U.S. Durable Orders Surge 2.5%; J&J Acquires Synthes for $21.3 B

Arthi Gupta
27 Apr, 2011
New York City

U.S. indexes edged higher after durable goods orders surged in March. Mortgage applications fell on higher FHA premiums. IBM authorized $8 billion for stock buyback. SMART Modular agreed to be acquired by Silver Lake Partners and Silver Lake Sumeru for $645 million.

[R]9:50 AM New York – U.S. indexes edged higher after durable goods orders surged in March. Mortgage applications fell on higher FHA premiums. IBM authorized $8 billion for stock buyback. SMART Modular agreed to be acquired by Silver Lake Partners and Silver Lake Sumeru for $645 million.[/R]

U.S. indexes are moving ahead after upbeat earnings news and better-than-anticipated economic data but are cautious ahead of the interest rate decision announcement from the Federal Reserve.

European indexes gained after good corporate earnings and Asian markets traded mixed.

Rating agency Standard & Poor''s said today that it had cut its outlook on Japan''s sovereign debt rating to ''negative'' from ''stable'' and warned of a possible downgrade if fiscal deterioration exceeds its estimates.

U.S. Mortgage Applications Fall

Applications for home mortgages in the U.S. decreased 5.6% from one week earlier, according to data from the Mortgage Bankers Association''s Weekly Mortgage Applications Survey for the week ending April 22. There was no adjustment made for Good Friday.

The seasonally adjusted Purchase Index decreased 13.6%, to its lowest level since February 25, 2011, driven by a 26.6% decrease in government purchase applications.

The average contract interest rate for 30-year fixed-rate mortgages decreased to 4.80% from 4.83%.

U.S. Durable Goods Orders Surge

New orders for U.S. manufactured durable goods showed a notable increase in the month of March, according to a report released by the Commerce Department on Wednesday.

The report showed that durable goods orders surged 2.5% in March following a revised 0.7% increase in February. The increase brings the total level of new orders for manufactured durable goods to $208.4 billion.

U.S. Consumer Confidence Index Rises

The U.S. Conference Board released a report on Tuesday showing that confidence rebounded by more than anticipated in April. The Conference Board said its consumer confidence index rose to 65.4 in April from an upwardly revised 63.8 in March.

IBM Hikes Dividend, Authorizes Buyback

International Business Machines Corp. announced a 15% increase in quarterly dividend and said its board authorized additional funds of $8 billion to buy back shares.

IBM declared a regular quarterly cash dividend of $0.75 per share. This dividend represents an increase of $0.10 per share from the company''s prior quarterly dividend of $0.65 per share.

Johnson & Johnson Acquires Synthes

Johnson & Johnson announced a deal to acquire the medical devices maker 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.

SMART Modular Agrees for Acquisition

SMART Modular Technologies, a leading independent manufacturer of memory modules and solid state storage products entered into an agreement to be acquired by Silver Lake Partners and Silver Lake Sumeru for $9.25 per share in cash. The transaction is valued at approximately $645 million.

Earnings Review

Amazon.com, Inc. ((AMZN)), the online retailer said first quarter revenues soared 38% to $ 9.86 billion from $7.13 billion reported for the year-ago quarter. Net earnings in the quarter slumped 33% to $201 million or 44 cents per share compared to net earnings of $299 million or 66 cents per share for the year-ago quarter.

Canadian National Railway Company ((CNI)), the largest freight railroad reported first quarter revenues increased 6% to C$2.08 billion from C$1.96 billion a year before. Net income in the quarter increased 31% to C$668 million or C$1.45 per share compared to net income of C$511 million or C$1.08 per share last year.

C.H. Robinson Worldwide, Inc. ((CHRW)), the third party logistics company said first quarter total revenue rose 14% to $2.37 billion from $2.07 billion in the same quarter last year. Net income in the quarter increased 15.5% to $97.0 million or 59 cents per diluted share compared to net income of $84.0 million or 50 cents per share for the year-ago quarter.

DreamWorks Animation SKG, Inc. ((DWA)), the animation film maker said first quarter total revenues fell 33% to $108.04 million from $162.14 million in the same quarter last year. Net income in the quarter plunged 59% to $8.8 million or 10 cents per diluted share compared to net income of $21.7 million or 24 cents per share for the year-ago quarter.

The Western Union Company ((WU)), the global payment services provider reported first quarter revenue grew 4% to $1.28 billion from $1.23 billion in the year-ago period. Net income in the quarter rose 1.1% to $210.2 million from $207.9 million in the year-ago quarter. On a per-share basis, earnings for the quarter rose to $0.32 from $0.30 as the share count was lower.