U.S. Mortgage Activities Rise; IBM, Intel Net Up, Yahoo Earnings Fall

Arthi Gupta
20 Apr, 2011
New York City

U.S. index futures trade higher after IBM and Intel reported higher than expected earnings and Yahoo net dropped 28%. U.S. mortgage activity increased. BofA planned divesting private equity business worth $5 billion. AES agreed to buy DPL for $4.7 billion.

[R]8:30 AM New York – U.S. index futures trade higher after IBM and Intel reported higher than expected earnings and Yahoo net dropped 28%. U.S. mortgage activity increased. BofA planned divesting private equity business worth $5 billion. AES agreed to buy DPL for $4.7 billion.[/R]

World indexes trade higher on upbeat global economic data and strong corporate earnings.

A leading indicator of China''s economic outlook increased for the second straight month in February, signaling continued expansion of the economy.

The Conference Board said on Wednesday that its leading economic index rose 0.3% from the previous month to 155.3 in February.

U.S. Mortgage Activity Increases

U.S. mortgage applications increased 5.3% from one week earlier, according to data from the Mortgage Bankers Association''s Weekly Mortgage Applications Survey for the week ending April 15.

The seasonally adjusted Purchase Index increased 10% to its highest level since December 3, 2010, driven largely by a 17.6% increase in government purchase applications.

Refinancing rose 2.7% from the previous week, as the average contract interest rate for 30-year fixed-rate mortgages decreased to 4.83% from 4.98%.

BofA Plans Divesting Private Equity Business

Bank of America Corp. intends to spin-off BAML Capital Partners, which may be valued at $5 billion.

The business is expected to be spun-off to the team managing the assets after they form an independent private-equity firm, according to an internal memo as quoted in various media reports.

AES Buys DPL

AES Corp., the power company agreed to acquire regulated electric utility DPL Inc. for $30 per share in cash or $3.5 billion in total. The enterprise value of the deal would be $4.7 billion, including the assumed DPL''s net debt of $1.2 billion.

NBCUniversal Strikes Deal With NHL

NBCUniversal reached agreement with the National Hockey League on a ten-year television and media rights deal, reportedly worth $2 billion.

BHP Iron Ore Output Up, Coal Production Declines

BHP Billiton reported higher than expected production in third quarter.

Iron ore production declined only 1% from the previous quarter to 33.23 million tons and coking coal production dropped 14% to 6.67 million tons and manganese dropped 26% to 5.3 million tons.

Iron ore production rose 7% from the previous year quarter despite inclement weather conditions in Western Australia and in Queensland. Thermal coal production increased 7% from a year ago quarter to 17.5 million tons.

BHP is still using force majeure clause for the supply from Bowen Basin production in Queensland and lagging in improving supply at a faster pace. Rio Tinto last week lifted the clause and resumed the normal supply.

Earnings Review

Altria Group, Inc. ((MO)), the largest tobacco corporations said first quarter net revenues decreased 2.1% to $5.64 billion from $5.76 billion last year. Net earnings in the quarter rose 15.3% to $937 million or 45 cents per diluted share compared to net earnings of $813 million or 39 cents per share a year ago.

Intel Corporation ((INTC)), the chipmaker said first quarter profit revenue rose 25% to a record $12.85 billion from $10.30 billion in the same quarter last year. Net income in the quarter soared 29% to $3.16 billion or 56 cents per diluted share compared to net income of $2.44 billion or 43 cents per share for the year-ago quarter.

International Business Machines Corp. ((IBM)), the information technology company reported first quarter total revenues increased 8% on actual rates to $24.6 billion from $22.85 billion in the first quarter of 2010. Net income for the quarter increased 11.5% to $2.9 billion or $2.31 per diluted share compared to net income of $2.6 billion or $1.97 per share in the year-ago quarter.

Juniper Networks, Inc. ((JNPR)), the computer networking gear maker said first quarter total revenue rose 21% to $1.10 billion from $912.62 million in the same quarter last year. Net income in the quarter declined 20% to $129.8 million or 24 cents per diluted share compared to net income of $163.1 million or 30 per share for the year-ago quarter.

VMware, Inc. ((VMW)), the software solutions provider reported first quarter revenues surged 33% to $843.7 million from $633.53 million a year ago. Net income in the quarter climbed 60.7% to $126 million or 29 cents per diluted share compared to net income of $78.4 million or 19 cents per share a year earlier.

Yahoo! Inc. ((YHOO)), the Internet search engine said first quarter revenue decreased 24% to $1.214 billion from $1.6 billion in the same quarter last year. Net income in the quarter fell 28% to $223.0 million or 17 cents per diluted share compared to net income of $310.2 million or 22 cents per share in the prior year quarter.