Nokia and Qualcomm Settle Patent Dispute

Elena
05 Apr, 2007
New York City

Wall Street traded in a light pre-holiday mood Thursday as investors, awaiting the release of March employment figures, keeping a cautious tone ahead of a three-day weekend. In corporate news, Constellation Brands rose 2.7% after it reported 26% profit increase in Q4. Among decliners, mattress maker Sealy fell 4.7% after it reported 7% profit rise in Q1 on lower prices. Nokia added 1.3%, while Qualcomm slipped 2.6% after Nokia agreed to pay Qualcomm $20 million in Q2 for using its UMTS license.

[R]11:30AM U.S. markets traded in a lackluster fashion.[/R]
Wall Street traded in a light pre-holiday mood Thursday as investors, awaiting the release of March employment figures, keeping a cautious tone ahead of a three-day weekend. In corporate news, Constellation Brands ((STZ)) rose 2.7% after it reported 26% profit increase in Q4, helped by strong wine sales. On the side of the losers, mattress maker Sealy ((ZZ)) dropped 4.7% after it reported 7% profit rise in Q1 after it charged lower prices to maintain sales growth. Nokia ((NOK)) added 1.3%, while Qualcomm ((QCOM)) slipped 2.6% after Nokia agreed to pay Qualcomm $20 million in Q2 for using its UMTS license. Shares of Dow component DuPont ((DD)) slipped 1.4%, helping to keep the blue chip index lower.

Despite the lack of direction shown by the broader markets, airline stocks posted some strength. Among the most notable advancers, Mesa Air Group ((MESA)) rose 1.9%, Continental ((CAL)) climbed 2.3%, ExpressJet ((XJT)) jumped 2.7%, Alaska Air ((ALK)) added 1.4%. Among companies driven by analyst comments, American Home Mortgage Investment Corp. ((AHM)), mortgage lender, fell 2.7% after Bear Stearns downgraded its rating on the company's stock. On the other hand, shares of Heelys ((HLYS)) surged 8.9% after Wachovia upgraded its rating on the footwear maker, expecting the company to exceed the consensus Q1 earnings estimate. In late morning trading, The Dow Jones industrial average fell 6.42, or 0.05%, to 12,523.63. The Standard & Poor's 500 index was up 0.09, or 0.01%, at 1,439.46, and the Nasdaq composite index rose 3.54, or 0.14%, to 2,462.23. Bonds showed little movement, with the yield on the benchmark 10-year Treasury note unchanged at 4.65% from late Wednesday.

[R]9:45AM U.S. stocks opened mixed ahead of Easter holiday.[/R]
Wall Street started trading narrowly mixed on Thursday after a three-day winning streak and ahead Friday''s release of key employment data. There was little reaction to the latest initial jobless claims figures, which rose to their highest weekly level. Investors cautiousness was also attributed to the fact that the stock market is closed on Friday for the Easter holiday. In corporate news, Micron Technology ((MU)) fell 1.2% due to disappointing quarterly results, followed by a brokerage downgrade. The chipmaker reported $52 million in Q2 and was cut to sell at Goldman Sachs. On the positive side, semiconductor stocks Marvel Technology and National Semiconductor showed some strength, contributing to the modest gain of the tech-heavy Nasdaq. Marvell Technology ((MRVL)) rose 2.3% and National Semiconductor ((NSM)) climbed 1.6%.

Tech giant Dell ((DELL)) was little moved after it said it wouldn''t file its annual report on time because the internal investigation into its past accounting practices hasn''t finished yet. Nokia ((NOK)) and Qualcomm ((QCOM)) settled a patent dispute as Nokia agreed to pay Qualcomm $20 million in Q2 for using its UMTS license. Shares of Nokia added 0.6%, while Qualcomm slipped 1.2%. The Dow Jones industrial average fell 20.73, or 0.17%, to 12,509.32. The Standard & Poor''s 500 index was down 1.37, or 0.10%, at 1,438.00, and the Nasdaq composite index rose 0.14, or 0.01%, to 2,458.83. Bonds showed little movement, with the yield on the benchmark 10-year Treasury note unchanged at 4.65% from late Wednesday.


[R]9:30AM The FTSE advanced buoyed by BoE decision not to raise the rates.[/R]
The UK market was higher on Thursday. The FTSE 100 was up 10 points to 6,374.7 by mid-afternoon trade.

Economic news

The cost of borrowing stayed at 5.25% on Thursday but a large majority of investors expect the Bank of England to deliver another increase in May, as industrial growth is slowing and the housing market is weakening.

Advancers

Old Mutual led the gainers, up 2.2%, as Citigroup increased their rating on the life assurer from hold to buy.

Takeover talk lifted InterContinental Hotels, up 1.2%, as speculation continued that the Barclays brothers would team up with a private equity group and bid for the company.

Royal Dutch Shell rose 0.5 % and BP gained 0.6% as the oil price rose and ABN Amro talked up the long-term possibility of consolidation.

Decliners

Scottish & Newcastle dipped, losing 0.9% as expectations for a potential bid for the company from European rivals died away.

