Treasury to Exit General Motors; Housing Starts Decline but Permits Rise

Arthi Gupta
19 Dec, 2012
New York City

Housing starts fell in November but new building permits and indication of future construction rose. Markel agreed to acquire Alterra for $3.13 billion. Oracle profit rose 18% but FedEx earnings declined 12% in the second quarter.

[R]9:45 AM New York – Housing starts fell in November but new building permits and indication of future construction rose. Markel agreed to acquire Alterra for $3.13 billion. Oracle profit rose 18% but FedEx earnings declined 12% in the second quarter.[/R]

U.S. indexes edged higher in early morning trading on optimism that lawmakers may strike a deal to avert the fiscal cliff crisis.

Housing starts declined in November after surging for two previous months and the last month growth was lowered. Building permits rose in November.

The European indexes rose after German business confidence improved more than anticipated in December. However, euro area construction output declined in October 1.6% in October.

Standard and Poor''s upgraded Greece''s credit rating from ''selective default'' to ''B-''.

UBS AG, the Swiss lender agreed to pay nearly Sfr1.4 billion in fines and disgorgement to the US, UK and Swiss authorities to resolve LIBOR-related investigations.

Asian indexes climbed on the hopes of additional monetary stimulus measures from the newly elected coalition government and the Bank of Japan is expected to announce new measures at the end of two-day meeting tomorrow.

U.S. Housing Starts Fall

U.S. housing starts fell 3% to an annual rate of 861,000 in November from the revised October estimate of 888,000 but 21.6% above the November 2011 rate of 708,000, according to a report released by the Commerce Department today.

Single-family housing starts in November were at a rate of 565,000; 4.1% below the revised October data of 589,000.

However, building permits in the U.S. rose 3.6% to an annual rate of 899,000 in November from the revised October rate of 868,000 and is 26.8% above the November 2011 estimate of 709,000.

Privately-owned housing completions in November were at a seasonally adjusted annual rate of 677,000, 9.7% below the revised October estimate of 750,000, but 16.1% above the November 2011 rate of 583,000.

Markel to Acquire Alterra

Markel Corporation and Alterra Capital Holdings Limited announced a merger agreement. Under the terms of the agreement, Markel will acquire Alterra for an aggregate consideration of approximately $3.13 billion.

Following the merger, Markel''s existing shareholders will own approximately 69% of the combined company on a fully diluted basis, with Alterra''s shareholders owning approximately 31%.

GM to Buy Back Stock from U.S. Treasury

General Motors said it will purchase 200 million shares of GM common stock held by the U.S. Department of the Treasury for $5.5 billion or $27.50 per share.

The share buyback is part of the Treasury’s plan to fully exit its entire holdings of GM stock within the next 12 to 15 months, subject to market conditions.

Earnings Review

Actuant Corporation ((ATU)), the industrial products distributor reported first quarter net sales fell 4% to $377 million compared to last year. Net earnings in the quarter decreased to $36.3 million or 49 cents per diluted share from $37.2 million or 50 cents per share in the year-ago period.

FedEx Corporation ((FDX)), the shipping company reported second quarter revenue rose 5% to $11.1 billion from the previous year. Net income in the quarter dropped 12% to $438 million or $1.39 per diluted share from $497 million or $1.57 per share a year before.

General Mills, Inc. ((GIS)), the consumer foods manufacturer reported second quarter net sales grew 6% to $4.88 billion from the same period last year. Net earnings in the quarter rose 21.8% to $541.6 million or 82 cents per diluted share from $444.8 million or 67 cents per share in the year-ago period.

Oracle Corporation ((ORCL)), the enterprise software provider reported second quarter total revenues rose 3% to $9.1 billion. New software licenses and cloud software subscriptions revenues were up 17% to $2.4 billion.

Net income for the quarter increased 18% to $2.6 billion or 53 cents per diluted share compared to $2.2 billion or 43 cents per share for the year-ago quarter.