More Mergers, Fed Meeting, Oracle Earnings

123jump.com Staff
20 Mar, 2007
New York City

U.S. stocks rose led by tech companies and steelmakers, on prospects demand for computer chips would grow and steel prices would increase. The Federal Reserve''s Open Market Committee began a two-day meeting on interest rates and the economy. A government report showed housing starts rebounded in February. Halliburton sank 7.5% on lowered earnings and Systemax plunged 21%. Oracle reported 27% rise in revenue and 35% increase in profit. Claires Store agrees to be sold to Apollo for $2.8 billion.

[R]4:00PM NY; 9:00PM Frankfurt; 1:30AM Mumbai - GLOBAL MARKETS[/R]
Investors in New York hoped that the Fed will not raise interest rates after two-day meeting that began today. Market averages in the U.S. closed higher on more merger news and continued worries on sub prime lending. In Europe Barclays is close to acquiring ABN Amro for $80 billion. Higher bid from other banks are likely.

Yield on 10-year U.S. bond closed at 4.547% and the 30-year bond closed at 4.709%.

Gold gained $4.70 to close at $652.20 a troy ounce, silver increased 13.7 cents to end at $13.37 a troy ounce and copper advanced $26.0 to close at $6671.0 per metric ton.

Oil gained 14 cents to close at $56.730 a barrel and heating oil lost 1.970 cents to finish at 166.870 cents a gallon. Natural gas increased 6.3 cents to close at $6.910 per MMBtu. Gasoline went down 1.600 cents to end at 194.210 cents a gallon.

Asian markets closed higher led by export-related shares in Japan. The advancers were led by Japan with a gain of 0.90%, India with an increase of 0.48% and Hong Kong with an advance of 0.47%. The decliners were led by Indonesia with a decrease of 0.14%, Philippines with a decline of 0.07% and Taiwan with a loss of 0.02%. Australia gained 0.30%.

European markets finished higher helped by positive sentiment on Wall Street, and as gains from banks such as ABN Amro offset poorly received earnings from Deutsche Post and Friends Provident. The advancers were led by Netherlands with an increase of 1.19%, France with an advance of 0.81% and Norway with a gain of 0.60%. There were no decliners.

Latin America markets finished higher ahead of the Fed''s interest-rate decision. The advancers were led by Mexico with a gain of 1.38%, Brazil with an increase of 1.14% and Argentina with an advance of 0.18%.In Canada, the stock market finished lower with a decline of 0.19% on weakness in the technology sector.

[R]2:30PM NY, U.S. Market Movers[/R]

3Sbio Inc. ((SSRX)), biotechnology company, said that the company has received approval from the PRC State Food and Drug Administration for licenses to produce and sell pre-filled syringe erythropoietin products in 2,000 IU, 3,000 IU, 4,000 IU and 10,000 IU strengths under its brand name, EPIAO. The Company plans to launch pre-filled syringe EPIAO products within 2007. Shares jumped 8.3%.

Affiliated Computer Services ((ACS)) shares rose 16.8%. Private-equity firm Cerberus Capital Management has offered to pay roughly $5.6 billion in cash for the company and assume $2.6 billion of its debt as part of the deal.

Alon USA Energy ((ALJ)) shares surged 7.6% on its management''s prediction that two recent acquisitions will contribute more than originally expected to the company''s future profits. The company expects its Paramount Petroleum and Edgington Oil acquisitions to generate earnings before interest, taxes, depreciation and amortization contribution of $300 million by 2011, up from its previous estimate of $100 million.

Eschelon Telecom Inc. ((ESCH)) said it agreed to be acquired by privately held Integra Telecom Inc. for about $566 million in cash. Integra said it expects earnings before interest, taxes, depreciation and amortization on a pro-forma basis to exceed $200 million for the combined company. It also sees annual revenue of more than $700 million. Shares climbed 12.7%.

Exide Technologies ((XIDE)) shares gained 16.7%. The company announced a new battery supply agreement with Toyota Motor Engineering & Manufacturing North America. Exide said it has begun shipping lead-acid starting batteries for the next-generation of Toyota Tundra trucks assembled at Toyota''s facility in San Antonio.

