Flood of Earnings Overwhelms Market

albena
30 Nov, -0001
New York City

U.S. major averages opened slightly higher, after improving throughout the morning amid mixed news from Microsoft and Google. The rise in crude oil futures also frustrated early trading. The weaker dollar and the continuing worries over the terror attacks in London gave oil prices a speculative lift. August gold pulled back after a nearly $4 gain in the previous session. Energy stocks move to the upside, lifted by Halliburton and Schlumberger.

U.S. MARKET AVERAGES

U.S. stocks struggled in morning trade, as news of a fresh terrorist incident in the London underground frustrated the market as investors pored over earnings news from Google, Microsoft, Halliburton and many others.

Major oil services companies Schlumberger Ltd. and Halliburton Co. traded higher, Halliburton gaining 4.8% to $51.06 and Schlumberger up 3% at $ 80.55 after both reported strong earnings.

Shares of Exxon Mobil Corp. also advanced 32 cents on the NYSE.

The biotech sector is down about 1.7%. Affymetrix ((AFFX)) dragged the sector down, losing 18% on earnings and forecast posted after the closing bell Thursday.

Google ((GOOG)) dropped 9% lower to $3.04.75 a share in premarket trade, after reporting earnings below some investors' estimates. The company also cautioned traders not to envisage Google to report sequential growth of 15% in 3Q, as it did last year.

Microsoft ((MSFT)) dropped 41 cents to $26.03 in premarket trade, after reporting results that fell short of investors’ expectations and also issued a disappointing forecast.

But some other tech companies were more upbeat, despite the disappointment from Google and Microsoft. Broadcom rallied 15% after the chipmaker reported higher-than-expected earnings late Thursday, and issued a bullish 3Q outlook. SanDisk gained 13% after reporting quarterly earnings down vs. last year but above estimates.

INTERNATIONAL MARKET NEWS

Asian benchmarks closed mixed with China being a top gainer and Japan the leading loser. The Japanese stocks ended down 0.8% after the surging yen in the wake of China’s currency revaluation send shares lower with big exporters like Honda Motor and Sony being among the leading losers. The Nikkei was also dragged downward by Wall Street losses and further unrest in London. China’s Shanghai Composite gained 2.5% after the currency reform was introduced. Airlines, property developers and paper mills ware among the leading gainers. Hong Kong’s Hang Seng added 1.1% on gains in property stocks. South Korea ended flat, weighed down by losses in auto and tech exporters. The dollar rebounded to 111.06 yen in Tokyo trading.

European shares traded lower at mid-day dealings on new attack fears in the British capital. The German DAX 30 lost 0.2%, the French CAC 40 declined 0.4%, and the U.K.’s FTSE 100 dropped 0.3%. In currency markets the euro was up 0.1% to quote at $1.2168; the pound lost 0.1% to trade at $1.7528.

ENERGY, METALS AND CURRENCIES MARKETS

Crude-oil gained for the first day in three on speculation that China’s refineries will boost imports and increase output of fuels after the currency reform, allowing the yuan to rise against the dollar. Light sweet crude for September delivery gained 47 cents to $57.60 on NYME. London Brent added 59 cents to $56.31 on London’s International Petroleum Exchange.

The U.S. dollar fell slightly against the euro after the London attacks and the currency revaluation system in China. The euro traded at $1.2177, up from $1.2171 in late NY trading. The dollar rose against the yen and stood at 110.97, but fell against the pound which reached $1.7535, up from $1.7521. The Chinese yuan rose 2% against the dollar a day after the government cut its link with the dollar, a move which could make the Chinese exporters more expensive and foreign assets cheaper for China to buy. The yuan closed at 8.1111 to the dollar. The violence in London also pushed the pound lower versus the greenback. The pound last was down 0.5% at $1.7469.

EARNINGS NEWS

Maytag, appliance maker, posted 2Q net income of 4 cents a share compared with a net loss of 52 cents a year ago, citing rising raw material costs and higher fuel transportation costs which offset sales growth and improved cost savings. Excluding restructuring charges the company would have posted 7 cents a share, missing estimates of 10 cents.

Merck & Co, pharmaceutical company, reported 2Q profit drop of 33 cents a share compared with 79 cents a year earlier on the withdrawal of its drug Vioxx and repatriation charges.

Eli Lilly, drug maker, posted 2Q net loss of 23 cents vs. 60 cents in the comparable period last year on litigation charges.

Microsoft, software maker, announced 4Q profit rise of 34 cents per share, up from 25 cents a year ago, reflecting 9% sales growth and a big tax benefit. Excluding special items the company would have posted 33 cents per share, topping estimates of 31 cents.

Google, online search engine, reported 2Q earnings increase of $1.19 per share compared with 30 cents a year ago on revenue growth of $1.38 billion.

Hyperion Solutions, software provider, posted 4Q net income rise of 50 cents per share , up from 36 cents last year on record sales of license revenue. Excluding special items, the company would have posted earnings of 55 cents a share, beating estimates of 52 cents.

Hutchinson Technology, supplier of suspension assemblies for disk drivers, reported 3Q earnings drop of 65 cents a share, down from $1.30 a year ago. The company projected 4Q earnings between 55 and 65 cents a share.

Schlumberger, oilfield and information services provider, posted 2Q earnings rise of 80 cents a share compared with 59 cents last year on revenue growth, exceeding expectations of 67 cents a share.

Beckman Coulter, biomedical equipment manufacturer, reported 2Q profit drop of 73 cents a share vs. 88 cents a year earlier. The company sees its 3Q earnings between 45 and 60 cents a share.

Skyworks Solutions, chip maker, posted 3Q net income fall of 5 cents a share, down from 8 cents last year on decline in revenue.

Kimberley-Clark said it is narrowing its 2005 adjusted earnings per share and expects to post earnings between $3.77 and $3.83 on solid sales growth and higher prices.

Great Atlantic & Pacific Tea, supermarket operator, reported net loss of $2.28 per share vs. a loss of $1.11 a year ago. Same-store sales fell 0.3%.

CORPORATE NEWS

Ford Motor could cut as much as 30% of its white-collar employees over the next few years to come, a reduction far deeper than announced earlier.

Pharmacy-benefits management company Express Scripts agreed to acquire specialty pharmacy company Priority Healthcare for $1.3 billion, or $28 a share. The deal represents an 8.3% premium for Priority, which sells high-cost injectable drugs for diseases such as hepatitis, cancer and multiple sclerosis.

OTHER NEWS

London police have shot a suspected suicide bomber at Stockwell underground station in south London on Friday. Stockwell station is close to Oval station, where one of the four small explosions Thursday took place.