U.S. Indexes Drop; Dell Net Falls 18%, Toll Brothers Swings to Loss

Arthi Gupta
22 Feb, 2012
New York City

The U.S. indexes declined after weaker-than-estimated global economic data. Dell Inc led the decline in tech stocks with quarterly earnings falling 18% and. Luxury home builder Toll Brothers swung to loss.

[R]9:35 AM New York – The U.S. indexes declined after weaker-than-estimated global economic data. Dell Inc led the decline in tech stocks with quarterly earnings falling 18% and. Luxury home builder Toll Brothers swung to loss.[/R]

U.S. indexes and European markets edged lower after European private sector contracted in February and China’s manufacturing reading showed another month of weak growth.

Traders were cautious in early trading after the euphoria of the Greece bailout waned.

Investors also took the note of the fine print in the Greek agreement that set terms of future bonds offerings and are governed by British law and contested in Luxembourg courts. In addition, in the event of default, Greek lenders will have the right to seize the gold reserves held by the central bank of Greece.

Greek agreement appears to be designed to save banks and international lenders, as has been the case during the emergency lending in Asian crisis and in Mexico’s debt crisis in the late nineties.

In addition, Fitch Ratings downgraded Greece''s long-term foreign and local currency Issuer Default Ratings to ''C'' from ''CCC''. The agency said a default is highly likely in the near term.

Euro-zone private sector contracted in February, a survey by Markit Economics showed today. The composite output index fell to 49.7 in February from 50.4 in January.

Asian markets closed the day higher after data showed China''s industrial activity contraction was estimated at a slower pace.

The HSBC flash manufacturing purchasing managers'' index for China increased to a four-month high of 49.7 in February from 48.8 in January. The reading below 50 indicates contraction and above 50 indicates expansion.

Bunge to Acquire Climate Change Capital

Bunge Limited, a leading global agribusiness and food company said, that it agreed with Climate Change Capital Limited to acquire Climate Change Capital Group Limited. Financial terms of the deal were not disclosed.

J&J Executive Change

Johnson & Johnson announced that its board appointed Alex Gorsky as Chief Executive Officer succeeding Bill Weldon, who has served as Chairman and CEO since 2002.

Earnings Review

Dell Inc. ((DELL)), the computer and accessories maker said fourth quarter revenue rose 2% to $16.03 billion from $15.69 billion in the same quarter last year. Net income in the quarter fell 18% to $764 million or 43 cents per diluted share compared to net income of $927 million or 48 cents per share for the year-ago quarter.

For the fiscal year 2012, revenue rose 1% to $62.1 billion from $61.5 billion the prior year. Net income for the year surged 33% to $3.5 billion or $1.88 per diluted share compared to net income of $2.6 billion or $1.35 per share a year ago.

Dollar Tree, Inc. ((DLTR)), the discount stores operator reported fourth quarter consolidated net sales increased 13% to $1.95 billion from $1.73 billion in the prior year. Net income for the quarter increased 16% to $187.9 million or $1.60 per diluted share compared to net income of $162.5 million or $1.29 per share a year ago.

Intuit Inc. ((INTU)), the financial management solutions provider said second quarter total net revenues rose 16% to $1.02 billion from $878 million in the prior-year quarter. Net income in the quarter soared 62% to $118 million or 39 cents per diluted share compared to net income of $73 million or 23 cents per share in the year-ago quarter.

Toll Brothers, Inc. ((TOL)), the luxury homebuilder reported first quarter revenues fell 4% to $321.96 million from $334.12 million in the prior year. Net loss for the quarter was $2.79 million or 2 cents per diluted share compared with a profit of $3.42 million or 2 cents per share last year.