U.S. Jobless Claims Fall, Deficit Widens; Coty Raises Offer for Avon

Arthi Gupta
10 May, 2012
New York City

U.S. indexes rose after weekly jobless claims fell 1,000 to 367,000, trade deficit widened more than estimated in March but import prices fell in April. Coty revised its offer for Avon Products with the help of Berkshire Hathaway financing. Cisco drops after revenues grow less than expected.

[R]9:50 AM New York – U.S. indexes rose after weekly jobless claims fell 1,000 to 367,000, trade deficit widened more than estimated in March but import prices fell in April. Coty revised its offer for Avon Products with the help of Berkshire Hathaway financing. Cisco drops after revenues grow less than expected.[/R]

U.S. indexes climbed after weekly jobless claims dipped 1,000 and trade deficit widened more than estimated in March.

The European indexes edged lower after the Greek political turmoil intensified and the prospect of another election are increasingly likely in the next six weeks. Alexis Tsipras failed in his bid to form a coalition government as expected.

Alexis Tsipras, the Greek leader of the leftist Syriza bloc failed to form a coalition government and socialist Pasok leader and former finance minister Evangelos Venizelos is expected to attempt to form a new government.

The European Financial Stability Facility board confirmed the release of the outstanding amount of €5.2 billion to Greece from the first instalment of €39.4 billion by the end of June.

The EFSF will disburse €4.2 billion on May 10 and the remaining funds of €1 billion will be disbursed depending on the financing needs of Greece.

The immediate task of a new government will be to cut spending by €11.5 billion to deal with budget gaps in 2013 and 2014, as part of the €130 billion bailout package. However, the communist party and the left coalition party oppose bail our terms and do not want to cut any more government spending.

Separately, Spain took full control of Bankia, the Spanish banking conglomerate only a year after the lender was created from the merger of seven savings banks called cajas.

The government has formulated a bailout fund called Frob to convert a previous €4.5 billion emergency loan into equity and after their conversion the bailout fund will have an indirect share of 45% in Bankia.

Asian markets traded mixed tracking political developments in Greece and weak economic report from China.

China''s exports grew 4.9% from a year ago in April and imports increased 0.3% from last year, according to a report released by China''s Customs Office. The increase in foreign trade was less than expected but rose from the previous month.

Seasonally adjusted unemployment rate for Australia fell to 4.9% in April from 5.2% in March, a report released by the Australian Bureau of Statistics showed.

U.S. Jobless Claims Dip

New seasonally adjusted weekly jobless claims in the U.S. for the week ended May 5 fell 1,000 to 367,000 from the previous week''s revised figure of 368,000, according to data released by the U.S. Labor Department today.

The four-week moving average for initial claims declined 5,250 to 379,000 from the previous week''s average of 384,250.

U.S. Deficit Widens

The U.S. trade deficit widened by more than anticipated in March, according to a report released by the U.S. Commerce Department today.

The report showed that the trade deficit widened to $51.8 billion in March from a revised $45.4 billion in February.

U.S. Import Prices Decline

Import prices fell 0.5% in April after climbing 1.5% in March, with the drop largely due to lower fuel prices, the U.S Labor Department said in a report released today.

Export prices rose 0.4% in April following a 0.8% increase in March.

FedEx to Acquire TATEX

FedEx Corp. agreed to acquire TATEX, a leading French business-to-business express transportation company.

The acquisition will give FedEx Express access to a nationwide domestic ground network which carries 19 million shipments with annual revenues of €150 million.

Coty Raises Avon Bid

Coty revised its offer for Avon Products to $24.75 per share from the previous offer of $23.25 and said it will withdraw the offer if the company fails to enter merger talks by May 14. Avon has so far rejected all previous offers from the company.

Coty also said it lined up equity financing from Berkshire Hathaway, its main shareholder John A Benckiser and BOT Capital Partners.

Earnings Review

Bombardier, Inc., the Canadian aerospace and defense company reported first quarter revenues fell 25.5% to $3.5 billion from $4.7 billion a year ago. Net income in the quarter declined 13.6% to $190 million or 10 cents per diluted share compared to net income of $220 million or 12 cents per share a year-ago quarter.

Cisco Systems, Inc. ((CSCO)), the computer networking gear maker said third quarter net sales rose 7% to $11.59 billion from $10.87 billion in the same quarter last year. Net income in the quarter climbed 20% to $2.2 billion or 40 cents per diluted share compared to net income of $1.8 billion or 33 cents per share for the year-ago quarter.

Kohl''s Corporation ((KSS)), the department store chain reported first quarter net sales increased 1.9% to $4.24 billion from $4.16 billion a year before. Comparable-store sales for the quarter increased 0.2%.

Net income in the quarter declined 23.4% to $154 million or 63 cents per diluted share compared to net income of $201 million or 69 cents per share last year.

Sun Life Financial Inc. ((SLF)), the financial services company said first quarter total revenue fell 25.2% to C$3.14 billion from C$4.20 billion in the prior-year period. Net income in the quarter advanced 56.6% to C$686 million or C$1.15 per diluted share compared to net income of C$438 million or 73 cents per share last year.

Windstream Corporation ((WIN)), the communications and technology solutions provider reported first quarter total revenues surged 51% to $1.55 billion from $1.02 billion in the prior-year quarter. Net income in the quarter rose 120% to $64.6 million or 11 cents per diluted share compared to net income of $29.4 million or 6 cents per share in the same quarter last year.