Microsoft May Contribute $1 Billion to Dell Buyout, Home Sales Ease

Nichole Harper
22 Jan, 2013
New York City

Stocks in New York declined after existing home sales declined unexpectedly in December. Microsoft may contribute as much as $1 billion in a deal to acquire computer maker Dell. Verizon Communications reported wider loss and Johnson & Johnson net surged.

[R]12:40 PM New York – Stocks in New York declined after existing home sales declined unexpectedly in December. Microsoft may contribute as much as $1 billion in a deal to acquire computer maker Dell. Verizon Communications reported wider loss and Johnson & Johnson net surged.[/R]

Stocks in New York seesawed and trended lower from the multi-year high last week after existing home sales declined unexpectedly in December from the previous month.

The S&P 500 index was nearly flat at mid-day at 1,485.54 and the Nasdaq Composite Index decreased 3.50 to 3,131.2.

Mixed batch of earnings were in focus. Regions gained 1% after the regional lender swung to a fourth-quarter profit took lower loan loss provisions. Verizon Communications reported wider wireless margins but took higher pension charges and larger subsidies for smartphone customers. Boeing declined 1.3% as regulators around the world ground its latest state-of-the-art 787 Dreamliner fleet.

Microsoft is in talks with private equity lenders arranging the deal to acquire computer maker Dell. Two sources in Microsoft and in Dell confirmed the talks but said amount of Microsoft participation hinges on the terms and may be limited to $1 billion.

Existing home sales declined in December according to the latest data released by the National Association of Realtors.

Home sales declined 1% to annual rate of 4.94 million last month and missed expectations set by analysts. For 2012, total existing home sales fell to 4.65 million, an increase of 9.2% from 4.26 million in 2011.

The dollar edged higher in New York trading against the yen and the euro and the Bank of Japan confirmed widely telegraphed plan to revise its inflation target to 2% from 1% and said it will defer the purchase of unlimited assets to January 2014.

Markets in Japan gained as much as 0.8% and the Nikkei benchmark declined 0.4% at close as many economists feared that the government plan to lift spending will not rekindle inflation and saddle government with debt.

Markets in Europe rebounded from the earlier loss after following losses in Asian markets. The indexes reversed after a private report suggested business confidence index recovered in Germany in January to 31.9 from the previous read of 6.9 in December.

Stocks in Review

Delta Air Lines, Inc. ((DAL)) slid 8 cents to $13.53 after the airline stated total sales in the fourth quarter grew 2% to $8.60 billion and net income in the quarter tumbled to $7 million or 1 cent per diluted share compared to $425 million or 50 cents a share a year ago period.

E. I. du Pont de Nemours and Company ((DD)) gained 1% or 50 cents to $47.49 after the agriculture products maker reported total sales in the fourth quarter ending in December slid 1% to $7.57 billion. Net income in the quarter declined 70% to $111 million or 12 cents per diluted share compared to $373 million or 40 cents a share a year ago.

The company said operating income is expected to decline in first half of 2013 compared to a year ago period and sales for the full year are estimated near $36 billion.

Johnson & Johnson ((JNJ)) slipped 37 cents to $72.86 after the healthcare products maker reported total sales in the fourth quarter ending in December climbed 8% to $17.6 billion from $16.3 billion in the same period of last year. Net income in the quarter surged to $2.57 billion or 91 cents per diluted share compared to $218 million or 8 cents a share a year ago.

The company expects earnings for the full year 2013 between $5.35 and $5.45 per share.

Regions Financial Corporation ((RF)) increased 2% or 15 cents to $7.58 after the retail and mortgage bank stated total revenue in the fourth quarter ending in December was nearly flat at $1.35 billion from the same period of last year. Net income in the quarter swung to $261 million or 18 cents per diluted share compared to net loss of $602 million or 48 cents a share a year ago earlier.

The Travelers Companies, Inc. ((TRV)) climbed 3.4% or $2.68 to $78.99 after the insurance company said total revenue in the fourth quarter ending in December rose 2% to $6.48 billion from $6.37 billion in the same period of last year. Net income in the quarter plunged 51% to $304 million or 78 cents per diluted share compared to $618 million or $1.51 a share a year ago period.

The insurer added catastrophe losses in the current quarter were $689 million including losses resulting from superstorm Sandy of $669 million.

Verizon Communications Inc. ((VZ)) rose 12 cents to $42.66 after the communication service provider reported revenues in the fourth quarter advanced 6% to $30 billion. Net loss in the quarter widened to $1.93 billion or $1.48 per diluted share compared to $212 million or 71 cents a share a year ago.

For the fiscal 2012, revenues grew 4% to $115.8 billion from $110.9 billion in the same period of last year. Net income in the year rose 4% to $10.6 billion or 31 cents per diluted share compared to $10.2 billion or 85 cents a share a year ago.

In the quarter, Verizon added 2.2 million wireless net retail connections including record 2.1 million retail post-paid net connections totaling 35.1 million retail postpaid accounts at the end of the fourth quarter.