U.S. Jobless Claims Rise, Economy Grew Faster 3.1% in Q3

Arthi Gupta
20 Dec, 2012
New York City

U.S. jobless claims rose and the economy expanded at a faster rate in the third quarter than previously estimated. ARRIS agreed to buy Motorola Home business for $2.35 billion. Knight Capital agreed to be acquired by Getco for $1.4 billion.

[R]10:25 AM New York – U.S. jobless claims rose and the economy expanded at a faster rate in the third quarter than previously estimated. ARRIS agreed to buy Motorola Home business for $2.35 billion. Knight Capital agreed to be acquired by Getco for $1.4 billion.[/R]

U.S. indexes were flat in early trading. Weekly jobless claims rose 17,000 to 361,000 and the gross domestic product growth estimate was sharply revised higher to 3.1% from the second estimate of 2%.

The impasse on the fiscal cliff issue continues and House Speaker John Boehner and President Barack Obama remain far apart in tax increase and spending plan.

European markets traded mixed with the indexes in Paris and London traded higher and in Frankfurt eased. Ericsson was in focus after leading the decliners in Stockholm trading.

In Asian news, the Bank of Japan expanded its asset buying program and South Korea got the first woman President.

The Bank of Japan decided to increase the size of its asset purchase program by 10 trillion yen, from about 91 trillion yen to about 101 trillion yen, which includes additional purchases of treasury discount bills and the Japanese Government Bonds of 5 trillion yen each.

Park Geun-hye has been elected as South Korea''s first woman president after she defeated her liberal rival Moon Jae-In in the tightly-contested presidential elections held on Wednesday, according to the state media.

U.S. Jobless Claims Rise, Economy Expands

Seasonally adjusted weekly jobless claims rose 17,000 to 361,000 in the week ending December 15 from the previous week''s revised figure of 344,000, according to a report released by the Labor Department today.

The 4-week moving average was 367,750, a decrease of 13,750 from the previous week''s unrevised average of 381,500.

Separately, real gross domestic product in the United States increased at an annual rate of 3.1% in the third quarter, according to the third and final estimate released by the Bureau of Economic Analysis today. In the second quarter, real GDP increased 1.3%.

In the second estimate, the Commerce Department had estimated economic growth of 2% in the third quarter.

ARRIS to Acquire Motorola Home Business

ARRIS Group Inc., the broadband equipment maker agreed to acquire Google Inc.''s Motorola Home business, TV set-top box maker, for $2.35 billion in a cash-and-stock transaction.

Upon closing of the transaction, Google will receive $2.05 billion in cash and approximately $300 million in newly issued ARRIS shares, representing an approximately 15.7% ownership interest post-closing.

Together, ARRIS and Motorola Home will have a global presence with over 500 customers in 70 countries, more than tripling ARRIS pro forma combined revenue to approximately $4.7 billion for the trailing four quarter period ended September 30.

Knight Capital to Be Acquired by Getco

Knight Capital Group Inc. agreed to be acquired by Getco Holdings Co for $1.4 billion in a cash and stock deal, representing a 51% premium to Knight''s closing share price on November 23.

Earnings Review

ConAgra Foods, Inc. ((CAG)), the packaged foods company reported second quarter net sales improved 8.9% to $3.74 billion from the previous year. Net income in the quarter rose 17.4% to $211.6 million or 51 cents per diluted share compared to $180.2 million or 43 cents per share for the year-ago quarter.

Darden Restaurants, Inc. ((DRI)), the full-service restaurant company reported second quarter annual sales rose 7% to $1.96 billion. Net earnings in the quarter fell to $33.7 million or 26 cents per diluted share compared to $54.1 million or 41 cents per share for the year-ago quarter.

Jabil Circuit, Inc. ((JBL)), the electronic manufacturing services provider said first quarter net revenue rose 7% to $4.6 billion from the same quarter last year. Net income for the quarter fell 6.2% to $105.8 million or 51 cents per diluted share compared to $112.9 million or 54 cents per share for the year-ago quarter.

KB Home ((KBH)), the homebuilder reported fourth quarter revenues rose 20% to $578.2 million, compared to the fourth quarter of 2011. Net income in the quarter decreased to $7.7 million or 10 cents per diluted share compared to $13.9 million or 18 cents per diluted share, in the year-earlier quarter.