U.S. Indexes Rebound On Earnings, Facebook Surges

Arthi Gupta
24 Oct, 2012
New York City

U.S. indexes gained ahead of the release of existing home sales data. Dow Chemical planned to cut about 2,400 jobs as part of its restructuring plans. Bard agreed to acquire Neomend for $140 million. Facebook soared 20% after revenues increased 32%.

[R]9:55 AM New York – U.S. indexes gained ahead of the release of existing home sales data. Dow Chemical planned to cut about 2,400 jobs as part of its restructuring plans. Bard agreed to acquire Neomend for $140 million. Facebook soared 20% after revenues increased 32%.[/R]

Stocks in early trading in New York gained after economic data in Europe and China and better than expected earnings reports.

Apple Inc gained after the company released iPad mini but analysts reserved their enthusiasm after the company set the price at $329. The higher than expected price will limit the new market company can reach in the teen age demographics and raised worries that it may cannibalize the iPad priced at $599.

Facebook ((FB)) surged 20% after it reported 32% increase in sales and Netflix ((NFLX)) dropped 14% after the company estimated lower than expected streaming business.

Dow Chemical Co. is in focus after the company said that it will cut about 2,400 jobs or 5% of its global workforce, and shut down approximately 20 manufacturing facilities as part of its restructuring plans.

At the completion of restructuring, the company anticipates to save by the end of 2014 $500 million in annual operating costs.

Dow Chemical reported third quarter net sales declined 10% to $13.64 billion from the year-ago period. Net income plunged 39% to $497 million compared with $815 million a year earlier.

European indexes advanced despite weaker than expected corporate earnings and economic data and the rise in bond yields of Italy and Spain.

According to a private survey in Europe, businesses suffered their weakest month in October since the recession began three years ago. Separately, Greek finance minister Yannis Stournaras said Greece was granted a two-year extension to abide by the terms set out by international lenders.

Asian markets traded mixed after China''s manufacturing sector contracted at a slower pace in October, according to a report from HSBC Holdings and Markit Economics released today.

Chinese manufacturing activity climbed to a three-month high of 49.1 in October from 47.9 in September.

PolyOne Agrees to Acquire Spartech

PolyOne Corporation agreed to acquire Spartech. Under the terms of the agreement, Spartech stockholders will receive $2.67 in cash and 0.3167 shares of PolyOne common stock for each share of Spartech common stock.

The company said based on the closing price of PolyOne shares on October 23, Spartech stockholders will receive cash and stock valued at $8 per Spartech common share, representing a total transaction value of approximately $393 million, including the assumption of Spartech''s net debt of $142 million.

Bard Acquires Neomend

C. R. Bard, Inc. agreed to acquire privately-held Neomend, Inc., a developer and supplier of sprayable surgical sealants and anti-adhesion products for $140 million.

The deal also entitles Neomend for future contingent payments up to an additional $25 million based on specific revenue-based milestones through 2016.

Earnings Review

AT&T Inc. ((T)), the telecommunications services provider reported third quarter consolidated revenues of $31.5 billion, flat versus the year-earlier period. Net income totaled $3.6 billion or 63 cents per diluted share, consistent with $3.6 billion or 61 cents per diluted share, in the year-earlier quarter.

EMC Corporation ((EMC)), the storage computers maker said third quarter consolidated revenue rose 6% to $5.28 billion compared with the year-ago quarter. Net income increased 3% annually to $626.3 million or 28 cents per diluted share from $605.6 million or 27 cents per share a year earlier.

Facebook, Inc. ((FB)), the social networking giant said third quarter revenue rose 32% to $1.26 billion from the same quarter last year. Net loss in the quarter was $59 million or 2 cents per diluted share compared to net income of $150 million or 10 cents per share for the year-ago quarter.

The Boeing Company ((BA)), the aerospace company reported third quarter total revenues grew 13% to $20.01 billion, from a year earlier. Net earnings in the quarter decreased 6% to $1.03 billion or $1.35 per diluted share from $1.10 billion or $1.46 per share last year.