Hirsch International Corp. ((HRSH)) shares climbed 37.6% after the distributor of embroidery systems reported its fourth-quarter results. Sales climbed 27% to $15.2 million. Operating income increased to $973,000, compared with a year-ago loss of $249,000; net earnings swung to a penny-per-share profit from last year''s loss of 4 cents per share.

Navistar International Corp. ((NAVZ.PK)) increased its fiscal-year outlook for industry volume for the United States and Canada and said its global quarterly shipments were unchanged. That’s why the company’s shares climbed 5%. Navistar forecast industry sales of medium and heavy trucks and school buses at 325,000 units to 347,000 units for the year, a 24% to 28% decline from 2006.

Progress Software Corp. ((PRGS)) shares rose 7.6% after the software company reported better-than-expected first-quarter results. The company posted adjusted earnings of $16.2 million, or 37 cents per share, on revenue of $115.2 million. Analysts anticipated earnings of 35 cents per share on revenue of $111.5 million. During the year-earlier period, the company earned $12.9 million, or 30 cents a share, on revenue of $103.9 million.

Silicon Motion Technology Corp. ((SIMO)) shares jumped 10% after the developer of chip components increased its first-quarter revenue outlook. The company now sees revenue of $33.1 million to $34.5 million, which represents a sequential decline of 3% to 7% from the fourth quarter. Previously, the company projected a sequential decline of 15% to 20%.

Verso Technologies ((VRSO)) shares climbed 13.3% after the company announced its providing general revenue and EBITDA financial guidance to investors. Verso management expects first quarter 2007 revenues to be at least $12 million. In the first quarter of 2006, the company recorded $6.7 million in revenue. Second quarter 2007 revenue is expected to be between $14 and $15 million versus $8.4 million recorded in the second quarter of 2006. Full year 2007 revenue is expected to be between $60 and $70 million. Revenue for 2006 was $42.5 million and in 2005, revenue was $32.8 million.

Delta Air Lines ((DALRQ.PK)) said it has been hired by JetBlue Airways Corp. to be its vice president of operations at John F. Kennedy International Airport in New York. The staffing announcement comes a month after weather-related problems at the airport left hundreds of JetBlue passengers stuck on planes for up to 11 hours, attracting considerable negative publicity. Shares fell 5%.

Hancock Fabrics ((HKF)), struggling fabric retailer, said it will close 104 more stores and will look into alternatives for the company''s future. The announcement brings the total number of closings to 134. Shares fell 28.2%.

[R]1:00PM NY European markets advanced, lifted by merger speculation.[/R]
European stocks closed on a positive note Tuesday, reversing from earlier losses. Markets were given a boost by gains in the U.S. market, strength in the financial sector and bid speculation which helped offset disappointing earnings from Deutsche Post. Dutch banking group ABN Amro shares gained 3.5% after confirming the takeover talks. Barclays shares were also higher, up 3.7%. U.K. insurer Prudential climbed 3.3% to 731.50 pence amid merger consolidation. In other deal news, U.K. leisure group Whitbread climbed 11% amid rumors of private-equity bid interest. Among companies releasing earnings results, Deutsche Post shares fell 4.8% after it said that its sales should increase slightly in 2007. Also on the negative side, shares in chemicals group Lanxess lost 3.2% after the company posted sales decline. The U.K. FTSE 100 index added 0.5% at 6,220.30, the German DAX 30 gained 0.4% at 6,700.29 and the French CAC-40 climbed 0.8% at 5,503.27.

Crude oil prices hovered round $57. Light, sweet crude April delivery traded at $56.78. Heating oil rose to $1.7027. Natural gas jumped 10 cents to $6.944 per 1,000 cubic feet. London Brent rose 30 cents to $60.82. The U.S. dollar traded mixed against its major currency rivals. The euro was quoted at $1.3289, down from $1.3301. The dollar bought 117.22 yen, down from 117.59. The British pound traded at $1.9580, up from $1.9443. European gold prices rose. In London gold traded at $659.50 per troy ounce, up from $653.50. In Zurich, the precious metal traded at $652.85, up from $654.10. Silver rose to $13.34, up from $13.15.


