U.S. Jobless Claims Flat, Carlyle Purchases DuPont Unit for $4.9 B

Arthi Gupta
30 Aug, 2012
New York City

U.S. indexes fell after weekly jobless claims remained unchanged at 374,000 and personal income rose in July. Carlyle Group agreed to purchase DuPont Performance Coatings for $4.9 billion. Darden Restaurants completed acquisition of Yard House USA.

[R]9:50 AM New York – U.S. indexes fell after weekly jobless claims remained unchanged at 374,000 and personal income rose in July. Carlyle Group agreed to purchase DuPont Performance Coatings for $4.9 billion. Darden Restaurants completed acquisition of Yard House USA.[/R]

U.S. indexes traded lower in early morning trading after a batch of disappointing economic data leading to worries of a slowdown in economic growth.

Weekly jobless claims remained unchanged at 374,000 and personal income rose in July.

European markets were trending lower as investors were cautious ahead of the meeting of leaders of France and Spain. The latest German unemployment data also highlighted the vulnerability of the labor markets in the strongest economy in the region.

Spanish Prime Minister Mariano Rajoy is scheduled to meet French President Francois Hollande in Madrid today and investors worry that the nation may be forced to ask for a larger bailout as Catalonia became the third region to ask for help.

Asian Economic Data

Japanese retail sales fell a seasonally adjusted 1.5% on a monthly basis in July from the previous month and fell 0.8% from a year ago month, according to a report released by the Ministry of Economy, Trade and Industry.

India revised its GDP data for quarters dating back to 2009 and lowered its latest export data. The statistical agency said fiscal fourth quarter 2009 growth was revised lower to 3.5% from 5.9% and fiscal fourth quarter 2010 was revised higher to 11.2% from 9.4%.

The government defended the revision and said that the latest changes in how industrial production is calculated affected the economic data series.

Home building approvals fell 17.3% from a month ago in July compared to the 1% drop in July, according to a report released by the Australian Bureau of Statistics. Also, new private capital spending increase in the second quarter to June declined to 3.4%.

U.S. Weekly Jobless Claims Flat

Seasonally adjusted initial jobless claims in the week ending August 25 were unchanged at 374,000 from the previous week. The 4-week moving average for claims was 370,250, an increase of 1,500 from the previous week's revised average of 368,750.

U.S. Personal Income Rises

Personal income increased $42.3 billion or 0.3% percent, and disposable personal income increased $39.9 billion or 0.3% in July, according to the Bureau of Economic Analysis.

In June, personal income increased $46.1 billion or 0.3% and disposable personal income increased $37.4 billion or 0.3%.

Real disposable income increased 0.3% in July compared with an increase of 0.2% in June.

U.S. Foreclosure Home Sales Rise

Sales of homes that were in some stage of foreclosure or bank-owned accounted for 23% of U.S. residential sales in the second quarter, up 22% from previous quarter and up 19% from last year, according to RealtyTrac.

The average foreclosure-related sales price in the second quarter was $170,040, an increase of 6% from the previous quarter and was up 7% from the second quarter of 2011.

Carlyle Group to Buy DuPont unit

The Carlyle Group, the global alternative asset manager agreed to purchase DuPont Performance Coatings for $4.9 billion in cash.

The transaction is expected to close in the first quarter 2013

Darden Completes Yard House Purchase

Darden Restaurants, Inc. completed the acquisition of Yard House USA, Inc. for $585 million in an all-cash transaction from private equity firm TSG Consumer Partners LLC.

The total transaction price includes approximately $30 million of cash tax benefits that are expected to be realized by Darden in fiscal 2013 and fiscal 2014.

Barclays Appoints New Chief Executive

Barclays PLC announced that Antony Jenkins has been appointed as a director and as chief executive. Jenkins has been a member of executive committee of Barclays since 2009 when he assumed the leadership role at its retail and business unit.

Jenkins, head of its retail and business banking unit will assume the office as the bank is facing multiple inquiries and struggles with the weak market conditions in its core markets.

Bank also said yesterday that the Serious Fraud Office of the UK government is investigating the bank and its four senior employees “regarding sufficiency of disclosure in fees” related to its 2009 transaction with a Qatar based fund.

Jenkins previously ran bank’s credit card business and was asked to oversee its retail and business unit in 2009.

Earnings Review

Ciena Corporation ((CIEN)), the networking gear maker reported third quarter revenue rose to $474.1 million compared to $435.3 million in the quarter a year ago. Net loss in the quarter narrowed to $29.8 million or 30 cents per diluted share compared to a net loss of $31.5 million or 33 cents per share in the prior-year quarter.

Costco Wholesale Corporation ((COST)), the membership warehouses operator reported net sales of $7.40 billion for August, up 8% from the same period last year. Comparable sales in the month rose 6%.

Pandora Media, Inc. ((P)), the Internet radio service said second quarter total revenue rose 51% to $101.3 million from the same quarter last year. Net loss widened to $5.4 million or 3 cents per diluted share compared to a net loss of $3.2 million or 4 cents per share for the year-ago quarter.

Royal Bank of Canada ((RY)), the diversified financial services company reported third quarter revenues rose to C$7.76 billion from C$6.90 billion in the prior year quarter. Net income in the quarter surged 73% to C$2.240 billion, from C$1.294 billion the prior year. Earnings per share for the quarter rose to C$1.47 from C$0.83 last year.