U.S. Stocks Advance on Deals; Microsoft to Pay $8.5 Billion for Skype

Bikram Pandey
10 May, 2011
New York City

U.S. stocks traded higher on merger news. Microsoft agreed to acquire Skype for $8.5 billion in cash. American Idol parent CKX agreed to go private. China

[R]11:00 AM New York – U.S. stocks traded higher on merger news. Microsoft agreed to acquire Skype for $8.5 billion in cash. American Idol parent CKX agreed to go private. China’s April exports and trade surplus soared and U.S. import prices increased at a slower than expected pace.[/R]

U.S. stocks gained in early trading after deal news and a surge in China’s April exports and the release of import price data.

Microsoft Corp agreed to acquire Internet telephony services provider Skype for $8.5 billion in cash. The largest ever purchase by Microsoft will help the software company to compete with mobile applications and communication offerings from Google and Apple.

Skype had recently filed to go public and raise more than $100 million and expand its video conferencing services using Internet Protocol platform.

In economic news, March wholesale sales increased 2.9% to $392.0 billion from the revised February sales and rose 15.4% from a year ago month.

According to the latest data from the U.S. Labor Department, March inventories rose 1.1% to $442.9 billion from the revised February data and increased 13.3% from a year ago.

In international news, Australian trade surplus increased to $1.47 billion in March compared to revised deficit of $87 billion in February according to the latest data from the Australian Bureau of Statistics.

China’s April trade surplus soared to $11.4 billion from $139 million in March and currency markets worried that inflation data later in the week may also prompt the Chinese government to tighten rates.

The Australian dollar traced lower from the high of $1.081 as investors focused on lower than expected Chinese import data.

In commodities markets, crude oil futures rose above $101 a barrel and silver futures topped $38 an ounce as gold price climbed to $1,510 an ounce. The dollar gained fractionally against the yen and the euro.

Stock Movers

Dean Foods increased 8% after it reported better than expected first quarter earnings.

Wendy’s/Arby’s Group declined 1% to $4.77 after the restaurant chain operator lowered its full year earnings outlook on higher food and operating cost.

Medifast ((MED)) soared 14% to $23.24 after the company reported first quarter net soared 30%.

The parent of American Idol television entertainment show CKX ((CKXE)) agreed to be acquired by private equity firm Apollo Global Management for $510 million. CKX soared 22.7% to $5.46.

JA Solar Holdings Co Ltd ((JASO)) increased 5.4% to $6.43 after the company reported better than expected earnings in the quarter to March and estimated second quarter sales growth to slow on lower subsidies for renewable energy in Italy.

JA Solar quarterly net soared to $71.8 million or 41 cents per ADS share from $38.4 million or 25 cents a share a year ago.