Wall Street Focuses on Japanese Deficit, Euro Weakens

Arthi Gupta
22 Aug, 2012
New York City

U.S. indexes edged lower after Japan reported larger-than-expected trade deficit. Health Care REIT agreed to acquire Sunrise Senior Living for $1.9 billion. Dell earnings fell 18% in the quarter.

[R]9:40 AM New York – U.S. indexes edged lower after Japan reported larger-than-expected trade deficit. Health Care REIT agreed to acquire Sunrise Senior Living for $1.9 billion. Dell earnings fell 18% in the quarter.[/R]

U.S. indexes dropped in early morning trading after Japan reported a larger-than-expected trade deficit and investors look ahead minutes of latest Fed meeting later in the day.

In addition, investors are also awaiting clear signals from a meeting between the head of the euro zone finance ministers and Greek prime minister and the leaders of France and Germany later in the week.

Greek prime minister in an interview with a German magazine said that all his nation wants is additional time to revive the economic growth and implement austerity measures but patience of German lawmakers and people is running thin.

Japan said trade deficit was 517.4 billion yen in July following the downwardly revised 60.3 billion yen surplus in June, data released by the Finance Ministry showed.

Health Care REIT to Buy Sunrise Senior

Health Care REIT, Inc. agreed to acquire all of the outstanding common stock of Sunrise Senior Living, Inc. for $14.50 per share in an all cash transaction. The purchase price reflects a real estate value of approximately $1.9 billion, of which approximately $950 million will be paid in cash and the balance through the assumption of debt at an average interest rate of approximately 4.9%.

The acquisition positions Health Care REIT among the largest owners of seniors housing in the world with over 58,000 units located in the U.S., Canada, and the UK.

Earnings Review

American Eagle Outfitters ((AEO)), the teen-apparel retailer reported second quarter net sales increased 11% to a record $740 million, compared to last year. Comparable store sales, including AE Direct, increased 9% compared to a 1% increase last year.

Net profit in the quarter fell 3.3% to $19.03 million or 9 cents per diluted share compared to $19.67 million or 10 cents per share last year.

Chico''s FAS, Inc. ((CHS)), the specialty retailer said second quarter net sales increased 16.4% to $641.7 million, and comparable sales rose 5.6%, square footage increased 7.4%. Boston Proper sales in the quarter were $32.6 million.

Net income rose 23% to $53.4 million or 32 cents per diluted share from $43.4 million or 25 cents per share in the same quarter a year earlier.

Dell Inc. ((DELL)), the PC maker said second quarter revenue fell 8% to $14.5 billion from the previous year. Net income for the quarter fell 18% to $732 million or 42 cents per diluted share compared to $890 million or 48 cents per share for the year-ago quarter.

Toll Brothers Inc. (TOL)), the luxury home-builder reported third quarter total revenues improved 41% to $554.32 million from last year. Net income in the quarter rose 46.3% to $61.6 million or 36 cents per diluted share from $42.1 million or 25 cents per share last year.

The completed home deliveries surged 39% to 963 units, from 693 last year.