U.S. Deficit Widens to $50.2 Billion, Alcoa Net More Than Doubles

Arthi Gupta
12 Jul, 2011
New York City

U.S. indexes traded lower as the euro-zone debt contagion fears expand to Italy and Spain. U.S. trade deficit widened to $50.2 billion in May. NCR agreed to acquire Radiant Systems for $1.2 billion. Alcoa Inc net sales increased 27% and net more than doubled.

[R]10:15 AM New York – U.S. indexes traded lower as the euro-zone debt contagion fears expand to Italy and Spain. U.S. trade deficit widened to $50.2 billion in May. NCR agreed to acquire Radiant Systems for $1.2 billion. Alcoa Inc net sales increased 27% and net more than doubled.[/R]

World indexes declined on worries that the sovereign debt crisis may spread to other euro-zone nations like Italy and Spain.

Asian markets plummeted amidst fears that the contagion effect may slowdown global economic recovery.

European market indexes declined more than 2% for the second day this week after a weak statement from the euro-zone finance ministers as Italian worries added to the fragile world markets sentiment.

U.S. Trade Deficit Widens

Trade deficit in May increased to $50.2 billion from the revised $43.6 billion in April. May exports decreased $1 billion and imports increased $5.6 billion. The goods deficit rose to $64.9 billion and service surplus rose to $14.7 billion.

NCR Acquires Radiant Systems

NCR Corporation, the ATM and cash dispenser maker agreed to acquire Radiant Systems, Inc, a maker of products for the hospitality and retail industries for $28 a share in cash or $1.2 billion.

The acquisition will help NCR to establish leadership in the hospitality and specialty retail markets.

MedQuist Buys M*Modal

MedQuist Holdings Inc., a leading provider of integrated clinical documentation solutions inked a deal to acquire M*Modal and its advanced Speech Understanding technology for total consideration of $130 million.

Cisco Plans Jobs Cut

Cisco Systems Inc. may cut as many as 10,000 jobs or about 14% of its workforce to revive profit growth, Bloomberg reported on Tuesday, citing people familiar with the plans.

The planned reduction include the elimination of as many as 7,000 jobs by the end of August, while the company is providing early-retirement packages to about 3,000 workers who accepted buyouts. These packages would include one year''s pay and medical benefits, and were offered to about 5,800 employees, the report said.

Earnings Review

Alcoa Inc. ((AA)), the aluminum producer said second quarter sales rose 27% to $6.59 billion from $5.19 billion in the same quarter last year. Net income in the quarter surged 137% to $322 million or 28 cents per diluted share compared to net income of $136 million or 13 cents per share for the year-ago quarter.

Chevron Corporation ((CVX)), the energy corporation estimated profit for the second quarter to increase sequentially, driven by increased crude oil prices.

Infosys Technologies Ltd. ((INFY)), the Indian software services firm reported first quarter revenue grew 23% to $1.671 billion from $1.358 billion in the year ago quarter. Net income on an IFRS basis rose 18% to $384 million from $326 million in the corresponding quarter of the preceding year. Earnings per American depositary share rose to $0.67 from $0.57 in the prior-year quarter.

Microchip Technology Inc. ((MCHP)), the microcontrollers, analog and Flash-IP solutions estimated first quarter earnings to be about $0.47 to $0.49 per share, down from the previous estimate of $0.52 to $0.55 per share.

Novellus Systems, Inc. ((NVLS)), the semiconductor equipment maker said second quarter net sales increased 9% to $350.2 million from $321.4 million in the same quarter last year. Net income in the quarter improved 2.2% to $64.7 million or 79 cents per diluted share compared to net income of $63.3 million or 66 cents per share in the prior-year quarter.

Wolverine World Wide, Inc. ((WWW)), a manufacturer of work-related footwear and apparel reported second quarter revenue grew 20.1% to $310.14 million from $258.20 million in the previous year. Net earnings in the quarter improved 39.1% to $23.96 million or 48 cents per diluted share compared to net earnings of $17.22 million or 35 cents per share a year earlier.