U.S. Import Prices Fall 0.5%; Kinetic Concepts in $6.3 Billion Deal

Arthi Gupta
13 Jul, 2011
New York City

U.S. indexes futures gained after import prices fell 0.5% in June. Applications for U.S. home mortgages slid for the fourth consecutive week. Private equity consortium acquired Kinetic Concepts for $6.3 billion. Electronic Arts agreed to buy PopCap for $750 million.

[R]9:00 AM New York – U.S. indexes futures gained after import prices fell 0.5% in June. Applications for U.S. home mortgages slid for the fourth consecutive week. Private equity consortium acquired Kinetic Concepts for $6.3 billion. Electronic Arts agreed to buy PopCap for $750 million.[/R]

World indexes traded higher after positive Chinese GDP data offset lingering sovereign debt worries and Moody''s downgrade of Ireland''s credit rating to junk status.

Asian markets climbed after China''s gross domestic product rose 9.5% on year in the second quarter of 2011, following the 9.7% increase in the first quarter, the statistics bureau said on Wednesday.

Another report showed industrial production surged 15.1% and retail sales expanded 17.7% in June.

European markets looked overseas in the absence of local economic news. China reported a sharp increase in economic expansion despite the recent monetary tightening stoking optimism that the current expansion may be sustained.

Moody''s downgraded Ireland''s foreign and local-currency government bond ratings by one notch to Ba1 from Baa3. The outlook on the ratings remains negative.

The rating agency said that the nation will need further rounds of official financing before it can return to the private market.

U.S. Import Prices Decline

June import price index for the U.S. decreased 0.5% and fuel prices fell 1.6%, the second consecutive monthly decline, following 0.8% in May. The index for export prices increased 0.1%.

U.S. Mortgage Applications Fall

U.S. mortgage applications declined for the fourth consecutive week, according to industry data released today.

Mortgage applications decreased 5.1% from one week earlier, according to data published from the Mortgage Bankers Association''s Weekly Mortgage Applications Survey for the week ending July 8.

The seasonally adjusted Purchase Index decreased 2.6% from one week earlier. The Refinance Index decreased 6.2% from the previous week, and was 42.1% lower than a year ago.

Fixed 30-year mortgage rates averaged 4.55%, down from 4.69%.

Consortium Acquires Kinetic Concepts

Kinetic Concepts, Inc., the medical technology company agreed to be acquired by a private consortium comprising of funds advised by Apax Partners, together with controlled affiliates of Canada Pension Plan Investment Board and the Public Sector Pension Investment Board for $68.50 per share in cash or for a total value of $6.3 billion, including outstanding debt.

Electronic Arts Buys PopCap

Electronic Arts Inc., the video-game publisher agreed to acquire PopCap Games, a leading provider of games for mobile phones, tablets, PCs and social network sites for $750 million.

Electronic Arts said it would pay approximately $650 million in cash and $100 million in EA shares to certain stockholders of PopCap.

EA does plan, however, to pay an additional $550 million to PopCap if the company were to generate cumulative before-tax-and-interest earnings more than approximately $343 million over the next two years.

OpenText Purchases Global 360

Open Text Corp. said it purchased Global 360 Holding Corp., a provider of process and case management solutions for about $260 million.

Open Text noted that the acquisition continues its expansion into the fast growing business process management market as well as giving the company important new capabilities in dynamic case management.

Earnings Review

Adtran, Inc. ((ADTN)), the networking and communications equipment provider reported second quarter total sales increased 23% to $184.23 million from $150.36 million in the same quarter last year. Net income in the quarter climbed 33% to $36.94 million or 56 cents per diluted share compared to net income of $27.75 million or 44 cents per share in the year-ago quarter.

Capital One Financial Corp. ((COF)), the financial holding company said second quarter total revenue rose 2.3% to $3.99 billion from $3.90 billion in the comparable period. Net income in the quarter surged 50% to $911 million or $1.97 per share compared to net income of $608 million or $1.33 per share last year.

Healthcare Services Group, Inc. ((HCSG)), the provider of housekeeping and food services to hospitals and nursing homes reported second quarter revenues increased 10% to $211.51 million from $192.95 million in the year-ago quarter. Net income in the quarter gained 13% to $9.82 million or 15 cents per diluted share compared to net income of $8.72 million or 13 cents per share in the prior-year quarter.