Housing Starts Surge, HP Takes $8.8 Billion Charge on Autonomy

Arthi Gupta
20 Nov, 2012
New York City

U.S. indexes struggled and housing starts surged to the highest rate in more than four years. HP swung to quarterly loss and blamed fraud at its $8.8 billion acquisition of Autonomy last year. Memorial Production agreed to buy oil and gas producing properties from Rise Energy for $271 million.

[R]10:15 AM New York – U.S. indexes struggled and housing starts surged to the highest rate in more than four years. HP swung to quarterly loss and blamed fraud at its $8.8 billion acquisition of Autonomy last year. Memorial Production agreed to buy oil and gas producing properties from Rise Energy for $271 million.[/R]

Market indexes in early trading trended lower after Hewlett Packard reported yet another quarterly disappointment and the company took a hefty charge against its recent acquisition of Autonomy for $8.8 billion and claimed fraud.

However, indexes trimmed losses after the release of housing starts jumped to the highest rate in four years according to the Commerce Department.

Housing starts increased 3.6% in October to a seasonally adjusted 894,000 units and the government agency said superstorm Sandy had minimal impact on the data.

Starts increased 41.9% from a year ago month but are still 60% below the peak of 2.27 million registered in January 2006.

Single family home construction starts declined 0.2% to 594,000 units and multi-family homes surged 11.9% to 300,000 unit rate, reflecting demand for more rental units.

Building permits declined 2.7% to annual rate of 866,000 after surging 11.1% in the prior month. Single family construction permit increased 2.2% to 562,000 units and for multi-family homes declined 10.6% to 304,000 unit rate.

Asian markets closed higher following a surge in New York and European markets on the hopes that U.S. lawmakers are working to settle differences and find a compromise for a budget.

The Bank of Japan maintained the uncollateralized overnight call rate unchanged between zero and 0.1%.

Memorial Production Inks Deal with Rise Energy

Memorial Production Partners LP agreed to acquire certain oil and gas producing properties offshore Southern California from Rise Energy Partners, LP for a purchase price of $271 million, which includes $3 million of working capital and other adjustments.

Dycom to Buy Quanta Telecommunications Subsidiaries

Dycom Industries Inc. agreed to acquire Quanta Services Inc.''s domestic telecommunications infrastructure services subsidiaries for about $275 million in cash.

The acquired subsidiaries provide specialty contracting services, including engineering, construction, maintenance and installation services to telecommunications providers, and other construction and maintenance services to electric and gas utilities and others.

Earnings Review

Campbell Soup Company ((CPB)), the convenience food products manufacturer reported first quarter sales increased 8% to $2.336 billion. Net earnings for the quarter declined to $245 million or 78 cents per diluted share compared with $265 million or 82 cents per share, in the prior year.

Chico''s FAS, Inc. ((CHS), the specialty retailer reported third quarter net sales increased 18.2% to $636.7 million compared to the same quarter a year earlier. Same store sales in the quarter increased 9.9% and square footage increased 8.2%.

Net income in the quarter rose 57.4% to $41.7 million or 25 cents per diluted share from $26.5 million or 16 cents per share+-` in the prior year.

Hewlett-Packard Company ((HPQ)), the technology company reported fourth quarter net revenue declined 7% to $30 billion from the prior year. Net loss in the quarter swung to $6.85 billion or $3.49 per share compared to net earnings of $239 million or 12 cents per share last year.

H.J. Heinz Company ((HNZ)), the food company reported second quarter sales grew 0.5% to $2.83 billion, despite a negative 2.4% foreign currency exchange impact. Net income in the quarter rose to $289.4 million or 90 cents per diluted share compared with $237.01 million or 73 cents per share last year.