U.S. Stocks Lose Momentum, Dell Errors

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

On the revised estimate of GDP, market rallied in New York at the opening and boosted averages in Europe. Commerce Department said fourth-quarter gross domestic product rose at a 2.5% annual rate, revised up from an estimate made a month ago of 2.2%. U.S. Steel has agreed to acquire Lone Star Technologies offering 39% premium and U.S. Steel climbed 3%. Tech stocks failed to participate in the rally. Cisco Systems declined 1.8% and Qualcomm was down 1.3%. Dell discovers accounting errors.

[R]5:00PM NY; 11:00PM Frankfurt; 3:30AM Mumbai - GLOBAL MARKETS[/R]

Yield on 10-year bond closed at 4.633% and the 30-year bond closed at 4.842%.

Gold declined $5.300 to close at $667.600 a troy ounce, silver decreased 11.5 cents to end at $13.340 a troy ounce and copper lost $33.000 to close at $6680.000 per metric ton.

Oil gained $1.950 to close at $66.030 a barrel and heating oil advanced 4.980 cents to finish at 187.720 cents a gallon. Natural gas decreased 6.3 cents to close at $7.609 per MMBtu. Gasoline went up 7.830 cents to end at 213.550 cents a gallon.

Asian markets closed mostly higher with Japan''s issues shrugging off losses to end slightly higher. The advancers were led by Hong Kong with an increase of 1.37%, Indonesia with an advance of 0.96% and Singapore with a gain of 0.85%. The only decliner was Philippines with a decrease of 0.35%. Australia gained 0.55%.

European markets finished higher as gains from airline shares, updates from caterer Compass Group, retailer KarstadtQuelle and electronics conglomerate Philips, and deal speculation boosted sentiment. The advancers were led by France with a gain of 1.42%, Italy with an increase of 1.37% and Netherlands with an advance of 1.33%. There were no decliners.

Latin America markets finished higher aided by a jump in international oil prices. The advancers were led by Brazil with an increase of 2.07%, Mexico with a gain of 1.16% and Argentina with an advance of 0.79%. There were no decliners. Canada gained 0.35% propelled by rumors that telecommunications giant BCE was ripe for takeover by a private-equity concern.

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

BCE ((BCE)), telecommunications company, jumped 5.8% following a media report saying that private equity firm Kohlberg Kravis Roberts & Co. is looking to buy the company. BCE executives, including Chief Executive Michael Sabia, met recently in Montreal to discuss a buyout with the private equity firm. The newspaper estimated such a buyout could be worth just under 30 billion Canadian dollars ($25.91 billion) and be the biggest in Canadian corporate history.

Gol Linhas Aereas Inteligentes ((GOL)), airline, surged 9.8% after the company agreed to buy struggling rival Varig for $275 million in cash and stock. Gol said the deal to acquire Varig includes $98 million in cash, 6.1 million nonvoting shares and the assumption of $45 million of debentures. The company will continue to operate the two as separate brands, with Gol remaining a low-cost, low-fare airline and Varig offering more upscale services.

Targeted Genetics ((TGEN)), gene therapy developer, said it swung to a fourth-quarter profit as revenue more than doubled and drug development costs tumbled, its shares jumped 59.5%. The company said that its net income increased to $808,000, or 8 cents per share, compared with a loss of $3.6 million, or 41 cents per share, in the year-ago period. Revenue climbed to $4 million versus $1.9 million in the same period a year earlier.

Worthington Industries ((WOR)), metal processor, said its third-quarter profit tumbled on higher costs. For the quarter Worthington earned $5.5 million, or 6 cents per share, compared with $19.2 million, or 21 cents per share, for the same period last year. Revenue declined less than a percent to $677.3 million versus $681.5 million in the year-ago period. Shares of the company climbed 5.1%.

AngioDynamics Inc. ((ANGO)) shares of medical device maker dropped 7.9% following quarterly results and an outlook that analysts generally regarded as weak. The company reported a loss of $10.4 million, or 55 cents per share, on revenue of $26.7 million. AngioDynamics posted an adjusted profit of 18 cents per share, but these results excluded $1 million in stock option expenses that analysts included with their figures.

ATMI Inc. ((ATMI)) shares of a provider of specialty materials to semiconductor makers fell 7.9% after the company slashed its first-quarter income outlook to a range of 17 cents to 21 cents per share. The company previously forecast income of 28 cents to 32 cents per share. The company blamed the shortfall on litigation expenses, a manufacturing defect in its packaging business, and a less profitable sales mix on some of its products.

