Stocks Higher on Greek Deal Hopes; RiM Plunges 18%

Arthi Gupta
17 Jun, 2011
New York City

U.S. stocks traded higher as Germany and France inch closer to Greek bailout. RiM dropped 12% after it estimated lower sales and earnings. Capital One agreed to acquire ING Direct for $9 billion. Tata Steel agreed to sell its entire stake in Riversdale to Rio Tinto for $1.1 billion.

[R]11:20 AM New York – U.S. stocks traded higher as Germany and France inch closer to Greek bailout. RiM dropped 18% after it estimated lower sales and earnings. Capital One agreed to acquire ING Direct for $9 billion.Tata Steel agreed to sell its entire stake in Riversdale to Rio Tinto for $1.12 billion.[/R]

U.S. indexes and European stocks gained trading after Greek Prime Minister George Papandreou reshuffled cabinet and appointed veteran politician as its new finance minister that boosted investor sentiment.

German Chancellor Angela Merkel and French President Nicolas Sarkozy agreed to a Greek debt proposal that will seek approval from the European Central Bank and offered “fully voluntary” participation of private investors.

Asian markets fell on rising concerns over Greece's ability to avoid a default. Hong Kong index dropped to eight month low and finished worst two week decline in since November.

Prada SpA completed the Hong Kong’s largest public offering to raise $2.2 billion that values the company at 22 times current year earnings or $13 billion.

Greek Prime Minister George Papandreou reshuffled cabinet to garner support for the government's austerity measures. Evangelos Venizelos will be the country's new Finance Minister, a government spokesperson said today, replacing George Papaconstantinou.

The Greek government is under immense pressure from the European Union and the International Monetary Fund to impose more unpopular austerity measures that include public-sector pay-cuts and tax hikes to save an extra €28 billion, or $40.5 billion and asset sale of as much as $70 billion.

Capital One Acquires ING Direct

Capital One Financial Corp. agreed to buy ING Direct from Dutch financial services firm ING Groep NV in a cash and stock deal valued at $9 billion.

Under the deal, Capital One will pay ING Groep $6.2 billion in cash and issue about 55.9 million Capital One shares, valued at $2.8 billion.

The acquisition will make Virginia-based Capital One the fifth largest depository institution and the leading direct bank in the United States.

Tata Steel Sells Riversdale Stake

Tata Steel Ltd., the Indian conglomerate said it will sell its entire 26.27% stake in Australian coking coal miner Riversdale Mining Ltd. for A$1.06 billion or $1.12 billion to Rio Tinto Ltd. Enabling Rio Tinto to take full ownership of Mozambique-focused Riversdale.

Tata Steel noted that the sale price represents a doubling in value in less than four years since its first investment in Riversdale and it will continue its joint venture with the company in Mozambique.

Chrysler Recalls Over 11,000 Vehicles

Chrysler Group LLC is recalling 11,351 vehicles across the Chrysler, Dodge and Jeep brands over a possible missing and incorrectly installed steering column pivot rivet, according to the National Highway Traffic Safety Administration.

Amdocs Acquires Bridgewater Systems

Amdocs Ltd., a provider of customer experience systems agreed to acquire Canada's broadband controls provider Bridgewater Systems Corp. for C$8.20 per share in a cash deal or C$211 million.

The total deal price would be C$128 million net of Bridgewater's cash as of March 31.

Oracle Sues Google

Oracle Corp. is seeking billions of dollars in damages in its Java patent- and copyright-infringement lawsuit against Google Inc., reports said citing a filing in San Francisco federal court.

Earnings Review

Lender Processing Services, Inc. ((LPS)), the mortgage services company estimated second quarter earnings per share in the range of $0.54 to $0.56.

Research In Motion Limited ((RIMM)), the smartphone maker said first quarter revenue increased 16% to $4.9 billion from $4.2 billion in the same quarter last year. Net income in the quarter declined 9.5% to $695 million or $1.33 per diluted share compared to net income of $769 million or $1.38 per share in the prior-year quarter.

The stocks fell in early trading after the company guided sales drop for the first time in nine years and plans to cut jobs.

The company guided sales in the quarter to be in the range of $4.2 billion to $4.8 billion and earnings per share between 75 cents and $1.05.

Steel Dynamics, Inc. ((STLD)), the steel producer and metals recycler estimates second quarter earnings per share to be in the range of $0.35 to $0.40.