P&G Profit and Outlook Up

Elena
31 Oct, 2006
New York City

U.S. stock market futures traded higher Tuesday, boosted by uplifted earnings outlook at Procter & Gamble on a better commodity and energy cost forecast. The consumer products maker reported higher-than-expected Q1 profit jump of 33% to 79 cents a share, up from 77 cents last year, boosted by 27% revenue.

[R]9:00AM Stock futures advanced on uplifted outlook by Procter & Gamble.[/R]
U.S. stock market futures traded higher Tuesday, reflecting uplifted earnings outlook by Procter & Gamble. Consumer products maker Procter & Gamble Co. ((PG)) reported higher-than-expected Q1 profit jump of 33% to 79 cents a share, up from 77 cents last year, boosted by 27% revenue increase due to sales from Gillette and improved margins. The company also lifted its full-year earnings outlook on a better commodity and energy cost forecast.

Eastman Kodak Co. ((EK)) posted a loss of $37 million, or 13 cents a share in Q3, citing $202 million in restructuring costs. This was the eighth quarterly loss in a row, but compared with a year-ago loss of $914 million, or $3.18 a share, when it took a $778 million tax, a significant improvement has been achieved. Sales fell 10% to $3.204 billion. Excluding one-time items, Kodak earned 44 cents a share, missing expectations of earnings of 19 cents a share on sales of $3.285 billion.

In merger-and-acquisition news, Merck ((MRK)) offered more than double the closing price for Sirna, maker of a drug to treat blindness. Elsewhere, Verizon Communications ((VZ)) was downgraded to neutral from buy at UBS on the roll-out of the company's fiber network and lower core profitability. Celegne ((CELG)) rose over 4% in German trading after Standard & Poor's said it would add the company to the S&P 500. S&P 500 futures rose 1.9 points at 1,385.10 and Nasdaq 100 futures rose 3.25 points at 1,740.00. Dow industrial futures rose 13 points.


[R]8:00AM Merck agreed to buy Sirna in a deal worth $1.1 billion.[/R]
Pharmaceutical company Merck & Co. ((MRK)) said Monday it agreed to buy Sirna Therapeutics Inc. in a deal worth $1.1 billion. Merck''s $13-per-share offer is almost a 102% premium over Sirna''s closing price of $6.45, which fell 5 cents before the bid was made public after the stock markets closed. Sirna''s stock surged 98% to $12.74 in after-hours trading. Merck''s shares fell 45 cents to $45.64 at the close of trading on the NYSE and remained unchanged in after-hours trading.

Sirna is a small biotechnology company developing drugs based on new technology, the so-called RNA interference technology, a technique discovered by this year''s Nobel winners, Andrew Fire of Stanford University and Craig Mello at the University of Massachusetts. There are eight U.S and European patents specifically related to the technology. Drug makers and researchers have long sought to create drugs that target bad cells while leaving healthy ones alone. Many people believe that RNA interference will be a powerful tool in customizing drugs.

The closest drug Sirna has near market is for the treatment of the eye disorder, macular degeneration, a leading cause of blindness in the elderly. However, that drug is still at least two years from regulatory approval. Merck said stockholders holding 36% of Sirna''s outstanding shares already have committed to support the deal. The transaction is expected to complete in Q1 of 2007.


[R]7:30AM South Korea leads Asia higher Tuesday, Japan advances on large-caps.[/R]
Asian markets finished mostly higher on Tuesday. The Nikkei 225 Index rose 0.3% to finish at 16399.39. Machinery stocks led the advance, with Fanuc gaining 6.2% and Toshiba Machine jumping 2.8%. Sony ended the session 0.2% higher. Shares of Softbank fell 2.9% after the Internet-services company is reportedly now under investigation by Japan antimonopoly body over possible advertising law violations.

In Seoul, South Korea market advanced, led higher by strong gains from Lotte Shopping and other retail stocks. The Korea Composite Stock Price Index, or Kospi, rose 0.6% to 1364.55. Lotte Shopping, operator of largest department-store chain in South Korea, rose 2% on news it will open a department store in Beijing in the first half of 2008 in a 50:50 joint venture with Yintai Group of China. Retailer Shinsegae surged 3.8% and Hyundai Department Store gained 2.5%.

Other markets in the region also advanced. Hang Seng Index in Hong Kong rose 0.2% to 18324.35, while Taiwan Weighted Price Index gained 0.4% to 7021.32 and New Zealand NZSX-50 rose 0.8% to 3784.49. Sydney S&P/ASX 200 bucked the trend and closed down 0.3% at 5384.40.


[R]6:30AM European shares advance on Tuesday on strong carmakers rally.[/R]
European markets were higher on Tuesday by mid morning. The FTSE 100 in London rose 0.3% to 6,145.9, Frankfurt Xetra Dax added 0.4% to 6,284.89, the CAC 40 in Paris climbed 0.1% to 5,368.77.

Advancers

DaimlerChrysler shares were up 3.4%, while Renault of France gained 2%, and Fiat of Italy added 1.4%. UBS shares fell 4.6%. Rival Swiss bank Credit Suisse shed 0.9%.

Insurers gained supported strong third-quarter revenues from Friends Provident of Britain, which gained 5.3%. European life groups ING and CNP Assurances advanced 1.1% and 1.1% respectively. Among the non-life groups, Generali jumped 1.3% and Munich Re moved up 1.1%.

Telenor, the Norwegian mobile operator, gained 1%. It reported better-than-expected numbers last week, prompting several broker upgrades.

Decliners

Sanofi-Aventis, the French drugmaker, fell 3.9% after reporting an 11.6% fall in third-quarter profit. Swedish paper products maker SCA fell 3.8% after reporting third-quarter pre-tax profits that fell shy of expectations.

KPN, the Dutch fixed-line telecoms group, declined after its 4.4% rise in third-quarter earnings fell just short of market forecasts, despite a strong performance at E-Plus, its German mobile division.

Dexia downgraded the group from “add to neutral, disappointed by dividend outlook and performance of KPN at its fixed-line business. The shares fell 1%.

Oil and gold

Oil prices edged higher Tuesday, recouping some of their losses after plunging more than $2 a barrel the previous day as traders looked to U.S. supply data due out this week that is expected to show rising inventories of crude. Light, sweet crude oil for December delivery climbed 2 cents to $58.38 a barrel in electronic trading on the NYME, after slipping $2.39 Monday to settle at $58.36 a barrel. Brent crude rose 6 cents to $58.74 a barrel on the ICE Futures exchange.

Gold traded at $600.70 an ounce on Tuesday, up $6.80 an ounce from Friday close of $593.90.

In morning European trading, the euro fell to $1.2685, compared with $1.2729 in New York late Monday. The British pound declined to $1.9001 from $1.9020. The dollar rose to 117.75 Japanese yen from 117.41 yen on Monday after the Bank of Japan suggested it would not rush into another rate increase.