GE, Microsoft, McDonald

Arthi Gupta
20 Apr, 2012
New York City

U.S. indexes gained momentum after better-than-estimated earnings and leading economic index rose in March. Apollo increased its offer price to acquire Great Wolf. Microsoft earnings beat estimates of lower quarterly net earnings.

[R]10:10 AM New York – U.S. indexes gained momentum after better-than-estimated earnings and leading economic index rose in March. Apollo increased its offer price to acquire Great Wolf. Microsoft earnings beat estimates of lower quarterly net earnings.[/R]

U.S. indexes edged higher after Microsoft reported better than expected earnings and General Electric reported 8% decline in quarterly sales but 12% decline in profit was ahead of estimates.

McDonald’s said its quarterly profit increased to $1.27 billion from $1.21 billion and earnings per share rose to $1.23 from $1.21 on same store sales in the U.S. rose 8.9% on new menu items and higher margin coffee frappes and fruit smoothies.

Finance ministers and central bankers from the leading 20 economies are gathering in Washington, D.C. to discuss the global economies and tackle the rising tensions in the euro zone sovereign debt markets.

International Monetary Fund ahead of the meeting said it secured additional funds of $320 billion to bolster its lending capacity to the euro zone.

The IMF move to bolster its capital to facilitate the lending to euro zone is in stark contrast to its posture at the time of Asian crisis when Indonesia, Thailand and Malaysia came under heavy pressure after currencies runs and a collapse in confidence.

The bureaucratic multilateral agencies, World Bank and IMF remain under the firm control of the U.S. and European politicians that advance political agendas of the Western economies and rarely focus on world economic development.

The European indexes traded lower but in early morning stocks made a feeble advance after German business sentiment unexpectedly improved in April. Yesterday, Spain completed the debt auction but at higher borrowing costs and French auction drew weaker than expected response.

The European Commission cleared the proposed acquisition of Synthes Inc., the Swiss medical device maker by Johnson & Johnson.

Johnson & Johnson had agreed a year ago to acquire Synthes for Sfr159 a share or $21.3 billion to expand its orthopaedics business.

Asian stocks traded mixed tracking the U.S. and European indexes.

Mitsubishi Motors Corp., the Japanese automaker estimated fiscal 2011 net income of 23.9 billion yen or 4.32 yen per share compared to its earlier outlook of 20 billion yen or 3.61 yen per share.

U.S. Leading Economic Index Rises

The Conference Board's leading economic index for the U.S. increased 0.3% in March following a 0.7% rise in February, according to a report released on Thursday.

Great Wolf Accepts Increased Offer Price

K-9 Acquisition, Inc., an affiliate of Apollo Global Management and Great Wolf Resorts, Inc. announced that they have further amended their previously announced merger agreement to provide for Apollo to increase its offer to acquire Great Wolf from $7.00 per share in cash to $7.85 per share in cash.

Earnings Review

Advanced Micro Devices, Inc. ((AMD)), the semiconductor maker reported first quarter revenue slipped 1.7% to $1.59 billion compared to $1.61 billion last year. Net loss in the quarter swung to $590 million or 80 cents per diluted share compared to net income of $510 million or 68 cents per share last year.

General Electric Company ((GE)), the conglomerate said first quarter consolidated revenues fell 8% to $35.18 billion. Operating earnings rose 1% to $3.6 billion or 34 cents per share from the prior year.

Net earnings from continuing operations rose 0.8% to $3.59 billion or 34 cents per diluted share, excluding some costs, compared to net earnings of $3.56 billion or 33 cents per share, a year earlier.

Honeywell International Inc. ((HON)), the diversified conglomerate said first quarter sales increased 7.3% to $9.31 billion from $8.67 billion last year. Net income in the quarter climbed 17% to $823 million or $1.04 per diluted share compared to net income of $705 million or 88 cents per share a year-ago quarter.

Microsoft Corporation ((MSFT)), the software maker said third quarter revenue rose 6% to $17.41 billion from $16.43 billion in the same quarter last year. Net income in the quarter fell 2.4% to $5.11 billion or 60 cents per diluted share compared to net income of $5.23 billion or 61 cents per share for the year-ago quarter.