Mixed Signals in U.S. Durable Orders, Euro Pauses

Arthi Gupta
24 Aug, 2012
New York City

U.S. market indexes are set to halt a six week long rally that lifted indexes to multi-year highs. The latest durable goods orders offered mixed picture of the U.S. economy with business spending waning. The euro zone tensions rose after leaders held firm and demanded Greece to meet its obligations.

[R]9:55 AM New York – U.S. market indexes are set to halt a six week long rally that lifted indexes to multi-year highs. The latest durable goods orders offered mixed picture of the U.S. economy with business spending waning. The euro zone tensions rose after leaders held firm and demanded Greece to meet its obligations.[/R]

Stocks on Wall Street open lower on the last day of trading in a week that is likely to halt a six-week long rally that was sparked by the growing enthusiasm in the euro zone.

Trading was already weak across Europe after leaders of France and Germany reiterated their stance that Greece should stick to its bailout commitments and stay in the euro zone but will not win any new concessions.

In addition, the latest durable goods report from the Commerce Department showed that overall orders surged in July but the narrower business spending metric declined for the second month in a row.

The latest data suggested that the U.S. manufacturing growth may be slowing down as exports to the euro zone weaken and dollar strengthens, confirming the global weakening trend.

U.S. Durable Goods Orders Surge

U.S. durable goods orders soared in July, according to the data released by the U.S. Commerce Department today. However, the non-defense orders excluding transportation orders, the gauge of business spending declined for the second month in a row.

New orders for durable goods rose 4.2% or $9.4 billion to $230.7 billion in July, from the revised 1.6% growth in June. Total orders were lifted by the 14.1% surge in transportation equipment orders and a 53.9% soar in civilian aircraft orders. Automobile orders also increased 12.8% in the month.

Excluding transportation orders, durable goods orders fell 0.4% in July compared to the revised 2.2% decline in June. Transportation equipment orders increased the most with a rise of $9.9 billion or 14.1% to $80.4 billion.

Excluding volatile transportation orders that include aircrafts, the orders declined 3.4% in the month after falling 2.7% in June.

The metric used for the calculation of GDP that includes non-defense orders excluding aircraft orders was flat after increasing 1.5% in June.

Tornier to Acquire OrthoHelix Surgical Designs

Tornier N.V., a medical device company agreed to acquire OrthoHelix Surgical Designs, Inc. for $135 million plus additional payments over two years, which will be based on achieving certain revenue growth milestones.

Earnings Review

Aruba Networks, Inc. ((ARUN)), the enterprise network solutions provider reported fourth quarter revenues grew 22% to $139.2 million from last year. Net loss in the quarter swung to $3 million or 3 cents per diluted share compared to profit of $68.2 million or 57 cents per share last year.

Full year revenue was $516.8 million, an increase of 30% from $396.5 million reported in fiscal year 2011. Net loss for the year was $8.9 million or 8 cents per diluted share compared with net income of $70.7 million or 60 cents per share, in fiscal year 2011.

Autodesk, Inc. ((ADSK)), the design software maker said second quarter revenue rose 4% to $569 million from the same quarter last year. Net income in the quarter fell 9% to $64.6 million or 28 cents per diluted share compared to $71.2 million or 30 cents per share for the year-ago quarter.

bebe stores, inc. ((BEBE)), the women''s apparel retailer reported fourth quarter sales for the quarter dropped 0.6% to $131.5 million from last year. Comparable store sales for the quarter decreased 2.5% compared to an increase of 7.5% in the prior year.

Net profit for the quarter dropped to $3 million or 4 cents per diluted share compared to $4.7 million or 6 cents per share last year.

Net sales for the year were $530.8 million, up 7.6% from $493.3 million last year. Comparable store sales for the year increased 5.3% compared to an increase of 0.6% in the prior year.

Net earnings for the fiscal year rose to $11.7 million compared to $4.1 million in the prior year and earnings per share rose to 14 cents a share compared to 5 cents in the prior year.

salesforce.com inc. ((CRM)), the enterprise cloud computing provider reported second quarter revenues surged 34% to $731.6 million. Net loss for the quarter widened to $9.8 million or 7 cents per diluted share compared to a net loss of $4.3 million or 3 cents per share a year ago.

The Madison Square Garden Co. ((MSG)), the integrated media business stated fourth quarter revenues grew 42% to $332.92 million from the prior-year period. Net income soared to $28.56 million or 37 7 cents per diluted share compared to net income of $8.53 million or 11 cents per share last year.

Full year revenues grew 8% to $1.3 billion compared to the prior year. Net income of $106.5 million or $1.38 per diluted share grew 34% compared to the prior year.