[R]11:30AM Wall Street traded modestly higher. Deal talk gave a boost.[/R]
U.S. stocks traded modestly higher, awaiting the Fed Reserve''s interest-rate decision. Investors received well the Commerce Department''s report that construction of new homes and apartments rose by 9%. However, homebuilders declined on the prospect of fewer permit applications. Toll Brothers ((TOL)), D.R. Horton ((DHI)), Centex ((CTX)), KB Home ((KBH)) and Hovnanian Enterprises ((HOV)) moved to the downside. Some deal talk also generated positive sentiment. Affiliated Computer Services ((ACS)) climbed 17% after an investment group said it is offering $5.93 billion in cash to take it private. Speculation arose over media reports on several other deals. Palm ((PALM)) gained 4.5% on reports that cell phone manufacturer Nokia Corp. ((NOK)) is trying to buy the company. American International Group ((AIG)) was reportedly considering an acquisition of Prudential PLC.

Investors found comfort in news that Accredited Home Lenders ((LEND)) received a $200 million term loan from Farralon Capital Management. The troubled lender surged 23% after falling 18% on Monday. The Dow was led by gains for Caterpillar ((CAT)), up 1.5% and Wal-Mart Stores ((WMT)), up 1.2%. In late morning trading, the Dow Jones industrial average rose 29.32, or 0.24%, to 12,255.49. The Standard & Poor''s 500 index was up 4.33, or 0.31%, at 1,406.39, and the Nasdaq composite index rose 10.40, or 0.43%, to 2,404.81. Bonds rose, as the Treasury markets shrugged off the housing data and an announcement from China that the country doesn''t intend to build up its reserves.

[R]10:30AM London equities were lower on Tuesday. Whitbread surges on M&A.[/R]
The UK market was lower on Tuesday. In mid-morning trade, the FTSE 100 was down 7.5 points to 6,181.7.

Advancers

Shares in Whitbread, the leisure group, rallied 10.4% as rumours circulated of a possible 23 pound-a-share bid. Barclays gained 4.6% while Lloyds TSB firmed 2% and Royal Bank of Scotland added 1.7 % on expectations of further merger activity to come. Bid speculation also raised shares of ICAP, the inter-dealer broker, 3.6% higher. Prudential rose 3.3 % as Citigroup lifted its price target on the life assurer and confirmed a buy rating.

Mid-caps leisure stock were also upbeat on the Whitbread break-up story. Punch Taverns gained 2.7%, Mitchells & Butlers gained 2.6% and Marston advanced 2.1%.

Decliners

Friends Provident plunged 6.7 % after its annual profits declined 3% to 509 million pounds, mainly on lower earnings from asset management arm F&C. Broadcaster BSkyB shed 1.9% as media regulator Ofcom launched an investigation into the pay TV market that could lead to a Competition Commission probe into the industry.

Peruvian silver and gold miner Hochschild Mining was off 2.9% to profit taking after the profits of the group increased by 89%.


[R]10:00AM Asia finishes higher as export-oriented stocks boosts markets.[/R]
Asian markets closed higher on Tuesday. The Nikkei 225 finished 0.9% higher, adding 153.65 points to 17,163.20. Auto maker Toyota gained 0.9% and Nissan Motor advanced 1.2%, while property company Mitsui Fudosan jumped 4%. Consumer-electronics producer Sanyo Electric added 1.1% following resignation of Chairwoman Tomoyo Nonaka on Monday.

Hong Kong Hang Seng Index rose 0.5% to end at 19,356.90. Expectations of strong earnings results by large-caps, including China Mobile, spurred the benchmark Hang Seng Index higher. China Mobile, which has the second-largest weighting in the benchmark index after HSBC, gained 0.9%. The Hang Seng China Enterprises Index, a benchmark of Hong Kong-listed China shares, closed 0.3% up, 23.41 points higher, at 9,248.67.

Elsewhere around the region, Australia S&P/ASX 200 closed 0.3% higher and Singapore Straits Times Index advanced 0.1%. Malaysia KLSE Composite added 1.1%, while Taiwan Weighted Price Index ended almost flat, down slightly 0.02% and South Korean Kospi edged higher 0.1%. China Shanghai Composite Index moved in and out of positive territory before closing 0.6% higher. Thailand SET Index was up 0.4%. Among decliners, New Zealand NZX-50 traded 0.3% weaker, and Indonesian JSX Composite shed 0.1%.