CarMax Inc. ((KMX)), used car retailer, said that its fourth-quarter profit rose 15%, as increased store and Internet traffic offset lower prices for its vehicles. Earnings for the quarter increased to $42.1 million, or 19 cents per share, from $36.7 million, or 17 cents per share during the same period a year earlier. Revenue grew 16% to $1.88 billion against $1.62 billion in the same period a year earlier. Shares fell 6.8%.

CDC Corp. ((CHINA)), online gaming and software company, said that it swung to a fourth-quarter loss due to several one-time charges. Net loss for the quarter was $4.2 million, or 4 cents per share, versus a profit of $1.5 million, or a penny per share, for the fourth quarter of 2005. Revenue for the quarter was $89 million, up 43% from $62.3 million in the year ago period. Shares of the company fell 8.3%.

CuraGen Corp. ((CRGN)) shares fell 15.4% after the company said Roche has agreed to acquire CuraGen subsidiary 454 Life Sciences Corp. 454 Life Sciences'' shareholders will receive up to $154.9 million in cash, of which Roche will pay $140 million in cash, and up to $14.9 million will be received from the exercise of stock options issued prior to the acquisition. CuraGen expects to receive roughly $85 million from the deal, before fees and expenses, of which $14 million will be held in escrow. The transaction is expected to close in the second quarter.

Delta Air Lines Inc. ((DALRQ.PK)), carrier, said that it earned $55 million on revenue of $1.25 billion in February in contrast to a loss a year earlier. The profit amounted to 23 cents per share and was disclosed in a monthly operating report for the 28-day period that was filed with the U.S. Bankruptcy Court in New York. The profit for February compared to a net loss of $209 million in February 2006. Shares fell 26.7%.

Insituform Technologies ((INSU)), which replaces, maintains and install underground pipes, said its earnings will decline this year as states and municipalities in the U.S. spend less on sewer pipeline rehabilitation. In fiscal 2006, the company posted net income of $24.7 million, or 90 cents per share, up from $13.2 million, or 49 cents per share, in 2005. Revenue rose to $596.7 million from $595.3 million in the last-year period. Shares fell 22.2%.

KMG America Corp. ((KMA)) shares fell 49.6% after A.M Best revised its ratings outlook on the company and its Kanawha Insurance Co. unit to """"negative"""" from """"stable."""" The stock was off 51.3% to $4.23 on volume of 358,900. Best''s decision and that the action could force a """"material change"""" in its approach to the worksite market. It added that it may not be able to compete in certain markets due to the decision, and the strategy changes now required could results in special charges as soon as the first quarter of 2007.

Movado Group ((MOV)), watch maker, said its fiscal fourth-quarter profit soared 14.8% as higher sales and lower interest expenses combined to boost earnings. Net income for the quarter rose to $14 million, or 52 cents per share, from $3 million, or 11 cents per share, in the prior-year quarter. The latest period included a gain on the sale of assets of $524,000 and a $2.2 million gain acquired with the Ebel brand. Excluding items, the company said it earned 42 cents per share in the latest period. Revenue rose 13% to $142.3 million from $126.1 million in the fiscal 2006 fourth quarter.

Multi-Fineline Electronix Inc. ((MFLX)) shares fell 9.5% said its profit could decline from the first quarter on lower-than-expected sales to its largest customer. Multi-Fineline had posted first-quarter earnings of 14 cents per share on sales of $123.9 million.

NeoPharm Inc. ((NEOL)) shares plunged 12.3% after the biotech drug developer said the Food and Drug Administration wants another late stage clinical trial on a brain cancer treatment candidate before it will accept a marketing application for review. The FDA''s Office of Oncology told Neopharm another Phase III clinical trial for Cintredekin Besudotox to treat recurring glioblastoma multiforme was needed before the agency could accept a marketing application for approval.

Resources Connection Inc. ((RECN)) shares dropped 6.4% after the owner of professional services company Resources Global Professionals said third-quarter profit declined 5% on higher costs. For the quarter net income decreased to $13.1 million, or 26 cents per share, from $13.8 million, or 27 cents per share, in the same period last year. Revenue for the quarter rose 17% to $187.5 million from $160.3 million in the same quarter last year.

