U.S. Indexes Meander; J&J Net Slumps 89%

Arthi Gupta
24 Jan, 2012
New York City

The U.S. indexes declined as the deadlock between Greece and its bondholders continues. SPX agreed to sell its Service Solutions business to Robert Bosch for $1.15 billion. The ILO warned of bleak global unemployment outlook.

[R]9:50 AM New York – The U.S. indexes declined as the deadlock between Greece and its bondholders continues. SPX agreed to sell its Service Solutions business to Robert Bosch for $1.15 billion. The ILO warned of bleak global unemployment outlook.[/R]

U.S. indexes and European markets traded lower after the impasse between Greece and its private creditors continues as both parties remain apart on the Greek proposal of 70% reduction in bond repayment.

The Greek government needs to restructure its debt to reduce it to 120% of GDP by 2020 from the current 160% level.

In Europe, market indexes were lower after companies reported weaker than expected earnings. Siemens, Software AG and KPN reported lower-than-estimated earnings.

Banks were in focus today after Societe Generale and Credit Agricole had their credit opinion downgraded to A from A+, with a stable outlook by Standard & Poor's Ratings Services.

Spain sold €2.51 billion short-term debt today amid lower yield and higher demand, reports said.

The Spanish Treasury issued €1.4 billion of three-month bills at an average yield of 1.285% compared to 1.735% in a December 20 auction. The bid-to-cover ratio was 4.3 compared to 2.9 in the last auction.

The Treasury also sold €1.11 billon of six-month bills at an average yield of 1.847% compared to 2.435% in the last auction. The bid-to-cover ratio rose to 6.9 compared to 4.1 in the prior

The yield on Spain’s benchmark 10-year bond rose to 5.472%.

Asian markets traded mixed and India left its key lending rate on hold and Reserve Bank lowered its cash reserve requirements for bank by 0.5%.

The International Labor Organization in its ""Global Employment Trends 2012"" report said that the world faces an ""urgent challenge"" of creating 600 million new jobs over the next decade. The agency added that globally 1.1 billion people were either unemployed or living in poverty.

Boeing Delivers Two Super Jumbos to Saudi Arabia

Boeing delivered the airline's first two 777-300ERs to the Saudi Arabian Airlines.

Saudi Arabian Airlines also announced an order for eight 777-300ERs valued at $2.4 billion at current list prices.

SPX to Sell Business Unit

SPX Corporation agreed to sell its Service Solutions business to Robert Bosch GmbH for $1.15 billion in cash.

Upon completion of the sale, SPX expects to record an after-tax book gain of approximately $450 million or $8.65 per share.

Semtech to Acquire Gennum

Semtech Corp., the semiconductor maker agreed to acquire Canada-based Gennum Corp. for about C$500 million, or $494 million. Semtech noted that the deal will significantly expand as well as diversify its analog and mixed-signal portfolio.

Earnings Review

EI DuPont de Nemours & Company ((DD)), the chemical company reported fourth quarter sales grew 14% to $8.43 billion from $7.40 billion. Net income in the quarter fell 0.8% to $373 million compared to net income of $376 million in the prior year. Earnings per share remained flat with last year at 40 cents per diluted share.

Johnson & Johnson ((JNJ)) reported fourth quarter sales grew 3.9% to $16.26 billion from $15.64 billion in the prior-year quarter. Net earnings in the quarter slumped 89% to $218 million or 8 cents per diluted share compared to net income of $1.94 billion or 70 cents per share a year ago.

Worldwide sales for the full-year 2011 were $65.0 billion, an increase of 5.6% from 2010. Net earnings and diluted earnings per share for the full-year 2011 were $9.7 billion and $3.49, respectively.

Texas Instruments Incorporated ((TXN)) said fourth quarter revenue declined 3% to $3.42 billion from $3.53 billion in the same quarter last year. Net income in the quarter plunged 68% to $298 million or 25 cents per diluted share compared to net income of $942 million or 78 cents per share for the year-ago quarter.

VMware, Inc. ((VMW)), the provider of virtualization solutions said fourth quarter revenues rose 27% to $1.06 billion from $835.66 million in the year ago quarter. Net income in the quarter surged 67% to $200 million or 46 cents per diluted share compared to net income of $120 million or 28 cents per share last year.

Revenues for 2011 were $3.77 billion, an increase of 32% from 2010. Net income for 2011 was $724 million, or $1.68 per diluted share compared to $357 million, or $0.84 per diluted share, for 2010.