U.S. Private Sector Added 179,000 Jobs; Time Warner Net Falls 10%

Arthi Gupta
04 May, 2011
New York City

U.S. indexes fell after private sector employment rose less-than-estimated in April but mortgage applications volume increased. Applied Materials agreed to acquire Varian Semiconductor for $4.9 billion. ConAgra offered $4.9 billion to buy Ralcorp. Time Warner net declined 10%.

[R]9:00 AM New York – U.S. indexes fell after private sector employment rose less-than-estimated in April but mortgage applications volume increased. Applied Materials agreed to acquire Varian Semiconductor for $4.9 billion. ConAgra offered $4.9 billion to buy Ralcorp. Time Warner net declined 10%.[/R]

U.S. indexes dropped after private sector added 179,000 jobs in April. Asian markets slid and European indexes traded lower after retail sales declined.

Portuguese Prime Minister Jose Socrates announced an agreement with the EU-IMF for a €78 billion bailout package, which will give the country a loan for three years to meet its deficit reduction targets.

The new budget deficit targets are 5.9%, 4.5% and 3% for 2011, 2012 and 2013, respectively.

U.S. Private Sector Employment Up

Private sector employment in the U.S. saw continued growth in the month of April, according to a report released by Automatic Data Processing, Inc. on Wednesday.

ADP said non-farm private employment increased by 179,000 jobs in April following an upwardly revised increase of 207,000 jobs in March.

U.S. Mortgage Applications Volumes Increase

Mortgage applications volume in the U.S. rose in the week ended April 29, reflecting a decrease in the mortgage rates and a surge in refinance volumes.

The results of the latest survey by the Mortgage Bankers'' Association showed that the market composite index, a measure of mortgage loan application volume, rose a seasonally 4% compared to the previous week. The refinance index climbed 6% and was augmented by a 0.3% increase in the purchase index.

The average contract interest rate for 30-year fixed-rate mortgage rates dropped to 4.76% from 4.80% in the previous week.

U.S. Factory Orders Rise

New orders for U.S. manufactured goods increased by more than expected in the month of March, according to figures released by the Commerce Department on Tuesday.

The report showed that new orders for manufactured goods increased 3% or $13.5 billion in March, bringing the total level of orders to $462.9 billion.

GM, Ford Auto Sales Up

General Motors Co. and Ford Motor Co. on Tuesday reported strong U.S. vehicle sales for the month of April, helped mainly by growing demand for small cars amid rising gasoline prices.

GM, the largest U.S. automaker, said U.S. vehicle sales for April increased 26.4% to 232,538 units from 183,997 units in the same month last year.

Ford Motor Co. said that it sold 189,778 vehicles in April, an increase of 16.4% from 162,996 vehicles sold in the same month last year.

Applied Materials Acquires Varian Semiconductor

Applied Materials, Inc., the semiconductor equipment and services provider said that it agreed to acquire Varian Semiconductor Equipment Associates, Inc. for $63 per share or about $4.9 billion in cash on a fully-diluted basis.

ConAgra Raises Offer for Ralcorp

ConAgra Foods, Inc., the packaged foods company increased its offer to acquire Ralcorp Holdings Inc. to $86 per share in cash from the initial $82-per-share stock-and-cash proposal made on March 21. Apart from the $4.9 billion worth cash offer, ConAgra will also assume $2.5 billion in Ralcorp''s debt.

U.S. Sues Deutsche Bank

The U.S. Department of Justice filed a civil mortgage fraud lawsuit against German lender Deutsche Bank AG.

The lawsuit, which claims more than $1 billion or €675.4 million in damages, accuses the bank of choosing mortgages for the Federal Housing Administration''s program ''in blatant disregard of whether borrowers could make mortgage payments.’

Earnings Review

Avis Budget Group, Inc. ((CAR)), the vehicle rental company reported first quarter net revenues grew 7% to $1.24 billion from $1.15 billion in the same quarter last year. Net income in the quarter was $7 million or 6 cents per diluted share compared to a net loss of $38 million or 37 cents per share in the prior-year quarter.

Comcast Corporation ((CMCSA)), the entertainment and communications company reported first quarter revenues surged 31.8% to $12.1 billion, from $9.2 billion last year. Net income in the quarter increased 8.9% to $943 million or 34 cents per diluted share compared with net income of $866 million or 31 cents per share in the prior year.

Las Vegas Sands Corp. ((LVS)), the resorts & casinos operator reported first quarter net revenue increased 58.2% to $2.11 billion from $1.33 billion in the same quarter last year. Net income generated in the quarter was $228.2 million or 28 cents per diluted share compared to a net loss of $28.9 million or 4 cents per share in the prior-year quarter.

Time Warner Inc. ((TWX)), the media and entertainment giant reported first quarter revenues rose 6% to $6.68 billion from $6.32 billion in the prior year. Net income in the quarter fell 10% to $653 million or 59 cents per diluted share compared to net income of $725 million or 62 cents per share last year.