Vodafone lost 0.5% after the telecommunications group admitted that Indian laws would prevent it from owning all of the 67% shareholding in Hutchison Essar that it said in February it was planning to acquire for 5.6 billion pounds.

Electronic cable firm Volex was down 6.9%, announcing it is pleased with progress since interims last November, although the weak dollar and high copper prices mean full year figures will be slightly below expectations.


[R]9:15AM Asian markets finished mostly lower with Japan leading the region lower.[/R]
Asian markets ended lower on Thursday. Japanese Nikkei 225 average closed 0.3% lower at 17,491.42. Oil company Inpex Holdings dipped along with other energy-related shares as crude-oil prices declined below $65 a barrel in the wake of the resolution of the U.K.-Iran crisis. Shares of Inpex shed 2.8% in Tokyo. Among export-related shares, Honda fell 1.4%, while Toyota Motor eased 1.1% in Tokyo.

Hitachi Construction Machinery advanced 1.6% as the company is on track to pay a higher year-end dividend for the business year beginning April 1 than its planned dividend for the just-completed fiscal year.

Chinaese benchmark Shanghai Composite Index gained 0.8% to 3,319.14. Singaporean shares hit a second straight record high on buying in select market large-cap on strong earnings expectations. The benchmark Straits Times Index ended up 12.94 points, or 0.4%, at a record 3345.86 points.

Australian S&P/ASX 200 lost 0.3% to settle at 6,077.10 and South Korean Kospi index closed 0.1% lower at 1,482.04. In Australia, shares of Coles Group advanced 1%, extending sharp gains from the previous session, on speculation it could become the target of bidding war after Wesfarmers came forward with a $16 billion takeover offer.


[R]9:00AM U.S. stock futures pointed a slightly weak opening. Jobs data weighed.[/R]
U.S. stock futures indicated a flat to lower market opening after five straight sessions of gains and ahead of three-day weekend. Economic data weighed on the sentiment after the Labor Department reported the number of jobless claims increased last week, indicating continued pressure on the economy. The new applications filed for jobless benefits rose by a seasonally adjusted 11,000, to 321,000, for the work week ending March 31. Investors were also digesting overseas monetary policy moves and a downgrade of Micron Technology stock. The company is expected to drag tech stocks down due to disappointing quarterly results, followed by brokerage downgrade. S&P 500 futures slipped 0.50 of a point at 1,448.00 and Nasdaq 100 futures eased 0.25 of a point at 1,819.00. Dow industrial futures declined 2 points to 12,593.

Shares of Micron Technology shares ((MU)) rose 1.1% in pre-open trading, although it reported a Q2 net income loss, due to falling prices of memory chips. The company reported a wider-than-expected loss of 7 cents a share vs. estimates for a loss equal to a penny a share. Goldman Sachs downgraded Micron to sell from neutral, saying the company''s losses were likely to get worse. At the same time, Citigroup reiterated its buy rating and raised its price target to $17 from $15.50. Again in the sector, SanDisk ((SNDK)) rose 1.4% after the company said it was forming a joint venture with South Korea''s Hynix Semiconductor to make NAND flash memory chips. Tech giant Yahoo ((YHOO)) gained 1.2% ahead of the open, as Goldman Sachs raised its price target on the Internet services giant to $35 from $31.50, citing benefits from better-than-expected search growth and greater click-through rates. Rackable Systems ((RACK)) dropped 7.6% ahead of the open after warning of a quarterly loss. Nokia ((NOK)) and Qualcomm (QCOM)) settled a patent dispute as Nokia agreed to pay Qualcomm $20 million in Q2 for using its UMTS license.

[R]8:15AM Constellation Brands posted 26% net income rise in Q4.[/R]
Constellation Brands Inc. ((STZ)), wine and spirits producer and marketer, posted 26% net income increase in Q4, as strong wine sales helped offset a drop in sales of imported beer and competition in the British market. Earnings for the fiscal quarter rose to $70.2 million, or 29 cents a share, from $58.2 million, or 24 cents a share. On a comparable basis, it earned 35 cents a share, above expectations of 34 cents a share. Sales rose to $1.42 billion from $1.3 billion. For the year the company expects to earn $1.21 to $1.31 a share.

Micron Technologies ((MU)) swung to a loss in Q2, pressured by falling prices of memory chips and weak demand from cell phone makers. The chipmaker said it lost $52 million, or 7 cents a share, compared to $115 million, or 15 cents a share a year ago, missing analyst estimates for loss equal to one penny a share. Sales totaled $1.43 billion, up 16.5% from the same time a year ago, but came in below expectations of sales of $1.46 billion a year earlier. The stock rose 2.15% in pre-market trading.


[R]8:00AM NY-7:00PM Mumbai Sensex ends with a slight gain Thursday, inflation tame.[/R]
The Sensex on BSE finished 69.31 points, or 0.54%, higher at 12,856.08. The market-breadth was strong as there were two gainers for each decliner. For 1,658 stocks that advanced, 853 declined and 67 remained unchanged. Of the 30 stocks in the Sensex 18 advanced, while the rest declined. The turnover on BSE was Rs 3,169 crore, compared with Rs 3,230.85 on Wednesday. On NSE, the turnover was Rs 6,946.16 crore, compared with Rs 6,971.64 crore on Wednesday.

