Verizon Helps Stock Futures

Elena
29 Jan, 2007
New York City

U.S. stock futures moved slightly higher Monday, helped by earnings reports and some merger activity. Dow component Verizon Communications reported Q4 earnings decline to 35 cents per share, down from 59 cents last year, blaming taxes on the sale of assets and costs related to a spinoff. However, the results beat analyst estimates as the telephone company''s cellular business added 2.3 million customers.

[R]9:00AM Market futures traded slightly higher on earnings and deal news.[/R]
U.S. stock futures moved slightly higher Monday, helped by earnings reports and some merger activity. Investors were cautious at the start of a week with busy economic agenda. Market eagerly awaits a Federal Reserve interest rate policy meeting, a reading on the manufacturing sector and the jobs report for January which wre due later in the week.

In pre-market earnings highlights, Dow component Verizon Communications ((VZ)) reported Q4 earnings decline, while earnings excluding special items topped analyst expectations, as the telephone company''s cellular business added 2.3 million customers Verizon earned $1.03 billion, or 35 cents per share, down from $1.66 billion, or 59 cents per share last year, blaming taxes on the sale of assets and costs related to a spinoff. Schering-Plough ((SGP)) said earnings came in line with expectations, while revenue rose above forecasts.

Mattel Inc. ((MAT)) reported Q4 net income of $286.4 million, or 75 cents a share, up from $279.2 million, or 69 cents a year ago, exceeding estimates of 67 cents a share. Quarterly sales rose 14% to $2.11 billion. Meat producer Tyson Foods ((TSN)) swung to profit in Q1, breaking a series of three quarterly losses. The company reported a profit jump of 46%to $57 million, or 16 cents per share from $39 million, or 11 cents per share last year, due to higher chicken sales and lower cost. The results beat analysts' expectations for profit of 6 cents on revenue of $6.38 billion.

In deal news, Citigroup ((C)) agreed to buy online bank Egg from the U.K.'s Prudential for 575 million pounds. Citigroup also plans to cut jobs and $1 billion in costs. Abitibi-Consolidated ((ABY)) and Bowater ((BOW)) said they would merge to create the eighth-largest publicly-traded forest products company. Laureate Education Inc. ((LAUR)) agreed to a $3.1 billion buyout by CEO Douglas Becker and a consortium of private equity firms including Kohlberg Kravis Roberts and Citigroup Private Equity. S&P 500 futures inched up 0.60 of a point to 1,428.10 and Nasdaq 100 futures edged up 0.25 of a point to 1,779.50. Dow industrials futures ticked up 3 points to 12,526.


[R]8:00AM U.K. Prudential agreed to sell Egg Banking to Citigroup for $1.13 B.[/R]
U.K. banking and insurance group Prudential announced on Monday that it had agreed to sell Egg Banking to Citigroup ((C)) for 575 million pounds ($1.13 billion). The transaction is expected to improve the group''s surplus under the Financial Conglomerates Directive by an estimated £300 million. Prudential said the deal is expected to complete in April, and is subject to regulatory approvals. Prudential said that a distribution agreement to provide life and pensions products to Egg customer for five year was reached. The sale will enhance Prudential’s earnings in 2007. Separately, Citigroup said it expects the deal to boost its earnings in its first year. Citigroup corporate and investment banking advised Citigroup on this transaction.


[R]7:30AM Asian markets ended mixed Monday with China up and HK down.[/R]
Asian markets finished mixed on Monday. In Japan, the Nikkei Index finished the day 0.3% higher at 17,470. Stocks rebounded as Seiko Epson and Nomura Research Institute soared after releasing upbeat earnings results. Seiko Epson ended 5.7% higher and Nomura Research Institute surged 7.3%. Seiyu surged 13% in response to news from Wal-Mart that the biggest retailer in the world may look for corporate acquisition opportunities in Japan.

The Hong Kong Hang Seng Index ended 0.2% lower at 20,237. China-related shares surged. China Southern surged 7.3%, China Eastern Airlines rose 3.7% and Air China gained 3.1%. Property developers fell on interest-rate concerns, as Sino Land dropped 1.2%, Swire Pacific declined 1.2% and Sun Hung Kai Properties lost 0.5%. The Shanghai Composite Index soared 2.2% to 2,945. Banks led the rally. Hua Xia Bank hit the 10% upper limit, China Minsheng Banking rose 8.9% and Bank of China gained 3.1%.

South Korean Kospi Index lost 0.6% to 1,363. Samsung Electronics declined 1.5% and Hynix Semiconductor fell 3.8% on investor concerns about declining DRAM prices. Australian S&P/ASX 200 slipped 0.2% to close at 5,760. Brambles advanced 3% on broker upgrades, takeover speculation and expectations of an earnings surprise in its first half results due next month. Big banks dragged the market down with National Australia Bank losing 0.7% and Commonwealth Bank of Australia slipping 0.6%.


[R]6:30 AM European markets edged higher on Monday despite warning from DT.[/R]
European markets inched higher on Monday. By mid morning, the FTSE 100 in London inched 0.1% higher to 6,231.2, Frankfurt Xetra Dax gained 0.2% to 6,706.1, and the CAC 40 in Paris added 0.4% to 5,606.54.

Advancers

Airline stocks advanced as German airline Lufthansa gained 1.6%. Air France-KLM shares were up 1.2%, Ryanair gained 0.1% and British Airways climbed 1.2%, despite caution ahead of expected strikes by cabin crew this week. Infineon, the German chipmaker, climbed 2.6% after it reported better-than-expected results for its fiscal Q1.

Fiat gained 1.6% after a price target upgrade from JPMorgan. Financial services stocks added weight to the overall gains in the market. Danske Bank gained 2.1%, BNP Paribas added 1.2%, and Portuguese largest lender Millennium BCP rose 1.4%.

Decliners

Deutsche Telekom said it now anticipated core profit for this year to come in at 19 billion euros rather than the previous estimate of between 19.7 billion euros - 20.2 billion euros. The shares fell 5.9%. Among other telecom stocks, Dutch group KPN fell 2.4%, France Telecom lost 2%, Belgacom shed 1.5% and BT Group slid 1.3%.

Oil and gold

Light, sweet crude for March delivery gained 31 cents to $55.73 a barrel in electronic trading on the New York Mercantile Exchange. March Brent crude on the ICE Futures exchange in London rose 36 cents to $55.65 a barrel. Gold traded in London at $643.40 per troy ounce, down from $645.95 late Friday.

Currencies

The dollar was mostly higher against other major currencies in European trading Monday morning. The euro traded at $1.2916, up from $1.2910 late Friday. The British pound was quoted at $1.9570, down from $1.9588. The dollar bought 121.89 Japanese yen, up from 121.58.