U.S. Jobless Claims Rise; Apple CEO Quits

Arthi Gupta
25 Aug, 2011
New York City

U.S. indexes traded sideways after weekly jobless claims rose 5,000 to 417,000. SPX agreed to acquire CLYDEUNION Pumps for $1.15 billion. Renaissance Learning received $15.50 a share takeover offer. Steve Jobs resigned as CEO of Apple that he co-founded and turned it the most valued U.S. company.

[R]10:00 AM New York – U.S. indexes traded sideways after weekly jobless claims rose 5,000 to 417,000. SPX agreed to acquire CLYDEUNION Pumps for $1.15 billion. Renaissance Learning received $15.50 a share takeover offer. Steve Jobs resigned as CEO of Apple that he co-founded and turned it the most valued U.S. company.[/R]

U.S. indexes traded sideways after weekly jobless claims rose 5,000 to 417,000 and Apple CEO Steve Jobs resigned. Jobs has been battling cancer and will remain as chairman of the board and a director of the company.

European and Asian indexes traded higher as central bankers around the world gather tomorrow to discuss the status of the world economy.

The French Prime Minister Francois Fillon unveiled a package of austerity measures on Wednesday aimed at generating additional savings of €12 billion over the next two years to narrow its budget deficit.

The Congressional Budget Office on Wednesday released a report forecasting a $1.3 billion federal budget deficit for 2011, the third-largest shortfall in the past 65 years, as the United States is facing profound budgetary and economic challenges.

The CBO added that based on economic data available through early July, it expects GDP to rise 2.3% in 2011 and 2.7% next year.

U.S. Weekly Jobless Claims Rise

First-time claims for U.S. unemployment benefits increased in the last week, according to data released by the U.S. Labor Department today.

The report showed that 417,000 Americans filed new claims for unemployment benefits in the week ended August 20 an increase of 5,000 from the previous week''s revised 412,000 new claims.

The Labor Department noted that some of the increase was due to claims filed by striking Communications Workers of America union members involved in a dispute with Verizon Communications.

The total number of people claiming unemployment insurance decreased 80,000 to 3.641 million for the week ended August 13 from the previous week''s revised level of 3.721 million.

Foreclosure Homes Sales Up

Foreclosure homes accounted for 31% of all U.S. residential sales in the second quarter of 2011, down from nearly 36% of all sales in the first quarter but up from 24% of all sales in the second quarter of 2010, according to RealtyTrac.

The average sales price of homes in foreclosure or bank owned was $164,217 in the second quarter, down less than 1% from the first quarter and dropping 5% from the second quarter of 2010.

SPX to Acquire Clydeunion Pumps

SPX Corp., the industrial products and services provider agreed to acquire UK-based Clydeunion Pumps, a supplier of pump technologies, for £700 million or $1.15 billion. The agreement also includes a potential earn out of up to £50 million based upon the acquired company''s operating earnings in 2012.

Renaissance Learning Receives Offer from Plato Learning

Renaissance Learning, Inc., the educational software and hardware maker said it received an unsolicited, non-binding proposal from Plato Learning, Inc. to acquire the company for $15.50 per share.

The offer tops the $14.85 per share bid received by Renaissance earlier in the month from European private equity firm Permira Advisers LLC.

Steve Jobs Quits

Steve Jobs, chief executive officer of Apple Inc. resigned on health grounds and is succeeded by chief operating officer Tim Cook. The company also stated that Jobs has been elected Chairman of the Board.

In a brief note Jobs, 56, mentioned that “he can no longer meet my duties and expectations.”

Baxter to Buy Baxa Corporation

Baxter International, Inc., the medical technology firm agreed to acquire Baxa Corporation, a privately held company for a total consideration of $380 million.

The acquisition adds to Baxter''s portfolio of nutrition products and drug delivery systems and supports patient safety.

Earnings Review

Applied Materials, Inc. ((AMAT)), the semiconductor equipment maker said third quarter net sales rose 11% to $2.79 billion compared to $2.52 billion in the previous year period. Net income in the quarter surged 287% to $476 million or 36 cents per diluted share compared to net income of $123 million or 9 cents per share in the prior-year quarter.

Big Lots, Inc. ((BIG)), the closeout retailer reported second quarter net sales increased 2.2% to $1.17 billion from $1.14 billion in the previous year. Comparable-store sales for U.S. stores open at least two years at the beginning of the fiscal year decreased 1.5%.

Net income in the quarter decreased 8.2% to $35.68 million or 50 cents per diluted share compared to net income of $38.88 million or 48 cents per share in the year-ago quarter.

Guess? Inc. ((GES)), the apparel maker reported second quarter revenues grew 17.3% to $677.2 million from $577.1 million in the year-ago quarter. Net earnings in the quarter fell 9.1% to $60.7 million or 65 cents per diluted share compared to net earnings of $66.8 million or 72 cents per share in the year-ago period.

Hormel Foods Corporation ((HRL)), the food company reported third quarter net sales rose 10.4% to $1.91 billion from $1.73 billion last year. Net earnings in the quarter grew 15.4% to $98.48 million or 36 cents per diluted share compared to net earnings of $85.37 million or 32 cents per share in the prior-year quarter.