Lehman Bros Net up 42%

Elena
12 Jun, 2006
New York City

Stock futures pointed to a positive start Monday morning with traders awaiting key inflation data and comments by Fed Reserve officials. Fed chief Bernanke is due to deliver three separate speeches, the first of which will be given Monday evening, commenting on bank supervision at the American Bankers Association Stonier Graduate School of Banking. In earnings news, investment bank Lehman Brothers Holdings posted net income in Q2 rose 42% to $1.69 a share from $1.13 a year ago.

[R]9:00AM Stock futures indicated a positive opening.[/R]
Awaiting key inflation data later in the week and comments by Fed Reserve officials on interest rates, U.S. stock markets were poised to higher opening. Global markets posted steep losses the previous week on worries about the impact of interest rate increases by central banks in attempt to curtail inflation. Five Federal Reserve top officials are expected to speak on Monday, including Chairman Ben Bernanke.

On the corporate front, investment bank Lehman Brothers Holdings Inc. ((LEH)) posted 42% net income growth in Q2. Goldman Sachs Group Inc. ((GS)) is due to report on Tuesday. eBay Inc. ((EBAY)) may also draw investor’s attention as the online marketplace is set to announce detailed plans on Tuesday how to combine its Skype Web telephone-call service into its core U.S. auction business. Standard & Poor''s 500 futures were up 3.70 points, above fair value. Dow Jones industrial average futures were up 22 points, and Nasdaq 100 futures were up 5.50 points.

Lehman Bros, ((LEH)), broker, reported that its Q2 earnings advanced 47% to $1.69 a share, up from $1.13 a share in the year-ago period due to strong underwriting and merger activity along with rising capital markets revenue boosted results. The firm said its revenue was $4.4 billion, compared to $3.3 billion a year ago. The company topped analysts’ forecasts for the company to earn $1.61 a share.

Comverse Technology Inc, ((CMVT)), provider of communications and billing services software products, reported Q1 sales of $373.5 million, up 37% from a year ago, and said it would not be able to file its Form 10-Q for the April quarter before a deadline due to its ongoing review of past stock option grants. The company added it told the Nasdaq Stock Market about the delay in filing its Form 10-Q and that it anticipates the exchange to issue an additional staff determination letter indicating this delinquency could serve as an additional basis for the potential delisting of its stock. In addition Verint Systems which is majority-owned by Comverse, posted sales of $87.7 million for Q1, up nearly 22% from a year-ago total of $72 million. Verint said that its Form 10-Q would also be delayed due to the ongoing probe of past stock option grants at Comverse, holder of a 57% stake in Verint.

AEP Industries Inc, ((AEPI)), maker of plastic packaging products, reported Q2 earnings of $2.08 a share, up from a loss of $4.43 a share a year-ago on 8% sales growth. The company said the sales increased to higher unit prices, offseting a 3.1% decline in sales volume.


[R]8:00AM Arcelor Sa rejected Mittal’s improved deal.[/R]
Luxembourg-based steelmaker Arcelor SA announced Monday it had rejected Mittal Steel’s improved bid offer, saying it ‘is inadequate as it continues to undervalue the company’ and recommended that company’s shareholders should vote for the deal with the Russian OAO Severstal as it is ‘a more attractive alternative from a strategic, financial and social point of view.’ Arcelor said Mittal''s revised offer does not take into account the company''s financial results for 2005 and the first quarter of 2006, or Arcelor''s strategic plan.

However, Arcelor board said officials will meet with Mittal to further discuss the deal and the possible improvements to it as the Severstal transaction does not preclude Mittal''s 25.8 billion euro ($33 billion) offer. Arcelor valued itself at 44 euros ($55.70) a share in an offer to buy back up to a quarter of its capital. The same price Severstal is paying to buy 32% of the combined company. Mittal is offering 37.74 euros ($47.78) a share in an offer aimed at all equity holders. The company needs to buy at least 50% of the company for its bid to succeed. Its offer closes on July 5 and the results will be published in mid-July.

Arcelor’s fate will be determined by its shareholders, who will vote this month whether to approve the hostile takeover bid from Mittal or a plan to merge the company with Severstal. They will also decide if Arcelor can continue with plans for the share buyback. The company maintained the view that share buyback, will bring shareholders more benefits than a takeover by Mittal. Arcelor''s board said it would not launch the self-tender offer until after Mittal announces how many shares it has bought.


[R]7:30AM Asian markets were broadly higher on Monday.[/R]
Asian markets closed broadly higher on Monday. The Nikkei 225 Index advanced 0.56% to 14833. On Friday, stocks recovered from declines to six-month lows worrying about a global economic slowdown. Ahead of Friday''s recovery, the Nikkei had plunged 9.2% since the start of the year. Among the gainers were Honda Motor, which advanced 0.72%, and Nissan Motor which climbed 0.64%. Machinery makers also gained, with Okuma Holdings climbing 1.07% and SMC 2.9%. Electronics shares also advanced. Sanyo Electronics added 5%, while computer maker Fujitsu jumped 4%. The benchmark Shanghai Composite Index in China advanced slightly 0.09% to 1552. The Shenzhen Composite Index edged up 0.3% to 398.88. Investors were also observing Bank of China, which Monday issued a prospectus, which is another step towards listing. Hong Kong''s Hang Seng Index shed 0.05% to 15621.44. Cathay Pacific Airways inched up 0.35%, extending Friday''s gains after the carrier reported it had secured the takeover of a mainland carrier Hong Kong Dragon Airways.


[R]6:30AM European shares extend early losses.[/R]
On the corporate front, Ericsson said it had agreed to sell its defense business, Ericsson Microwave Systems AB and its 40% holding in Saab Ericsson Space to Saab. Remy Cointreau recouped from a sharp opening fall to trade 0.6% higher after the French wines and spirits group posted full-year results below analysts’ expectations due to restructuring charges. There are reports that Credit Suisse is in exclusive talks to sell its insurance business Winterthur to Axa, the French insurance company. Arcelor has formally rejected Mittal Steel’s takeover bid but its management board has agreed to meet with Mittal to review the offer. Arcelor traded 0.4% higher on hopes that its decision to review the offer might indicate a softening in its stance towards Mittal, which edged 1.5% down.

Light, sweet crude oil for July delivery declined 13 cents to $71.50 a barrel by 0610 GMT, while Brent crude advanced 2 cents to $70.50 a barrel. Gold opened Monday at a bid price of $604.30 a troy ounce, down from $615.65 late Friday. The dollar changed little against the euro. The European currency purchased $1.2643 in morning European trading, compared with $1.2644 in New York late Friday. The British pound advanced to $1.8446 from $1.8413, while the dollar inched up to 114.00 Japanese yen from 113.92 yen.