Fiscal Cliff in Focus after Reelection of Obama and Divided Congress

Arthi Gupta
07 Nov, 2012
New York City

U.S. indexes dropped 1% after investors focused on the fiscal cliff negotiations with the divided Congress. Barack Obama was reelected for the second presidential term. AT&T plans to invest $14 billion over the next three years to enhance its wireline IP broadband networks.

[R]9:55 AM New York – U.S. indexes dropped 1% after investors focused on the fiscal cliff negotiations with the divided Congress. Barack Obama was reelected for the second presidential term. AT&T plans to invest $14 billion over the next three years to enhance its wireline IP broadband networks.[/R]

U.S. indexes dropped more than 1% in early trading after the reelection of President Barack Obama. Market already had factored the President’s win and the two parties retaining control of the U.S. Senate and the House.

Investors shifted attention to the so called “fiscal cliff” that is set to kick in automatically the spending cuts and tax increases of $600 billion from Jan 1.

SprintNextel Corp said it agreed to acquire from U.S. cellular wireless telecom spectrum and business in five states for $480 million.

The acquisition involves 585,000 U.S. Cellular customers in Ohio, Missouri, Illinois and Indiana.

The European indexes dropped after the European Commission lowered growth forecast for the euro zone and European Union and expected unemployment to peak next year just below 11%.

AT&T Plans Investment

AT&T Inc. plans to invest $14 billion over the next three years to significantly expand and enhance its wireless and wire-line Internet broadband networks to support growing customer demand for high-speed Internet access and new mobile, app and cloud services.

PacWest and First California Agree to Merge

PacWest Bancorp and First California Financial Group, Inc. inked an agreement and plan of merger whereby PacWest will acquire First California for $8 a First California common share or approximately $231 million in aggregate consideration, payable in PacWest common stock.

The transaction is currently expected to close late in the first quarter of 2013.

Earnings Review

Bombardier, Inc., the Canadian transportation equipment manufacturer reported third quarter revenues fell to $4.3 billion from $4.6 billion last year. Net income in the quarter rose to $212 million from $192 million reported last year. Earnings per diluted share advanced to 12 cents from 11 cents per share last fiscal year.

Devon Energy Corporation ((DVN)), the energy company reported third quarter total revenues declined to $1.865 billion from $3.502 billion last year. Net loss for the quarter was $719 million or $1.80 per diluted share compared to net income of $1.038 billion or $2.50 per share in the same quarter last year.

Macy''s, Inc. ((M)) reported third quarter sales rose 3.8% to $6.075 billion from last year. On a same-store basis, third quarter sales were up 3.7%.

Net income in the quarter rose to $145 million or 36 cents per diluted share compared with $139 million or 32 cents per share last year.

Time Warner Inc. ((TWX)), the media and entertainment company reported third quarter revenues decreased 3% to $6.84 billion from the year-ago period. Net income for the quarter rose to $838 million or 86 cents per diluted share from $822 million or 78 cents per share in the prior-year quarter.

U.S. Cellular Corp ((USM)) lowered its full-year service revenue estimate of $4.08 billion to $4.13 billion from its previous range estimate of $4.05 billion to $4.15 billion.

Profit in the latest quarter decreased to $35.5 million or 42 cents a share from $62.1 million or 73 cents a share. Customer churn rate increased to 1.7% in the quarter from 1.6% in the previous quarter and 1.5% in the year ago quarter.