U.S. Stocks Advance; Oracle to Buy Taleo for $1.9 Billion

Nichole Harper
09 Feb, 2012
New York City

U.S. stocks traded sideways and 49 states agreed to a settlement with five largest U.S. banks for $26 billion for foreclosure abuses. PepsiCo plans to trim $1.5 billion in cost and Cisco Systems quarterly sales exceeded expectations.

[R]12:10 PM New York – U.S. stocks traded sideways and 49 states agreed to a settlement with five largest U.S. banks for $26 billion for foreclosure abuses. PepsiCo plans to trim $1.5 billion in cost and Cisco Systems quarterly sales exceeded expectations.[/R]

U.S. stocks struggled at mid-day after Cisco Systems reported better than expected sales and PepsiCo said it will trim 3% of its workforce.

A multi-billion dollar settlement was announced between 49 states and nations’ largest mortgage lenders over foreclosure abuses.

The settlement was announced by Attorney General Eric Holder this morning and five largest banks – Bank of America, Wells Fargo, Citigroup, JP Morgan Chase and Ally Financial – agreed to pay $25 billion to reimburse home owners and reform mortgage lending.

The settlement would cover mortgages originated between 2008 and 2011 and apply only to privately held mortgages.

Investors were cautiously optimistic after Greek leaders agreed to implement economic reforms and the euro held firm against the dollar.

Oracle Corp agreed to acquire Taleo Corp, the human resource software maker using cloud computing for $1.9 billion.

Greek Negotiations at Next Hurdle

Greek negotiations reached a new hurdle after what appears to be a broad agreement on the bailout terms and labor reforms after marathon negotiations all night ahead of the euro zone finance ministers meeting today.

European Central Bank President Mario Draghi confirmed at a news conference hours ago that leaders of Greek parties have agreed to demands of international lenders according to a call from Greek Prime Minister Lucas Papademos.

Draghi told a news conference in Frankfurt, “Prime Minster of Greece confirmed that an agreement had been reached and has been endorsed by the major parties.”

The agreement still needs approval from the Greek parliament. Greece is schedule to pay €14.5 billion of interest payment on March 20.

Rates on Hold in Europe

European Central Bank left its key lending rate at 1% and President Mario Draghi did not clarify what is the position of the central bank if it will participate in Greek debt swap.

The central bank is estimated to have at least €35 billion of Greek bonds and is in negotiations with the European Financial Stability Facility to transfer those bonds at cost which can be then transferred to Greece at a reduced cost.

Separately, Bank of England left its key lending rate at 0.5% and expanded its bond purchase program, which is essentially printing more money, by 50 billion pounds to 325 billion pounds.

Stock Movers

Cisco Systems, Inc. ((CSCO)) fell 50 cents to $19.93 after the communication equipments maker reported second quarter net sales increased 11% to $11.5 billion from $10.4 billion in the same quarter last year. Net income in the quarter increased surged 44% to $2.2 billion or 40 cents per diluted share compared to $1.5 billion or 27 cents per diluted share in the year ago earlier.

PepsiCo, Inc. ((PEP)) slipped 4.3% or $2.89 to $63.85 after the snack and beverage company reported fourth quarter revenue increased 11% to $20.2 billion from $18.2 billion in the same quarter last year. Net income in the quarter increased 4% to $1.42 billion or 89 cents per diluted share compared to $1.37 billion or 85 cents per diluted share in the year ago.

For 2011 revenue increased 15% to $66.5 billion from $57.8 billion in last year. Retail Net income for the year rose 2% to $6.44 billion or $4.03 per diluted share compared to $6.32 billion or $3.91 per share in the prior year.

PepsiCo also said it will cut 3% of its global workforce or 8,700 jobs and cut $1.5 billion in costs by 2014 to turnaround its food and snacks business. Chief executive Indra Nooyi said stock buyback program of $4 billion will be put in place and quarterly dividend will increase 4% from the next quarter.

Thomson Reuters Corporation ((TRI)) fell 5 cents to $27.72 after the financial information provider reported fourth quarter revenue rose 3% to $3.6 billion from $3.5 billion in the same quarter last year. Net loss in the quarter swung to $2.6 billion or $3.11 per diluted share compared to net earnings of $0.23 billion or $0.27 per diluted share in the year ago.

For 2011 revenue rose 6% to $13.8 billion from $13.1 billion in last year. Net loss in the quarter swung to $1.4 billion or $1.67 per diluted share compared to net earnings of $0.9 billion or $1.08 per share in the prior year.

Visa Inc. ((V)) increased 5% or $5.50 to $113.85 after the payment service provider reported first quarter revenue increased 14% to $2.55 billion from $2.24 billion in the same quarter last year. Net income in the quarter increased to $1 billion or $1.49 per diluted share compared to $0.9 million or $1.23 per diluted share in the year ago.

Whole Foods Market, Inc. ((WFM)) increased 2.4% or $1.90 to $79.83 after the natural and organic food retailer reported first quarter sales increased 13% to $3.4 billion from $3 billion in the same quarter last year. Comparable store sales increased 9%. Net income in the quarter soared 33% to $118.3 million or 65 cents per diluted share compared to $88.7 million or 51 cents per diluted share in the year ago period.