[R]9:45AM Wall Street opened mixed ahead of Fed Reserve’s rate decision.[/R]
U.S. stock markets began trading in a mixed fashion on Tuesday, with investors cautious ahead of the Fed Reserve''s decision on interest rates, but relieved that the house construction increased. Housing starts rose 9% to a seasonally adjusted annual rate of 1.525 million in February from a revised 10-year low of 1.399 million in January, beating the expectations for an increase to 1.46 million.

Among early movers, Accredited Home Lenders ((LEND)) climbed 20% after the mortgage company said it received a $200 million term loan from Farallon Capital Management. Shares of Barclays ((BCS)) rose 4% in early trade after it confirmed that it was in merger discussions with ABN Amro. Speculation that the two were considering a merger helped spur Monday''s rally. In the tech sector, shares of Rambus ((RMBS)) rose 6.1%. founder Darwin Deason and private equity fund Cerberus Capital Management said Tuesday they have proposed to buy ACS for about $6 billion.

Technology stocks were driven higher by solid gains for Affiliated Computer Services ((ACS)). The stock jumped 18% after founder Darwin Deason and private equity fund Cerberus Capital Management said Tuesday they have proposed to buy ACS for about $6 billion. That price is about 16% higher than ACS''s Monday closing price of $51.29. In the first hour of trading, the Dow Jones industrial average rose 8.50 or 0.07%, to 12,234.67. The Standard & Poor''s 500 index was up 1.54, or 0.11%, at 1,403.60, and the Nasdaq composite index rose 3.34, or 0.14%, to 2,397.75. Bonds rose, with the yield on the benchmark 10-year Treasury note falling to 4.54% from 4.57% late Monday.

[R]Housing starts increased 9% in February.[/R]
Tuesday morning, the Department of Commerce released its report on housing starts and building permits in the month of February, showing that housing starts rose much more than economists had been expecting. The report showed that housing starts rose 9.0 percent to a seasonally adjusted annual rate of 1.525 million units in February from a revised 1.399 million unit rate in January. Economists had expected starts to rise to a 1.445 million unit rate. The increase in housing starts was due in large part to a notable increase in housing starts in the West, which rose 26.4 percent compared to the previous month. Housing starts in the South rose 18.0 percent, while housing starts in the Northeast and Midwest fell 29.7 percent and 14.4 percent, respectively. The report also showed that single-family housing starts rose 10.3 percent to a 1.220 million unit rate in February, more than offsetting a 2.2 percent decline in the rate for units in buildings with five units or more. At the same time, the Commerce Department also said that building permits fell 2.5 percent to a seasonally adjusted annual rate of 1.532 million units in February from a 1.571 million unit rate in January. Building permits are seen as an indication of the outlook for housing demand.


[R]9:00AM NY-7:00PM Mumbai Sensex gains in volatile trade, Ranbaxy rallies.[/R]
The Sensex on BSE finished 60.95 points, or 0.48%, higher at 12,705.94. The market-breadth was positive although it weakened at the end of the session. For 1,367 stocks that advanced, 1,201 declined and 67 remained unchanged. Of the 30 stocks in the Sensex 17 advanced, while the rest declined. The turnover on BSE was Rs 2,910.12 crore, higher than Rs 2,675.95 crore on Friday, but unusually low for the second day in a row. The turnover on NSE was Rs 6,056.26 crore, also much lower than Rs 4,965.07 crore.

Economic news

Heavy capital inflows drove the Indian rupee to an 18-month high against the dollar on Tuesday. At noon, the rupee stood at 43.98/99 per dollar, having struck a high of 43.9225 per dollar, its strongest since late-September 2005.

The Prime Minister Dr Manmohan Singh will preside over a meeting of the Planning Commission to work out state-wise strategies for achieving the annual farm growth to beyond 4%.

The entertainment and media industry in India is likely to grow at 18% compound annual growth rate and reach a projected size of Rs 1,00,000 crore by 2011 from its present size of Rs 43,700 crore.

Trading highlights

MindTree was the most-active stock with a turnover of Rs 157.70 crore followed by Reliance Communications and AMD Metplast.

