U.S. Durable Goods Orders Rise, Merger Activities Heat Up

Arthi Gupta
27 Jun, 2012
New York City

U.S. indexes climbed after durable goods orders rose in May. Merger activity heat up for the second day and Loral agreed to sell Space Systems for $1 billion. Liberty Global and Searchlight agreed to buy OneLink for $585 million. SS&C Technologies acquired GlobeOp for

[R]9:45 AM New York – U.S. indexes climbed after durable goods orders rose in May. Merger activity heat up for the second day and Loral agreed to sell Space Systems for $1 billion. Liberty Global and Searchlight agreed to buy OneLink for $585 million. SS&C Technologies acquired GlobeOp for £572 million.[/R]

U.S. indexes gained after durable goods orders in May rose more than estimated and investors shifted to focus to domestic earnings. Barclays agreed to pay $450 million fines to the U.S. and UK authorities for attempting to manipulate London interbank offered rate or Libor which is used as a reference for trillions of dollars of contracts around the world.

European markets traded higher but pressures on political leaders intensified to offer a concrete plan to arrest the rising and unsustainable yields in the peripheral member nations.

Spain’s Prime Minister Mariano Rajoy warned that the nation “cannot finance” government debt for a long time at prices like those we are now paying” in a speech to Parliament.

Spain is likely to force to accept a bailout in the next few months as bond markets exact interest rates that the government cannot afford to pay. Spanish economy is two times larger than the combined economies of Ireland, Greece and Portugal.

But the calls for the pooling of member nations debt in the shape of eurozone bonds to quickly relieve market pressure has met stiff resistance from German Chancellor Angela Merkel.

Merkel reiterated her position and urged member nations to cede more sovereignty to Brussels and manage their fiscal situation with prudence. She stressed, “Guarantees and controls must go together.”

Asian markets rallied on speculation that China may announce more stimulus measures for economic growth.

U.S. Durable Goods Orders Rise

U.S. durable goods orders rose in May, according to data released by the U.S. Commerce Department today.

New orders for manufactured durable goods in May increased 1.1% or $2.3 billion to $217.2 billion in May.

Loral to Sell Space Systems to MDA

Loral Space & Communications, Inc., the satellite communications developer agreed to sell its wholly-owned subsidiary Space Systems/Loral to MacDonald, Dettwiler and Associates Ltd., the mission critical information provider for over $1 billion. The deal is expected to close in a few months.

Liberty Global, Searchlight to Acquire OneLink

Liberty Global Inc., the provider of video, broadband Internet and telephony services and affiliates of investment firm Searchlight Capital Partners L.P. agreed to acquire Puerto Rico-based OneLink Communications for an enterprise value of about $585 million to create the largest cable company in Puerto Rico.

SS&C Acquires GlobeOp

SS&C Technologies Holdings, Inc., a provider of financial services software and software-enabled services announced acquisition of GlobeOp Financial Services S.A. for £4.85 per share or approximately £572 million.

The combined entity will be one of the leading fund service providers with the ability to provide complete lifecycle capabilities for hedge funds, fund of funds, private equity and managed account managers.

Earnings Review

General Mills, Inc. ((GIS)), the consumer foods maker reported fourth quarter net sales grew 12% to $4.1 billion from $3.6 billion in the same quarter last year. Net earnings in the quarter rose 1.6% to $325.4 million or 49 cents per diluted share compared to net earnings of $320.2 million or 48 cents per share in the prior-year quarter.

H&R Block, Inc. ((HRB)), the tax service provider said fourth quarter total revenue declined 2.4% to $2 billion from $2.05 billion in the same quarter last year. Net income in the quarter fell 11% to $586.1 million or $1.99 per diluted share compared to net income of $658.6 million or $2.14 per share for the year-ago quarter.

Total revenue for the fiscal year 2012 declined to $2.89 billion from $2.94 billion last year. For the fiscal year 2012, the company reported net income of $265.9 million or 89 cents per diluted share compared to net income of $406.1 million or $1.31 per share for the fiscal year 2011.

Lennar Corporation ((LEN)), the home builder reported second quarter revenues grew 22% to $930.16 million from $764.49 million in the same quarter last year. Net earnings in the quarter soared to $452.7 million or $2.06 per diluted share compared to net earnings of $13.8 million or 7 cents per share in the previous year.

Lindsay Corporation ((LNN)), the manufacturer of irrigation systems said third quarter operating revenues rose 12% to $172.1 million from $153.45 million in the prior-year quarter. Net earnings in the quarter gained 23% to $18.82 million or $1.47 a diluted share compared to net earnings of $15.29 million or $1.20 per share a year ago.

McCormick & Company, Incorporated ((MKC)), the maker of spices said second quarter net sales grew 11% to $984 million from $883.7 last year. Net income in the quarter grew 9% to $80.4 million or 60 cents per diluted share compared to net income of $73.6 million or 55 cents per share in the prior-year quarter.