European Indexes Rise; Volkswagen, Volvo Net Up, Credit Suisse Net Down

Arthi Gupta
27 Apr, 2011
New York City

European indexes gained after strong corporate earnings. Automakers led the way with Volkswagen and Volvo reporting better-than-anticipated profit. Nokia planned to outsource Symbian activities to Accenture. J&J agreed to acquire Synthes in $21.3 billion deal.

[R]2:00 PM Frankfurt – European indexes gained after strong corporate earnings. Automakers led the way with Volkswagen and Volvo reporting better-than-anticipated profit. Nokia planned to outsource Symbian activities to Accenture. J&J agreed to acquire Synthes in $21.3 billion deal.[/R]

European markets gained on better than expected earnings from industrial companies, automakers, banks and telecom equipment suppliers.

U.S. indexes traded higher ahead of the interest rate decision later today.

Asian markets traded mixed after Standard & Poor''s revised down the outlook on Japan''s long-term rating to negative from stable. The ratings agency warned of a possible rating downgrade if the country’s fiscal situation worsens further over the next two years.

However, investors largely ignored the rating agency action on the widely held perception that S&P and Moody’s lag the market and have lost their credibility in the last three years.

In Paris CAC-40 Index gained 33.24 or 0.82% to 4,078.53 and in Frankfurt DAX index edged higher 68.46 or 0.93% to 7,424.97.

Johnson & Johnson Acquires Synthes

Johnson & Johnson announced a deal to acquire the medical devices company Synthes, Inc. for Sfr159 per share or $21.3 billion. Upon completion of this transaction, Synthes and the DePuy Companies of Johnson & Johnson together will comprise the largest business within the Medical Devices and Diagnostics segment of Johnson & Johnson.

Nasdaq, ICE Urge For Talks

Nasdaq OMX Group, Inc. and IntercontinentalExchange, Inc. in an open letter to NYSE Euronext shareholders urged them to call on their directors to set up a meeting between Nasdaq OMX, ICE and NYSE to address any concerns they have and start a mutual due diligence process.

Last week, the NYSE Euronext board once again rejected the $11.2 billion unsolicited offer from Nasdaq OMX and ICE in favor of a merger with Deutsche Boerse AG.

Nokia Slashes Jobs

Nokia intends to reduce its global workforce by about 4,000 employees by the end of 2012, with the majority of reductions in Denmark, Finland and the UK.

Separately, Nokia announced plans to outsource its Symbian software activities and transition about 3,000 employees to Accenture. At the same time, Accenture would provide mobility software services to Nokia for future smartphones.

Gainers & Losers

ABB Ltd. gained 2.97% to Sfr23.23 after the Swedish power and automation technology company reported first quarter revenues advanced 21% to $8.4 billion, the strongest growth in the past two years. Net income for the quarter increased 41% to $655 million or $0.29 per basic share from $464 million or $0.20 per share in the prior year.

Credit Suisse Group AG edged higher 0.92% to Sfr39.66 after the Swiss investment bank reported first-quarter core net revenues dropped 13% percent to Sfr7.81 billion. Net income in the quarter declined 45% to Sfr1.14 billion from Sfr2.06 billion in the prior-year quarter. Earnings per share slumped to 0.90 francs from 1.63 francs.

Electrolux AB fell 1.16% to SEK 161.20 after the appliances maker stated first quarter net sales declined 7% to SEK 23.44 billion from SEK 25.13 billion a year ago. Net income in the quarter fell 50% to SEK 457 million or SEK 1.60 per share compared to SEK 911 million or SEK 3.19 per share last year.

Koninklijke DSM N.V. surged 6.39% to €46.19 after the company engaged in creating products and services in Life Sciences and Materials Sciences reported first quarter sales grew 15.5% to €2.23 billion from €1.93 billion in the comparable period last year. Net Profit, incl exceptionals, rose 28% to €166 million or 0.98 euros per share from €130 million or 0.78 euros per share last year.

LM Ericsson Telephone Co. surged 10.58% to $14.53 after the Swedish telecom equipment maker reported first quarter net sales grew 17% to SEK 53 billion from SEK 45.1 billion in the same quarter last year. Net income in the quarter soared 220% to SEK 4.1 billion or SEK 1.27 per share from SEK 1.3 billion or SEK 0.39 per share in the prior-year quarter.

STMicroelectronics N.V. slumped 3.37% to €8.14 after the independent semiconductor company said first quarter net revenues increased 9% to $2.54 billion from $2.33 billion in the same quarter last year. Net income in the quarter soared 198% to $170 million or 19 cents per diluted share from $57 million or 6 cents per share in the prior-year quarter.

Volkswagen AG soared 6.05% to €117.50 after the German automobile manufacturer reported first quarter group sales revenue grew 30.8% to €37.47 billion from €28.65 billion in the previous year. Profit after tax for the quarter soared 264% to €1.71 billion versus €0.47 billion a year earlier.

Volvo AB increased 2.55% to SEK 116.50 after the Swedish automaker reported first quarter net sales climbed 22% to SEK 71.58 billion from SEK 58.62 billion kronor a year ago. Net income in the quarter surged 143% to SEK 4.09 billion from prior year''s SEK 1.68 billion. Earnings per share were 2.01 kronor, higher than 0.83 kronor a year ago.