U.S. Stocks Fall, Euro Weakens; Verizon in Video Venture

Nichole Harper
06 Feb, 2012
New York City

U.S. index declined after Greek negotiations worries overwhelmed earnings reports. Fidelity National offered to acquire casual restaurant chain O

[R]1:45 PM New York – U.S. index declined after Greek negotiations worries overwhelmed earnings reports. Fidelity National offered to acquire casual restaurant chain O’Charley’s. Video rental services provider Coinstar and Verizon formed a streaming service joint venture.[/R]

U.S. stocks traded lower on the first day of a week after rising for five weeks in a row. The indexes came under pressure at the opening after Greek leaders and international troika failed to meet the deadline for the debt restructuring and the conditions for the future bailouts.

Market indexes declined in a cautious trading after generally better than expected earnings from CNA Insurance, HCA Corp, Lazard Limited and Hasbro, Inc.

The toy maker, Hasbro reported fourth quarter earnings ahead of expectations, Humana Inc reported a surge in last quarter of the year 2011.

In deal news, Fidelity National Financial Inc agreed to acquire casual dining chain O’Charley’s Inc for $9.85 a share, 45% premium to its closing price on Friday. Fidelity controls 9.5% of the stock before the offer.

However, investors focused on the tortuous Greek negotiations.

German Chancellor Angela Merkel in Paris said she wants quick actions from Athens and failure to strike a deal could risk the next tranche of the bailout.

She also added, “We want Greece to stay in the euro. I want to make clear once again that there can be no deal if the troika proposals are not implemented. They are on the table, time is of the essence.”

The latest data from the European Union statistics agency Eurostat in Luxembourg reported Greece’s debt rose to 159.1% of GDP in the third quarter from 138.8% in the quarter a year ago.

The E.U. estimated the debt ratio to surge to 162.8% in 2011 for Greece, sharply above the 60% target set for the euro zone members.

The statistical agency also said the debt ratio for Italy rose 0.5 percentage point to 119.6% in the third quarter and Portugal’s ratio increased 18.9 percentage points to 110.1%. Ireland’s debt ratio also increased to 104.9%.

The lack of decision between Greece and international lenders rattled market indexes across Europe.

Verizon and Coinstar in Video Streaming Deal

The second largest U.S. telecom operator Verizon Communications Inc and DVD rental services provider Coinstar Inc entered into a joint venture that will offer video streaming service via broadband Internet.

Verizon will control 65% stake in the company and Coinstar Inc will have the rest. Coinstar operates 34,000 kiosks to rent videos across the nation, largely at grocery stores and has roughly 30 million renters.

The joint venture is going to compete with the popular Neflix Inc and other similar ventures between Blockbuster and satellite TV operator Dish Network and similar services in the works from Google and Amazon. Verizon Wireless, the subsidiary of Verizon is also in a deal to with cable companies Comcast and Time Warner Cable to market TV plans.

Stock Movers

Lazard Limited ((LAZ)) dropped 7.2% or $2.10 to $26.79 after the Bermuda based financial advisor reported fourth quarter net revenue decreased to $451.8 million from $594.9 million in the same quarter last year.

Net loss in the quarter swung to $4.8 million or 4 cents per diluted share compared to net income of $99.8 million or 77 cents per diluted share in the year ago earlier.

Loews Corporation ((L)) fell 35 cents to $38.26 after the property and casualty insurer reported fourth quarter revenue decreased to $3.48 billion from $3.72 billion in the same quarter last year.

Net earnings in the quarter dropped to $268 million or $0.67 per diluted share compared to $466 million or $1.12 per diluted share in the year ago earlier.

For 2011 revenue decreased to $14.1 billion from $14.6 billion in last year. Net income for the year slumped to $1.06 billion or $2.63 per diluted share compared to $1.29 billion or $3.07 per share in the prior year.

Humana Inc. ((HUM)) slipped 3.4% or $3.07 to $87.05 after the accident and health insurer reported fourth quarter revenue increased 9% to $9.06 billion from $8.28 billion in the same quarter last year.

Net earnings in the quarter surged 86% to $199 million or $1.20 per diluted share compared to $107 million or $0.63 per diluted share in the year ago earlier.

For 2011 revenue increased 10% to $36.83 billion from $33.60 billion in last year. Net earnings for the year increased 29% to $1.42 billion or $8.46 per diluted share compared to $1.10 billion or $6.47 per share in the prior year.

Micron Technology Inc ((MU)) declined 20 cents to $7.75 after the death of its chief executive in a plane crash last week.

Sysco Corporation ((SYY)) slipped 3.8% or $1.19 to $29.71 after the food products distributor reported second quarter sales grew 9.2% to $10.2 billion from $9.4 billion in the same quarter last year.

Net earnings in the quarter slipped to $250.1 million or 43 cents per diluted share compared to $258.2 million or 44 cents per diluted share in the year ago earlier.