Facebook Acquires Instagram for $1 B, AT&T Sells Stake in Yellow Pages

Arthi Gupta
10 Apr, 2012
New York City

U.S. indexes edged lower after wholesale inventories rose more than estimated in February. Facebook agreed to acquire Instagram for $1 billion. Cerberus agreed to acquire AT&T yellow pages division for $1 billion. Supervalu swung to loss.

[R]11:20 AM New York – U.S. indexes edged lower after wholesale inventories rose more than estimated in February. Facebook agreed to acquire Instagram for $1 billion. Cerberus agreed to acquire AT&T yellow pages division for $1 billion. Supervalu swung to loss.[/R]

U.S. indexes traded sideways after a listless morning session. Alcoa will kick-start quarterly earnings season after the markets close.

European indexes slumped after a latest survey of confidence in the region showed a decline and markets overlooked a surge in German exports. Latest imports data from China also dragged market sentiment and bond yields of Spain rose to a high for the year.

The trading sentiment weakened after bond yields of Italy and Spain advanced and Spain reiterated its pledge to sell nationalized banks and lower its deficit to 3% of gross domestic product in 2013.

Asian markets edged lower.

China’s trade balance was in a surplus of $5.35 billion in March compared to a deficit of $31.48 billion in February, according to the latest data released by the General Administration of Customs today.

Exports rose 8.9% from a year ago in March compared to the 18.4% annual growth reported for February. Imports eased to 5.3% in March from the 39.6% expansion in February.

The Bank of Japan decided to retain the benchmark uncollateralized overnight call rate at 0-0.1% but did not announce further stimulus.

U.S. Wholesale Inventories Rise

U.S. wholesale inventories rose to a seasonally adjusted level of $478.9 billion in February, reflecting a 0.9% increase from January levels, according to data released by the U.S. Department of Commerce today.

Facebook to Acquire Instagram

Facebook Inc. agreed to buy Instagram, a photo-sharing app for smartphones, for about $1 billion in cash and stock. The deal is expected to close later this quarter.

Instagram is a free photo sharing application that allows users to take a photo, apply a digital filter and share it on a variety of social networking services. The company has more than 30 million registered users and is less than two years old and has minimal revenues.

AT&T to Sell Yellow Pages
AT&T announced that an affiliate of Cerberus Capital Management, L.P. agreed to acquire AT&T Advertising Solutions and AT&T Interactive for $950 million. As part of the transaction, AT&T will receive a 47% equity interest in the new entity, YP Holdings LLC.

The transaction includes assets of AT&T Advertising Solutions, which delivers sales and customer support, and AT&T Interactive, which conducts interactive product development.

YP will include approximately 1,200 The Real Yellow Pages print directory titles reaching about 150 million homes and businesses in 22 states; YP.com, the YPSM Local Ad Network, which includes more than 300 mobile and online publisher websites nationwide providing digital reach to more than 71 million monthly unique visitors.

Ford Recalls Focus Cars

Ford Motor Co. said it plans to recall 140,310 Focus cars manufactured between August 2010 and October 2011 on concerns that a missing moisture seal could hurt the motor that runs the passenger side windshield wiper, according to the National Highway Traffic Safety Administration.

Sony, Sharp Widen Loss Forecast

Sony Corp., the Japanese consumer electronics and entertainment firm widened its net loss forecast for the year 2012 as it takes a tax charge.

The company estimated a record 520 billion yen or about $6.41 billion net loss in the year. This is significantly greater than the February forecast of 220 billion yen loss and last year''s reported net loss of 259.6 billion yen.

Sharp Corp., the Japanese TV maker estimated a net loss of 380 billion yen or about $4.7 billion for the fiscal year.

Corning to Buy Majority of BD Discovery Labware

Corning Incorporated inked an agreement with Becton, Dickinson and Company to acquire the majority of its Discovery Labware unit for approximately $730 million in cash.

The acquisition will expand Corning Life Sciences’ annual revenues by 40% and catapult the segment toward its goal of being a $1 billion business by 2014, the company further stated.

Danaher Agrees To Buy X-Rite

Danaher Corp., the science and technology conglomerate entered into a merger agreement with X-Rite, Inc. to acquire the colour measurement technology firm through a cash tender offer of $5.55 per share.

The deal has an enterprise value of around $625 million, including debt assumed and net of cash acquired.

Earnings Review

AU Optronics Corp. ((AUO)), the maker of flat panel displays stated its preliminary consolidated March 2012 revenue declined 12.5% to NT$31.44 billion from NT$35.95 billion last year.

Consolidated revenues for the first quarter fell 13% to NT$81.10 billion from NT$93.23 billion a year ago.

Harmonic Inc. ((HLIT)), the video infrastructure solutions maker estimated net revenue for the first quarter in the range of $125 million to $128 million compared to the company’s previous guidance of $132 million to $142 million.

Supervalu, Inc. ((SVU)), the grocery retailer reported fourth quarter net sales declined 5% to $8.23 billion from $8.66 billion in the same quarter last year. Net loss in the quarter was $424 million or $2 per share compared to a net income of $95 million or 44 cents per share reported last year.