U.S. Weekly Jobless Claims Drop; HP to Slash 27,000 Jobs

Arthi Gupta
24 May, 2012
New York City

U.S. weekly jobless claims fell 2,000 to 370,000 and durable goods orders rose 0.2% in April. General Mills agreed to acquire Brazilian food maker Yoki and HP planned to slash 27,000 jobs. Tiffany and NetApp plunged on earnings worries.

[R]10:25 AM New York – U.S. weekly jobless claims fell 2,000 to 370,000 and durable goods orders rose 0.2% in April. General Mills agreed to acquire Brazilian food maker Yoki and HP planned to slash 27,000 jobs. Tiffany and NetApp plunged on earnings worries.[/R]

U.S. indexes inched lower as the economic and political uncertainties in Europe weighed and weekly jobless claims fell modestly and durable goods orders edged higher.

Hewlett-Packard plans to cut 27,000 employees or 8% of its workforce by the end of fiscal year 2014. The computer giant is struggling with the recent product missteps and turmoil in the executive ranks and failure to develop new products that win market share.

The restructuring is expected to generate savings between $3 billion to $3.5 billion after fiscal year 2014.

Tiffany dropped more than 5% after it reported weaker than expected earnings despite an improvement in sales and NetApp plunged 12% after it offered a cautious fiscal first quarter outlook.

Facebook continued to struggle after the social networking site faced ore regulatory scrutiny and several investors estimated the stock to trade near $22.

The European indexes rebounded a day after plunging more than 2% as leaders failed to resolve brewing political crisis linked to Greece and two economic reports signaled slowdown in the region and in Germany.

France proposed the floating of Eurobonds that will be used to finance growth measures in struggling Greece and other peripheral nations. However, Germany prefers these nations to put in place austerity measures, shrink government and improve competitiveness that will drive future economic growth.

Greece, Ireland and Portugal were able to increase real wages in the last fifteen years only because of a sustained investment from Germany and other nations but failed to improve governance or competitiveness.

At the meeting held in Brussels yesterday, leaders insisted that Greece accept the bailout terms and stick to the previously agreed austerity measures and urged nation to stay in the currency union.

Asian markets closed on a mixed note dampened by weaker-than-estimated Chinese manufacturing data and Australian dollar closed at a six month low and the rupee in India sank to another record low against the dollar to 55.75.

China''s manufacturing sector shrank for the seventh month in a row in May. The headline HSBC purchasing managers'' index fell to 48.7 in May from 49.3 in April.

U.S. Weekly Jobless Claims Drop

Initial claims for U.S. unemployment insurance dipped in the week ended May 19, according to the Labor Department.

Seasonally adjusted weekly jobless claims declined 2,000 to 370,000 from the previous week''s revised level of 372,000.

The four-week moving average of new unemployment claims dropped 5,500 to 370,000 from the previous week''s revised average of 375,500.

U.S. Durable Goods Orders Climb

Durable goods orders in the U.S. edged up 0.2% or $0.3 billion to $215.5 billion in April after falling 3.7% in March, according to a report released by the U.S. Commerce Department today.

Transportation orders rose 2.1% in April following a 10.5% drop in March.

General Mills to Acquire Yoki

General Mills agreed to acquire Yoki Alimentos S.A., a privately-held food company headquartered in Sao Bernardo do Campo, Brazil.

General Mills estimates the transaction to close during the first half of its 2013 fiscal year, which begins on May 28, 2012.

NYSE Euronext to Buy Corpedia

NYSE Euronext agreed to buy Corpedia Corporation, a provider of ethics and compliance e-learning and consultative services. Terms of the acquisition were not disclosed and the transaction is expected to close in June.

Earnings Review

Costco Wholesale Corporation ((COST)), the operator of membership warehouse clubs reported third quarter net sales increased 8%to $21.85 billion from $20.19 billion in the prior year on comparable sales rise of 5%. Net income for the quarter rose 19% to $386 million or 88 cents per diluted share compared to net income of $324 million or 73 cents per share a year ago.

H.J. Heinz Company ((HNZ)), the food maker reported fourth quarter sales grew 5.6% to $3.05 billion from $2.89 billion in the earlier year quarter. Net income for the quarter slipped 22% to $175.34 million or 54 cents per diluted share compared to net income of $223.86 million or 69 cents per share last year.

Hewlett-Packard Company (HPQ)), the computer and printer maker said second quarter net revenue fell 3% to $30.7 billion from $31.6 billion in the same quarter last year. Net income for the quarter slumped 31% to $1.6 billion or 80 cents per diluted share compared to net income of $2.3 billion or $1.05 per share for the year-ago quarter.

Tiffany & Co. ((TIF)), the luxury jewelry retailer said first quarter net sales increased 8% to $819.17 million from $761.02 million in the same quarter last quarter. Net earnings in the quarter rose 1% to $82 million or 64 cents per diluted share compared to net earnings of $81.06 million or 63 cents per share in the prior-year quarter.