Economic news

The wholesale price index in India advanced 6.39% in the 12 months to 24 March, down from the increase in the previous week of 6.46 but slightly above a forecast of 6.29%.

The group of ministers on special economic zones, which met today, decided to end compulsory land acquisition by state governments for special economic zones and limited their size to 5,000 hectares. The ministers also cleared 83 special economic zones with no disputes and increased their processing area to 50% of the land size.

The largest commercial bank in India, State Bank of India, intends to raise its interest rates next week tracking the RBI move to lift the cash reserve ratio and a key rate last Friday.

Telecom regulator TRAI ruled out mandatory sharing of infrastructure among mobile operators, proposing instead allowing active networks like antennae, feeder, cables and transmission equipments to be shared among them.

Trading highlights

Indiabulls Real Estate was the most-active stock with a turnover of Rs 176 crore followed by MindTree and IFCI.

Advancers

Tata Steel led the advancers, soaring over 6% to Rs 465 as steel companies have hiked product prices. Tata Steel crude steel production for the year 2006-07, crossed 5 million tons. The production of hot metal touched 5.55 million tons, crude steel at 5.05 million tons and saleable steel at 4.93 million tons. Reliance Energy surged 2.7% to Rs 501.

The cement sector advanced after dropping on Wednesday, as buying was intense at lower levels. The fall came after the government announced a reduction in import duties. Today Grasim rallied 2.4% to Rs 2,113. Gujarat Ambuja Cements was up 1.10% to Rs 106.10, ACC added 1.06% to Rs 722, and UltraTech Cement Company ended up 2.26% to Rs 693.

ICICI Bank and HDFC advanced over 2% each to Rs 839 and Rs 1,530, respectively, while HDFC Bank gained almost 2% at Rs 943. Cipla advanced nearly 1.5% at Rs 233. Maruti, Hindalco and SBI added 1.3% each to Rs 756, Rs 132 and Rs 948, respectively.

Decliners

Dr.Reddy''s led the decliners, down 2% to Rs 729. Hero Honda shed 1.8% to Rs 632, and NTPC dropped 1.4% to Rs 159. NTPC posted a net profit of Rs 6,726.4 crore in 2006-07 as against Rs 5,820.2 crore in the previous fiscal, an increase of 15.57%. Index heavy Reliance Industries was down 0.4% to Rs 1,257.55 on 3.50 lakh shares. It moved in a range of Rs 1,368.90 –1,353.10.


[R]6:30AM European stocks were lower despite merger and acquisition speculation.[/R]
European markets were lower on Thursday. By mid-morning, Frankfurt Xetra Dax was flat at 7,076.62, the CAC 40 in Paris lost 0.2% to 5,730.12 and London FTSE 100 was flat at 6,363.4. National benchmarks fell in 13 of the 15 markets in western Europe that were open.

Advancers

Safran SA curbed declines today after it was reported the company and Thales SA, Europe largest defense-electronics company, may revive plans to merge. Safran gained 4%, while Thales was 0.3% higher.

Takeover talk lifted French construction group Eiffage 0.8% after Spanish rival Sacyr Vallehermoso, recently linked to an Eiffage bid, announced it was increasing its stake closer to the one-third level that would trigger a mandatory takeover bid.

Air France-KLM Group advanced 3.7%. Europe biggest airline may join Aeroflot and UniCredit in bidding for a stake in Alitalia, even though the deadline for new bidders has passed, as stated by Italian Industry Minister Periluigi Bersani.

Decliners

Volvo fell 3.2 % after chief executive Leif Johansson stated acquisitions would continue to make up half of the targeted 10 % annual growth of the company.

BHP Billiton, the world largest mining company, decreased 0.6%. China is the second-biggest market after Europe for the company. Anglo American, the second-largest, shed 0.6%. Antofagasta, which owns three copper mines in Chile, fell 1.5%.

Scottish & Newcastle lost 1.2% and shares of the largest brewer in theU.K were cut to sell from hold at ING Groep NV and downgraded to reduce from hold at Dresdner Kleinwort.

Oil and gold

Crude oil was little changed near a one-week low in New York after Iran released 15 British navy personnel, easing concern that supply from the Middle East may be disrupted. Crude oil for May delivery was at $64.35 a barrel, down 3 cents, in after-hours electronic trading on the New York Mercantile Exchange. In London, Brent crude for May settlement was at $68.55 a barrel, up 15 cents, in electronic trading on the ICE Futures exchange.

Gold was unchanged in London and traded at $672.60 per troy ounce, unchanged from late Wednesday. Silver opened in London at $13.56 per troy ounce, up from $13.52.

Currencies

The dollar was mostly higher against other major currencies in European trading Thursday morning. The euro traded at $1.3360, down from $1.3367 late Wednesday. The British pound traded at $1.9736, down from $1.9753. The dollar bought 118.74 Japanese yen, up from 118.67.