RF Micro Devices Inc. ((RFMD)) shares fell 11.2% after the chipmaker backed its fourth-quarter guidance but warned that first-quarter results would be lower than Wall Street''s forecast. The company said it still backs its previous outlook of fourth-quarter earnings of 11 to 12 cents a share on revenue of $250 million to $260 million, assuming the Jazz Semiconductor transaction closes in March. The Greensboro, N.C.-based company also confirmed it still sees pro forma per-share earnings of 10 cents to 11 cents a share.

Stride Rite Corp. ((SRR)), shoemaker and retailer, affirmed yearly guidance based on the strength of its brands and its acquisition of Robeez, a Canadian footwear company acquired in September. The company reaffirmed net income earnings guidance of between $1.10 per share and $1.15 per share, excluding integration costs of 2 cents per share.

UTI Worldwide Inc ((UTIW)) shares tumbled 19.4% after the company''s fourth-quarter earnings missed Wall Street''s expectations because of persistent costs pressures. UTI Worldwide, which helps its customers move freight via trucks and other modes of transportation owned by other companies, said that profit for the three months ended Jan. 31 more than doubled to $23.6 million, or 24 cents per share, on a revenue gain of 31%. But analysts polled by Thomson Financial had forecast a profit of 26 cents per share on revenue of $934.1 million.


[R]1:30PM NY – 6:30PM Frankfurt – European markets closed sharply higher across the region with several indexes up 1%.[/R]

Of the nine major markets in Europe, seven gained more than 1% led by 1.4% rise in Italy, and 1.2% advance in France, Germany and Switzerland. U.K. gained 0.9%.

Banks, airlines and auto stocks led the charge in the region. Air France-KLM, British Air, and Deutsche Lufthansa rose more than 1.5% despite higher oil prices. French magazine reported that Air France is looking to cut cost of more than one billion euros, stock rose 2.4% to 34.1 euros. Iberia, Spanish airlines, said that it has hired Goldman Sachs and Morgan Stanley for merger related work. The stock gained 3% to 4 euros.

Mining stocks in the UK trading registered another day of gain on revised economic growth rate in the U.S. Final read on the economic growth rate for the fourth quarter was revised to 2.5% from 2.2%. BHP Billiton ((BHP)), Rio Tinto ((RTP)) and Arcelor Mittal ((MT)) gaining.

In Germany, government agency reported fall in unemployment of 65,000 during this month. SAP AG, German software maker fell 1% on the rumors that its chief technology officer and board member is likely to step down at the end of this week. The company is also embroiled in a dispute with Oracle involving customer data and software technology.

KarstadtQuelle rose 2.0% to 27.7 euros after reporting its first annual profit since 2003 on operating margin improvement and asset sales.

Raiffeisen International, Austrian bank, rebounded after dropping yesterday on earnings report. The bank reported earnings of 700 million euros falling short of analyst estimates. However, market focused on the reported earnings growth and ignored the guidance issued for the current fiscal year.


[R]12:30PM NY – Markets in New York trim earlier gains and Nasdaq turn negative. Initial claims of unemployment fell by 10,000 in the U.S. and Germany registered a fall in unemployment by 65,000.[/R]

Market averages rose in the early morning trading on revised GDP growth rate, lower inflation index and buy-out deals. However, by Mid-day gains in market averages were trimmed by half and Nasdaq turned negative.

U.S. Steel said that it has agreed to acquire for $2.1 billion Lone Star Technologies, oil field tubular products maker, at a 39% premium to closing price of yesterday. The stock jumped 37% to $66.

Commerce Department reported that the final read on the fourth quarter GDP growth rate was estimated to 2.5%, revised from previous read of 2.2%. Inflation report along with the GDP report showed that core prices, excluding food and energy, rose at 1.8% lower than the previous estimate of 1.9% and better than 2.2% in the third quarter of 2006.

Department of Labor reported that at the end of last week, initial claims of unemployment fell 10,000 to 308,000 beating estimates of 320,000 claims.

Weekly report on oil inventory showed that crude oil inventory declined for the seven week in a row. Crude oil inventories declined 0.9 million barrels, gasoline inventories fell by 0.3 million barrels and distillate inventories edged lower by 0.7 million barrels at the end of last week. The EIA reported today that natural gas inventories fell by 22 billion cubic feet at the end of last week.

Oil continued to climb on the inventory report and tensions in the Middle-East. Oil rose 52 cents to trade at mid-day at $64.60 per barrel, new six-month high and gasoline price at gas stations are up 20% for the year and averaging at $2.603 per gallon.


