U.S. Productivity, Private Employment Rise; Global Growth Worries

Arthi Gupta
07 Mar, 2012
New York City

The U.S. indexes gained after employment in the private sector rose in February and productivity increased 0.9% in the fourth quarter. Scotiabank agreed to acquire Howard Weil and Nuance Communications agreed to purchase Transcend for $300 million.

[R]9:45 AM New York – The U.S. indexes gained after employment in the private sector rose in February and productivity increased 0.9% in the fourth quarter. Scotiabank agreed to acquire Howard Weil and Nuance Communications agreed to purchase Transcend for $300 million.[/R]

U.S. indexes gained after better-than-anticipated employment and productivity reports but investors were cautious ahead of the Greek bond swap program results.

Global economic outlook is worsening after Australia reported weakest growth since 2008 and Brazil’s economy expanded at 2.7% in 2011 after surging at 7.5% in 2010.

India also lowered its target in the current fiscal year that ends in March and China trimmed its growth expectation to 7.5% from 8%. And the euro zone economy contracted at 0.3% in the last quarter and is expected to shrink in the first two quarters of this year.

European indexes rebounded ahead of the Greek debt swap deadline tomorrow. Private investors in Greece will have to decide by tomorrow whether to take a 53.5% haircut of their existing Greek holdings in exchange for new bonds that pay lower interest rate.

At least 40% of private holders of Greek debt have agreed to the swap but uncertainty reigns if hedge funds will participate in the swap or challenge the offer in courts that may drag for more than a decade.

Asian shares fell for the third straight day and Australia reported weaker than expected economic growth of 0.4% in the December quarter. The economy expanded at 2.3% rate in 2011, the slowest pace since 2008.

Weak economic data did not boost investor segment. The Australian Bureau of Statistics reported that the domestic economy expanded 0.4% sequentially in the fourth quarter.

U.S. Private Sector Employment Rises

U.S. employment in the private sector rose in February, according to a report released by payroll processor Automatic Data Processing, Inc. today.

ADP said private sector employment increased by 216,000 jobs in February following an upwardly revised increase of 173,000 jobs in January.

U.S. Productivity Revised Up

U.S. productivity increased 0.9% in the fourth quarter compared to the initial estimate of 0.7% growth, according to a report released by the U.S. Labor Department today.

The amount of goods and services produced rose at an annual rate of 3.7% from the original estimate of 3.6%.

Nuance to Buy Transcend

Nuance Communications, Inc. agreed to acquire Transcend Services, Inc., a provider of medical transcription and speech editing services, for approximately $300 million in cash.

Scotiabank Agrees to Acquire Howard Weil

Scotiabank reached an agreement today to acquire Howard Weil Incorporated, a leading U.S.-based energy investment boutique. Terms of the transaction were not disclosed.

Earnings Review

Ciena Corporation ((CIEN)), the network specialist reported first quarter total revenue declined 3.8% to $416.69 million from $433.31 million in the prior-year quarter. Net loss in the quarter narrowed 40% to $47.65 million or 49 cents a diluted share compared to net loss of $79.06 million or 84 cents per share in the prior year.

Express, Inc. ((EXPR)), the specialty apparel and accessory retailer said fourth quarter net sales increased 8% to $673.2 million from $621.5 million in the fourth quarter of 2010 on comparable sales rise of 5%. Net profit in the quarter advanced 25% to $60.4 million or 68 cents per diluted share compared to net profit $48.4 million or 55 cents per share last year.

Net sales for full-year 2011 increased 9% to $2.1 billion from $1.9 billion in 2010, and year-to-date comparable sales increased 6%. This follows a 10% increase in comparable sales in the prior year. Net income for the year was $140.7 million or $1.58 per diluted share compared to net income of $127.4 million or $1.48 per diluted share, in 2010.

The Bon-Ton Stores, Inc. ((BONT)), the department store operator reported fourth quarter total sales decreased 2.7% to $983.2 million compared with $1,010 million for the prior year period and comparable-stores sales declined 2.6% in the period. Net income in the quarter declined 8.1% to $78.19 million or $4 per share compared with net income of $85.04 million or $4.41 per share last year.

Fiscal year 2011 total sales decreased 3.2% to $2,884.7 million compared with $2,980.5 million for the same period last year on comparable store sales drop of 2.8%. Net loss for the year was $12.1 million, or 67 cents per diluted share compared with net income of $21.5 million or $1.12 per diluted share, for the prior year.

Pandora Media Inc. ((P)), the Internet radio company reported fourth quarter revenues surged 71% to $81.3 million from $47.6 million in the same quarter last year. Net loss for the quarter widened 109% to $8.18 million compared to a net loss of $3.91 million last year. However, loss per share sharply narrowed to 5 cents from 31 cents in the prior-year quartet on a higher share count.