Apple Crushes Estimates on China Sales, Nasdaq Up 2.3%

Arthi Gupta
25 Apr, 2012
New York City

U.S. indexes edged higher and Nasdaq soared 2% after Apple earnings crushed market expectations. New orders for U.S. durable goods fell in March. Amgen agreed to acquire Turkey-based Mustafa Nevzat for $700 million.

[R]9:50 AM New York – U.S. indexes edged higher and Nasdaq soared 2% after Apple earnings crushed market expectations. New orders for U.S. durable goods fell in March. Amgen agreed to acquire Turkey-based Mustafa Nevzat for $700 million.[/R]

U.S. indexes edged modestly higher on upbeat earnings. Tech stocks climbed after strong quarterly performance from Apple, driven by a surge in the sale of iPhones in China and iPad sales in the U.S. However, orders for durable goods in the U.S. declined.

The European indexes soared after more companies reported better-than-estimated earnings.

ABB Ltd, ACE Limited and Air Liquid SA reported better than expected earnings but Credit Suisse quarterly net plunged 96% and Siemens said quarterly sales rose 9% but new orders declined 19%.

Germany raised €2.405 billion from the sale of its new 30-year bond at an average yield of 2.41% compared to 2.62% in a prior auction on January 25, data from the Bundesbank showed today. The bid-to-cover ratio declined to 1.1 from 2.1 in the last auction.

The UK economy unexpectedly contracted in the first quarter, entering a double-dip recession.

Investors also look ahead to the Federal Reserve’s announcement later today and will be looking for clues if the central bank is prepared to offer additional monetary stimulus. The Fed is expected to hold rates near zero and has indicated in the past that it is prepared to expand asset purchase program if economic conditions warrant it.

The political turmoil in The Netherlands continues after the Dutch opposition parties rejected Prime Minister Mark Rutte’s austerity cuts.

The major Asian markets closed on a mixed note, with the Japanese market rebounding from four sessions of losses, while the Hong Kong, Indian, Indonesian, Malaysian and South Korean markets retreated.

Standard and Poor''s downgraded the outlook on India''s credit rating to ''negative'' from ''stable'', citing the country''s investment and economic growth has slowed and the current account deficit has widened.

U.S. Durable Goods Orders Fall

New orders for U.S. durable goods fell 4.2% or $8.8 billion to $202.6 billion in March, according to data released by the U.S. Commerce Department today. The drop reflected the largest monthly decline since January of 2009.

Excluding transportation, orders fell 1.1% in March after a 1.9% rise in February.

Amgen to Acquire Mustafa Nevzat

Amgen, the biotechnology firm agreed to acquire 95.6% of shares in Mustafa Nevzat, a privately held Turkish pharmaceutical company for an amount that valued it at $700 million.

MN had revenues of around $200 million in 2011 and has grown on average at double-digit rates in local currency over the last five years.

Intel, Cray Ink Deal

Intel Corporation inked a deal with Cray Inc. to acquire its interconnect hardware development program and related intellectual property for $140 million in cash.

Siemens to Buy FCE

Siemens Industry, Inc. signed and closed a purchase agreement to acquire 100% of the shares of FCE, LLC, a furnace company based in Pennsylvania serving the metals industry. Financial details of the transaction were not disclosed.

Earnings Review

Apple Inc. ((AAPL)) soared 9% after second quarter revenue rose 59% to $39.2 billion from $24.7 billion a year ago. Net profit in the quarter surged 94% to $11.6 billion or $12.30 per diluted share compared with net profit of $6.0 billion or $6.40 per diluted share, in the year-ago quarter.

The company sold 35.1 million iPhones in the quarter, representing 88% unit growth over the year-ago quarter largely on the sales increase in China. Revenues in China accounted for 20% of the total sales and jumped to 20% from 12% in the entire last year and 2% only two years ago.

Apple sold 11.8 million iPads during the quarter, a 151% unit increase over the year-ago quarter. Apple guided revenues of $34 billion in the current quarter and $8.68 earnings a share.

Apple also said its cash soared to $110 billion and plans to issue cash dividend and share buybacks.

The Boeing Company ((BA)) jumped 4% after first quarter total revenues increased 30% to $19.38 billion from $14.91 billion a year ago. Net earnings in the quarter increased 58% to $923 million or $1.22 per diluted share compared to net earnings of $586 million or 78 cents per share, in the year-ago quarter.

WellPoint Inc. ((WLP)) gained 1.8% to $72.06 and the managed health care company stated first quarter operating revenue rose 3.4% to $15.2 billion, from $14.7 billion in the first quarter of 2011. Net income in the quarter declined 7.6% to $856.5 million or $2.53 per diluted share compared to net income of $926.6 million or $2.44 per share last year.

Wipro Limited ((WIT)) declined 51 cents to $9.82 and the India based software services provider said fourth quarter gross revenues rose 19% to 98.16 billion rupees from 82.71 billion rupees the prior year. Net income in the quarter, on IFRS basis, grew 8% to 14.81 billion rupees or 6.03 rupees per share compared to net income of 13.76 billion rupees or 5.61 rupees per share in the year-ago quarter.