[R]11:15AM NY – CarMax profit rises 15% missing the analyst estimates.[/R]

CarMax ((KMX)) reported fourth quarter fiscal 2007 earnings of 19 cents per share compared to 17 cents per share a year ago on revenue rise of 16% to $1.9 billion. The company reported earnings of $42.1 million in the fourth quarter compared to $36.7 million a year ago. Consensus estimate for the earnings was 20 cents, according to analysts surveyed by 123jump.com.

The company guided for the fiscal 2008 earnings per share between $1.03 and $1.14 and expects same store sales growth to be between 3% and 9%, lower than 13% growth in fiscal 2007. Net profit in the fourth quarter declined to 2.2% from 2.3% from a year ago.

The company expects to open 13 stores in the fiscal 2008 and plans to spend $300 million up from $192 million from the fiscal year. Comparable unit store sales 12% for the fourth quarter and 9% for the fiscal year 2007.

The auto finance unit revenue rose in the quarter 1.7% to $32 million and up 1.8% to $133 million for the fiscal year 2007. Gross profit per vehicle declined $60, to $2,651 in the quarter, from the previous year.

[R]10:30AM NY – U.S. Steel buys Lone Star Technologies for $2.1 billion.[/R]

Lone Star Technologies ((LSS)) has agreed to be acquired by U.S. Steel ((X)) for $67.50 per share, 39% premium from yesterday’s close. The Lone Star stock jumped $17.92 or 37% at the opening. Total purchase price estimated at $2.1 billion.

U.S. Steel, with this acquisition, will be the largest oil pipes and tubes manufacturing company in the North America manufacturing 2.8 million tons of tubular products, according the company.

U.S. Steel is known for its seamless steel oil tubes manufacturing and Lone Star is known for its welded tubular products and services. The combined operation will strengthen the tubular products portfolio of U.S. Steel and strengthen its position in the oil field service sector. The company projects that combined operations will save $100 million per year before taxes by the year 2008.

Luxembourg based Tenaris S.A. ((TS)), largest maker of seamless oil tubes and products last month completed acquisition of Hydril Corp, maker of valves and metering equipment for oil flows and completed purchase of Maverick Tube Corp in October for $ 2.8 billion.

High level of oil drilling activity around the world is likely to continue for at least three years, however, the oil exploration and drilling costs have risen considerably in the last four years.

[R]9:15AM NY – U.S. stocks are expected to open higher on upward revision of fourth quarter GDP growth.[/R]

Stocks in New York trading are likely to open higher with futures indicating 25 to 30 points premium at the opening. Fourth Quarter GDP growth rate was revised to 2.5% from the previous estimate of 2.2% by the Commerce Department.

Crude oil in London trading is up 15 cents to $64.23 per barrel. European stocks are trading higher across the region on expectations that the U.S. market will rebound in the morning trading. Italy, France, Germany and the UK are trading 1% higher at mid-day trading. Airlines and auto stocks led the rebound.

In overnight trading in Asian markets gained led by a small rise in Japan. Hong Kong led the region with a gain of 1.37% and India advanced 0.74%.

[R]5:00AM Gold advances on Wednesday supported by a surge in oil prices.[/R]
June gold advanced $4.10 to $672.90 a troy ounce on the New York Mercantile Exchange and May silver also gained 17.5 cents to finish at $13.455 an ounce. July platinum rose $5.80 to close at $1,257.80 an ounce, while June palladium gained $1.85 to finish at $357.85 an ounce. The most-active May copper contract added 0.50 cent to settle at $3.0625 per pound.

The front-month May crude oil contract advanced $1.15, or 1.8%, to finish at $64.08 a barrel, the highest settlement for a front-month contract since Sept. 11, 2006. April heating oil also gained 4.1 cents, or 2.3 percent, to end at $1.8274 a gallon. April reformulated gasoline blend stock for oxygenate blending fell 1.58 cents, or 0.8%, to finish at $2.0572 a gallon. April natural gas futures finished 5.5 cents higher at $7.558 a million British thermal units, the highest front-month settlement price since Feb. 23.

Futures on raw sugar in foreign ports were aided by short covering, and the May contracts finished 0.01 cent higher at 10.12 cents a pound. Arabica coffee futures ended slightly higher with May coffee closing 0.25 cent higher at $1.1270 a pound.