U.S. Jobless Claims Fall, CPI Up 0.5%; FedEx Net Drops

Arthi Gupta
17 Mar, 2011
New York City

U.S. indexes climbed after consumer prices index rose 0.5% in February and weekly jobless claims declined 16,000 to 385,000. Russia based VimpelCom shareholders approved merger with Wind Telecom. FedEx quarterly net declined but beat forecast.

[R]9:55 AM New York – U.S. indexes climbed after consumer prices index rose 0.5% in February and weekly jobless claims declined 16,000 to 385,000. Russia based VimpelCom shareholders approved merger with Wind Telecom. FedEx quarterly net declined but beat forecast.[/R]

U.S. stocks climbed higher after weekly jobless claims fell and consumer price index increase was less than expected.

World indexes advanced after investors are hoping that a meeting of Group of Seven finance ministers tomorrow morning Japan local time may provide easier monetary stance around world while Japan battles multiple crisis.

The U.S. military said on Thursday it is augmenting its rescue efforts in Japan. Greg Jaczko, chairman of the U.S. Nuclear Regulatory Commission, said ""attempts to cool the reactor 2 at the Fukushima Dai-ichi nuclear complex don''t seem to be working"" and emergency workers in the vicinity could be exposed to ""potentially lethal"" radiation doses.

In the Middle East, at least six prominent opposition leaders were detained by authorities in Bahrain on Thursday, barely hours after a violent crackdown on anti-government protesters in the capital Manama.

Iran recalled its ambassador from Bahrain to protest the crackdown on Shiite protesters.

The Bank of Japan continued to inject cash to calm the financial market with the latest release of 5 trillion yen according to bond traders in Tokyo.

The central bank injected around 55.6 trillion yen this week. On Monday, the central bank eased its monetary policy by doubling the size of outright asset purchases under its policy of quantitative easing to 10 trillion yen.

U.S. CPI Rises

The U.S. Labor Department said that the consumer price index rose 0.5% in February after rising 0.4% in each of the two previous months, with the prices driven by higher energy prices. The energy index rose 3.4% and gasoline index increased 4.7% in February.

Excluding the jump in energy prices as well as a moderate increase in food prices, the core consumer price index rose 0.2% in February, matching the increase in January.

U.S. Weekly Jobless Claims Decline

Seasonally adjusted weekly jobless claims decreased 16,000 to 385,000 from the revised previous week claims of 401,000.

The preliminary insured unemployment rate in the week ending March 5 was unchanged from the prior week''s unrevised rate of 3.0%.

Industrial Production Rises 0.3%

February industrial production increased 0.3% after fell 0.1% in January. Manufacturing production rose 0.4% and mining increased 0.8%. Utility output declined 4.5% and capacity utilization for total industry fell to 76.3%.

Private Equity Firms Plan Buying Hotel Mortgages from FDIC

Blackstone Group L.P. and Square Mile Capital Management LLC, the private-equity firms have agreed to buy from the Federal Deposit Insurance Corp. a portfolio of $385 million of hotel-backed mortgages, the Wall Street Journal reported Wednesday, citing people familiar with the deal.

The group of private equity firms agreed to pay about 80 cents on the dollar for the portfolio of mortgages that are backed by 45 hotels. The mortgages were held by the failed Silverton Bank in Georgia, which held the debt until mid-2009, when it was closed by the FDIC.

VimpelCom Shareholders Approve Merger with Wind Telecom

VimpelCom Ltd. said its shareholders approved the combination of the company with Wind Telecom S.p.A., despite a vocal opposition from its largest shareholder Telenor ASA.

In all 53.5% of voted shares approved the merger with the assets controlled by the Egyptian billionaire Naguib Sawiris. Telenor controls a 36% voting stake in VimpelCom and has been involved in a legal fight with the company and urging the telecom carrier to lower its debt.

Through the deal, VimpelCom will have more than 50% stake in Orascom and Italy based Wind Telecommunicazioni SpA.

Under the deal VimpelCom will pay $1.495 billion in cash and 325.6 million in new shares and 305 million in new preferred shares in the company to Wind Telecom. The total deal is valued at $6 billion.

VimpelCom said the merger with Wind Telecom is expected to lead to the creation a new global telecom player with over 173 million mobile subscribers covering a population of 838 million people.

In addition, the combined group will have a diversified revenue base, larger scale of operations, and potential synergies estimated to be $2.5 billion on a net present value basis.

Earnings Review

Aurizon Mines Ltd. ((AZK, ARZ.TO)), the Canadian gold miner reported fourth-quarter revenue grew 16% to C$48.56 million from C$41.98 million last year. Net earnings in the quarter declined 37% to C$6.21 million or C$0.04 per share compared with net earnings of C$9.86 million or C$0.06 per share last year.

CLARCOR Inc. ((CLC)), the filtration and packaging products company reported first quarter net sales increased 14% to $245.72 million from $215.13 million last year. Net earnings for the quarter rose 47% to $21.88 million or 43 cents per diluted share compared to net earnings of $14.87 million or 29 cents per share in the first quarter of previous year.

FedEx Corporation ((FDX)), the package delivery giant stated third quarter revenue increased 11% to $9.66 billion from $8.70 billion the previous year.

Net income in the quarter slipped 3.3% to $231 million or 73 cents per diluted share compared to net income of $239 million or 76 cents per share last year, due in part to costs related to the combination of the company''s FedEx Freight and FedEx National LTL operations.

Guess?, Inc. ((GES)), the international fashion house said fourth quarter total net revenue rose 17.9% to $756.92 million from $642.03 million in the same quarter last year.

Net income for the quarter rose 19% to $103.3 million or $1.11 per diluted share compared to net income of $86.6 million or 93 cents per share for the year-ago quarter, driven by strong growth in Europe and Asia.

Herman Miller, Inc. ((MLHR)), the office furniture system maker reported third quarter net sales increased 25.8% to $414.8 million from $329.6 million last year. Net earnings in the quarter rose 139% to $19.8 million or 29 cents per diluted share compared to net earnings of $8.3 million or 12 cents per share in the previous year.

Pegasystems Inc. ((PEGA)), the business automation software developer reported fourth quarter total revenue rose 22% to $89.25 million from $72.95 million last year. Net loss for the quarter was $4.69 million or 13 cents per diluted share compared to an income of $6.33 million or 16 cents per share in the previous year.