Provident Energy Trust, the open-end unincorporated investment trust reported fourth quarter revenue from continuing operations (net of financial derivative instruments) grew 24.3% to C$514.96 million from C$414.16 million a year ago. Net income in the quarter was C$61.32 million or C$0.22 per share compared to a loss of C$20.34 million or C$0.08 per share in the prior year.

Quad/Graphics, Inc. ((QUAD)), the printer of magazines, catalogs and other commercial products reported fourth quarter net sales rose 171.2% to $1.39 billion from $512.6 million in the previous year quarter. Net earnings in the quarter declined 26.3% to $26.6 million or 55 cents per diluted share compared to net income of $36.1 million or $1.24 per share in last year.

Semtech Corporation ((SMTC)), the analog and mixed-signal chip maker reported fourth quarter net revenue grew 36.8% to $116.27 million from $85.02 million in the year-ago quarter. Net income in the quarter rose 174.2% to $26 million or 39 cents per diluted share compared to net income of $9.48 million or 15 cents per share in the prior-year quarter.

The Buckle, Inc. ((BKE)), the apparel retailer reported fourth quarter revenues rose 10.4% to $303.1 million from $274.4 million in the same quarter of last year. On a same-store-basis, sales grew 6.3% compared to the year-ago quarter. Net income in the quarter increased 17.6% to $49.5 million or $1.05 per share compared to net income of $42.1 million or 90 cents per share a year earlier.

The Men''s Wearhouse, Inc. ((MW)), the men''s dress apparel retailer said fourth quarter sales increased 18.57% to $542.11 million from $457.22 million in the comparable quarter a year ago, driven largely by acquisitions in corporate apparel segment as well as comparable sales growth.

Net loss in the quarter narrowed 25% to $14.09 million or 27 cents per diluted share compared to a loss of $18.75 million or 36 cents per share in the fourth quarter of previous year.

Valhi, Inc. ((VHI)), the holding company reported fourth quarter total revenues rose 19.3% to $407.0 million from $341.1 million in the comparable quarter last year. Net income in the quarter soared 394% to $17.8 million or 15 cents per diluted share compared to net income of $3.6 million or 3 cents per share in the prior-year quarter.