Advancers

Ranbaxy led the advancers, soaring over 6% to Rs 336.4 as reports circulate that the company has withdrawn its bid for Merck generics business. The company exited the race on concerns that the acquisition would not add to earnings.

Reliance Energy surged 4.1% to Rs 476.1 and index heavy Reliance Industries gained 0.5% to, Rs 1,321.05 on market rumors it may sign a joint venture with US-based Dow Chemical Co. Bank shares added on short-covering in the derivatives segment. HDFC Bank gained 3% to Rs 954 and State Bank of India rose 2.6% to Rs 953.

Cement shares advanced on reports that the government may offer a five-year tax break to cement plants set up after April 1 2007. Grasim gained 4% to Rs 2,124, Gujarat Ambuja Cements gained 3.4% to Rs 110.9 and ACC was up 0.3% to Rs 742. Hindustan Lever added 2.1% to Rs 184 and Cipla gained 2.5% to Rs 230

Decliners

BHEL dropped 1.7% to Rs 2,044. Infosys slipped 1.5% to Rs 2,054. The increase of the rupee pushed down IT shares as their derive their revenue mostly in dollar terms. Wipro shed 1.4% to Rs 571.25 and TCS shed 0.6% to Rs 1252.3. TCS and Wipro gyrated between positive and negative territory during the day.

Tata Steel was down 1.3% to Rs 424 and Hero Honda lost 0.8% to Rs 635.30. Reportedly, Honda Motorcycle & Scooters India, a wholly-owned subsidiary of Japanese company Honda, proposes to entry-level 100-cc motorcycle segment and will be tough competition.


[R]8:00AM European shares were lower Tuesday despite gains in banking stocks.[/R]
European markets were lower on Tuesday. By mid morning, Frankfurt Xetra Dax fell 0.2% to 6,659.09, the CAC 40 in Paris was off 0.4% at 5,437.67 and London FTSE 100 edged 0.1% higher to 6,196.2.

Advancers

Dutch bank ABN Amro gained 3.5% after confirmation of the merger talks with Barclays. The two companies said they were in exclusive primary discussions over a merger that could value the combined bank at 80 billion or 117 billion euros. Shares in Barclays rose 4.4%.

German sports car maker Porsche gained 3.1% after upgrades from both Morgan Stanley and Lehman Brothers. Morgan Stanley raised its price target on Volkswagen after the company strong results, particularly from its Audi division. Shares in VW gained 1%. Among mining stocks, BHP Billiton was also generally stronger, up 1.4%, supporting the UK benchmark index.

Decliners

The energy sector pushed market lower, after crude fell below $57 a barrel. Royal Dutch Shell fell 1%, while France Total shed 0.9% and Italy’s Eni lost 1 %. Chemicals group Lanxess lost 1.4% after its sales dropped 2.9% to 6.94 billion euros in 2006. The company posted a profit in 2006 of 197 million euros.

Deutsche Post, the German mail and logistics group, fell 5.8% after forecasting a 7 % fall in operating profit for 2007. Friends Provident the U.K. provider of life insurance, pension products, and asset-management services, declined 5% after it reported that 2006 pretax profit fell 34% and underlying pretax profit fell 3%.

Oil and gold

Oil prices rose but were hovering just under $57 a barrel Tuesday as traders responded to a drop the day before and looked for market drivers. Crude oil for April delivery rose 37 cents to $56.96 a barrel in electronic trading on the New York Mercantile Exchange. The April contract, which expires Tuesday, fell 52 cents the day before amid expectations of rising crude stocks. On London ICE Futures exchange, May Brent crude gained 32 cents to $60.84 a barrel.

Gold prices rose. Gold traded in London at $654.40 per troy ounce, up from $653.50 late Monday. In Zurich, gold rose to $652.85, up from $651.80. Silver opened in London at $13.13 per troy ounce, down from $13.15.

Currencies

The U.S. dollar was mixed Tuesday against other major currencies in European trading. The euro traded at $1.3284, down from $1.3301 late Monday in New York. Other dollar rates compared with late rates Monday in New York included: 117.77 Japanese yen, up from 117.59; 1.2151 Swiss francs, up from 1.2124. The British pound traded at $1.9556, up from $1.9443.