Merck Considers Settling

albena
26 Aug, 2005
New York City

Futures are trading higher Friday and market will watch final August consumer sentiment data from the University of Michigan, which is expected to decline due to surging oil prices. Merck & Co. is in focus due to reports it may settle some of its Vioxx-related lawsuits. WPP Group posted a 41% rise in first-half net profit and lifted its operating margin target for the year. No major companies are scheduled to report earnings Friday.

U.S. AVERAGES

Merck & Co. ((MRK)) announced it may consider settling some of some 5,000 pending cases, related to Vioxx, according to reports.

Hewlett-Packard Co. ((HPQ)) said it would allocate $4 billion to buy back the tech giant's common stock.

Pixar ((PIXR)) is the subject of an informal inquiry by the SEC over heavier-than-expected returns of DVDs of its hit film """"""""The Incredibles"""""""", problems with which caused the company to lower guidance earlier this year.

WPP Group ((WPPGY)), the world's second-largest advertising agency, reported a 41% increase in first-half net profit Friday and boosted its operating margin full-year target.

Novell Inc. ((NOVL)) said late Thursday its quarterly profit tumbled as the company reported weaker sales on higher tax and restructuring costs.

Chico's Fas Inc. posted 2Q sales above expectations. Omnivision Technologies Inc. targeted 2Q revenue above estimates.

Raycom Media agreed to acquire TV-station operator Liberty Corp. for about $867 million in cash.

ECONOMIC NEWS

The only economic reading scheduled for release Friday is the revision of the University of Michigan Consumer Confidence Index. Economists expect that the index declined to 92.5 for its late August survey result, down vs. 92.7 earlier in the month.

Fed Chairman Alan Greenspan is to speak about """"""""Reflections on Central Banking"""""""" in Wyoming at 10 a.m.

INTERNATIONAL MARKET NEWS

Asian markets closed higher on Friday benefiting from modest gains on U.S. market and firm crude-oil prices. Tokyo's Nikkei Average closed up 0.28%, at 12,439.48 on interest in steel and auto shares. Elsewhere in the region, Hong Kong's Hang Seng index gained 0.63% to 14,983.89, Australia's All Ordinaries index added 0.35% to 4,419.10 and in Singapore, the Straits Times index rose 0.09% to 2,286.55. Seoul's Kospi index went against the upward trend shedding 0.98% to 1.086.55 on broad foreign selling of financial stocks and surging oil fears.

European markets advanced Friday, with metals and mining stocks trimming some of Thursday's losses. Crude oil remained stable over $67 a barrel. The German DAX 30 gained 0.2% to 4,863, the French CAC 40 added 0.2% to 4,386 and the U.K.'s FTSE 100 index rose 0.2% to 5,265.

GDP in the U.K. in the second quarter climbed 0.5% vs. the previous quarter, revised up from the previous estimate of 0.4%, the Office of National Statistics announced. Year-on-year, the Office said the U.K. economy grew 1.8%, up vs. the previous estimate of 1.7%.

ENERGY, METALS AND CURRENCIES MARKETS

Oil prices were slightly lower as Hurricane Katrina took a course that would probably miss most of the oil platforms in the region. The October light crude futures contract for NYMEX dropped 23 cents to $67.26 a barrel in electronic trading, while the September contract for Brent crude slid 20 cents to $66.07.

The euro and the British pound advanced vs. the dollar , as the surging oil and expectations for higher U.S. interest rates dragged the greenback lower. The dollar had last declined 0.24% vs. the euro and the European currency was changing hands at $1.2315. The greenback also dropped 0.37% vs. the British pound - one pound was quoted at $ 1.8059.

The dollar bought 109.79 yen on the Tokyo foreign exchange market Friday, down 0.15 yen vs. late Thursday and below the 110.07 yen it bought later that day in New York.

The Chinese yuan reached its highest level since a July 21 revaluation, closing at 8.0965 yuans per $1. It finished at 8.1002 per $1 Thursday.

The benchmark 10-year Treasury lost 2/32, or 63 cents per $1,000 invested, to yield 4.171%. The 30-year bond was down 4/32 to yield 4.376%.

Gold traded in London at $438.50 bid per troy ounce, up vs. $438.45 on Thursday. In Zurich the bid price was $438.35, up vs. $438.25. Gold shed 60 cents in Hong Kong to finish at $438.65.

EARNINGS NEWS

No major companies are scheduled to report earnings Friday.

ProSiebenSat.1, German television company, reported that first-half net profit advanced 38% to 47 euro cents a share despite a tough advertising market. The company expects the net television advertising market to fall by about 2% in 2005 and added that it relies on a better than the market in fiscal 2005 performance after an increase in revenue and profit.

WPP, British advertising company, announced that first-half net profit increased to 11.4 pence a share, from 8.2 pence a share in the year-ago period on strong revenue growth. Adjusted pretax profit advanced 38% to 221.5 million pounds. The results are an indicator for a significant improvement from last year . Looking ahead, the company lifted its headline IFRS operating margin target to 13.7% from 13.2% for 2005 and to 14.2% for 2006.

CORPORATE NEWS

Hewlett-Packard Co. ((HPQ)) announced that the company’s board authorized an additional $4 billion to repurchase its common stock. Through the repurchase, the company plans to offset the dilution of shares issued under employee benefit plans, and return cash to its shareholders. Hewlett-Packard said it repurchased $2.1 billion in stock in the three fiscal quarters ended July 31, and has about $800 million left under its $3 billion repurchase program approved last September. According to reports, HP plans to invest $150 million over the next 5 years to boost its capabilities in radio frequency identification technology, to compete with Sun Microsystems and Symbol Technologies.

Brazil's Companhia Vale do Rio Doce, the world’s largest iron ore mining company, is in talks to acquire French metals and mining company Eramet SA for more than $2 billion, according to reports Friday. The French state has a 28% holding in Eramet and the company's largest shareholder is the Duval family with a 37.2% stake. Paris-based Eramet with a market value of about $2.8 billion, has large nickel, manganese and alloy businesses. The companies didn’t issue any comments on the matter.

UAL Corp., the parent of United Airlines, could receive $3 billion in debt financing, to emerge from bankruptcy by late 2005 or early 2006, according to Friday reports. The exit financing amount is $500 million more than airline’s expectations. The group of lenders includes Citigroup, Deutsche Bank, GE and J.P. Morgan Chase. United is reported to be still working on the financing terms.