U.S. Indexes Mixed; GE Net Falls 18%, Google Drops 8%

Arthi Gupta
20 Jan, 2012
New York City

The U.S. indexes traded sideways ahead of the outcome of stalled talks between Greece and its international lenders. Investors were cautious in early trading despite positive earnings from tech companies. Intel quarterly net rose 4.6% and Google net rose 7% but fell short of expectations.

[R]10:00 AM New York – The U.S. indexes traded sideways ahead of the outcome of stalled talks between Greece and its international lenders. Investors were cautious in early trading despite positive earnings from tech companies. Intel quarterly net rose 4.6% and Google net rose 7% but fell short of expectations.[/R]

U.S. indexes and European markets traded lower today as nervous investors focused on the outcome of stalled talks between Greece and its international lenders.

Greece is looking to cut its debt load by €100 billion and Greek government is offering new securities to bond holders that pay less than 4% but private lenders, mostly hedge funds, are demanding higher interest rates and lower cut in the principal payment.

Greece is looking to cut its interest payment by €4 billion a year and cut its debt to GDP ratio to 120% from the current 140%.

Greece needs to wrap up its discussion by next week to avail the next tranche of its €130 billion bailout from European institutional lenders.

Asian stocks extended gains after better-than-estimated economic data and earnings from the U.S. and positive outcome of Spanish and French debt auctions. Traders were optimistic that China will loosen its monetary policy.

China's manufacturing sector contracted for a third successive month in January, a survey by Markit Economics showed today.

The Markit/HSBC flash purchasing managers' index rose slightly to 48.8 in January compared to 48.7 in December.

Moody's expects to place the ratings of a number of rated banks under review for downgrade during first-quarter 2012, in order to assess the effect of several trends on bank credit profiles.

Earnings Review

General Electric Company ((GE)), the diversified technology and financial services corporation reported fourth quarter revenue decreased 7.9% to $37.97 billion from $41.23 billion last year. Net income in the quarter fell 18% to $3.73 billion, or 35 cents a diluted share compared to net income of $4.54 billion, or 42 cents a share, a year earlier.

Google Inc. ((GOOG)), the Internet and software corporation reported fourth quarter revenues soared 25% to $10.58 billion from $8.44 billion last year. Net income in the quarter rose 7% to $2.71 billion or $8.22 per share compared to net income of $2.54 billion or $7.81 per share in the year-ago quarter.

Full-year gross revenues grew 29.4% to $37.9 billion from $29.3 billion last year. Net income for the year rose 14.5% to $9.737 billion or $29.76 per share from $8.505 billion or $26.31 per share for fiscal year 2010.

International Business Machines Corp. ((IBM)) reported fourth quarter total revenues grew 2% to $29.49 billion from $29.02 billion a year ago. Net income in the quarter improved 4% to $5.5 billion or $4.62 per diluted share compared to net income of $5.3 billion or $4.18 per share last year.

Revenues for 2011 increased 7% to $106.9 billion compared with $99.9 billion in 2010. Net income for the year rose 7% to $15.9 billion or $13.06 per diluted share compared with $14.8 billion or $11.52 per diluted share in the year-ago period.

Microsoft Corporation ((MSFT)), the software company said second quarter revenue rose 5% to $20.89 billion from $19.95 billion in the same quarter last year. Net income in the quarter fell 0.6% to $6.62 billion or 78 cents per diluted share compared to net income of $6.63 billion or 77 cents per share for the year-ago quarter.

Schlumberger Limited ((SLB)), the oilfield services provider reported revenues grew 21% to $10.97 billion versus $9.07 billion in the same quarter last year. Net income in the quarter rose 35.6% to $1.41 billion or $1.05 per share compared to net income of $1.04 billion or 76 cents per share in the prior-year quarter.

For fiscal year 2011, revenues grew to $39.54 billion from $27.45 billion in the previous year. The company reported adjusted income from continuing operations for the full year of $4.97 billion or $3.66 per share, up from $3.60 billion or $2.86 per share last year.