U.S. Stocks Rise, Google Buys Double Click

123jump.com Staff
13 Apr, 2007
New York City

U.S. averages rose on declining trade deficit, positive comments from Cisco and falling oil price. Gold surged $10 on the news that the wholesale prices rose 1% in March on 3.6% rise in food and 8.7% rise in energy cost. General Electric earnings gained 1.5% on revenue gain of 5.6% and reported 44 cents per share earnings. Google agreed to purchase Doble Click for $3.1 billion after the close. Merck jumped 8% on revised earnings outlook and dismissal of class action suit related to Vioxx.

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

The U.S. trade deficit declined to $58.4 billion in February from revised $58.9 billion in January. Google has agreed to pay $3.1 billion cash for advertising company Double Click. Cisco rebounded on positive comments by the company on stronger than expected capital spending. Nasdaq has talked with Nordic stock exchange operator OMX looking for deal. European averages closed higher led by energy and pharma stocks. Royal Bank of Scotland is looking to make an offer for ABN Amro bank. India based software company Infosys reported 70% rise in earnings and Korean company Samsung profit fell 15%.


Yield on 10-year bond closed at 4.764% and the 30-year bond closed at 4.930%.

Gold gained $10.200 to close at $689.900 a troy ounce, silver increased 23.5 cents to end at $14.090 a troy ounce and copper lost $150.000 to close at $7730.000 per metric ton.

Oil declined 22 cents to close at $63.630 a barrel and heating oil lost 0.540 cents to finish at 190.070 cents a gallon. Natural gas decreased 13.4 cents to close at $7.790 per MMBtu. Gasoline went down 2.040 cents to end at 217.140 cents a gallon.

Asian markets closed lower amid investor caution ahead of the release of U.S. producer price data, while Samsung dragged down shares in Seoul after reporting a drop in net profit. The decliners were led by Japan with a decline of 1.01%, Taiwan with a decrease of 0.90% and Thailand with a loss of 0.38%. The advancers were India with an increase of 2.06%, Indonesia with an advance of 0.56% and Singapore with a gain of 0.03%. Australia lost 0.31%.

European markets finished higher as higher crude-oil prices boosted petroleum shares, while drug maker GlaxoSmithKline strengthened after one of its drugs received U.S. approval and competitor Merck & Co. raised its profit outlook. The advancers were led by Germany with an increase of 0.97%, Netherlands with an advance of 0.92% and Norway with a gain of 0.83%. There were no decliners.

Latin America markets finished higher following the release of benign U.S. inflation data. The advancers were led by Brazil with an increase of 1.21%, Argentina with an advance of 1.15% and Mexico with a gain of 0.46%. There were no decliners. Canada advanced 0.53% with gains in the energy and materials groups offset by a decline in financial-services stocks.


[R]4:30PM NY – GE conference call highlights[/R]
GE reported earnings in the first quarter of 2007 rose 1.5% to $4.51 billion or 44 cents per share compared to $4.44 billion or 42 cents a share. Revenue rose 5.7% to $40.2 billion from $38.03 billion a year ago. Organic revenue rose 8% and asset rose 22%. Backlog of major equipment rose 32% to $37 billion. Return on total capital rose 100 basis points to 18.8% and operating profit margin rose 1.3% to 14.4%, and operating cash flow rose 10% to $7.4 billion.

The company anticipates strong year for infrastructure, aviation, energy and commercial finance business. Emerging markets orders are up 14% and service revenue rose 10% in the first quarter. Service portfolio rose 9% to $94 billion.

Operating profit at infrastructure segment rose to 16%, at industrial segment to 8.1%, at healthcare to 14.3% and at NBCU to 19.8%. Overall operating profit at the company declined to 11.3% from 11.5%.

Orders for aviation for major equipment declined 10%, energy segment rose 17%, healthcare gained 2%, oil and gas advanced 12% and transportation declined 63% totaling 2% decline in overall orders but rose 3% including services in the quarter. New total orders for major equipment totaled $9.5 billion in the quarter.

Loan delinquencies in the first quarter for equipment financing were reported at 1.26% and at GE Money were at 5.48% totaling to 5.18%.

Total restructuring cost was reported at $354 million with a total headcount reduction of 3,900. Restructuring expense by business is as follows: $85 million in infrastructure, $143 million in industrial, $48 million in commercial finance and $47 million in GE Money, $22 million in healthcare and $9 million in NBCU.

Infrastructure revenue in the quarter were up 18%, segment profit were up 28%, orders were 2%, equipment backlog was up 35% and the company forecasted equipment revenue to rise 20% in the second quarter. GE Money revenue rose 14% and segment profit roe 2% and asset rose 20% and forecasted 10% rise in segment profit in the second quarter. Broad based global revenue growth of 2% was offset by weakness in WMC & Japan.

Industrial segment revenue rose 5% with retail appliance sales growth of 5% and but the segment profit fell 20%. Revenue at lighting rose 10% and productivity in the division rose 4.3%. Revenue at plastics declined 3% on 1% decline in profit and 4% fall in price and 32% price hike in benzene. Second quarter profit outlook for the segment is a decline between 10% and 15%. Revenue at NBC Universal declined 22% in the quarter from a year ago, and revenue declined 8% excluding Olympics. Segment profit rose 6% from a year ago. Revenue at healthcare was flat and profit rose 5%. The company forecasted a profit growth between 5% and 10% in the second quarter. Revenue at Commercial finance segment rose 15% and profit rose 21% and assets grew 26%. The company forecasted second quarter profit rise between 10% and 15%.

Tight market conditions and underwriting guidelines have had dramatic impact in lending for sub-prime loans issues by GE. The total loans issued in fourth quarter of 2006 were over $9 billion and only $3.4 billion loans were issued in the first quarter and only $500 million of loans in March 2007. After tax basis reserves had to be increased by $330 million and pre-tax basis that was app $550 million.

The company reaffirmed its annual earnings per share guidance between $2.18 and $2.23.

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

Anika Therapeutics Inc. ((ANIK)), which makes products to treat bone, cartilage and soft tissue ailments, said that it has received European approval for the commercial sale of its Elevess product. Elevess is an injectable soft tissue filler for facial wrinkles, scar remediation and lip augmentation, Anika said. Shares climbed 6.17%.

FCStone Group Inc. ((FCSX)), commodity risk management company, said that its second-quarter net earnings increased to $6.92 million, or 48 cents per share, compared with $3.94 million, or 27 cents per share, in the year-ago period. Revenue climbed to $403.4 million against $268.9 million in the comparable period last year. Shares climbed 14.07%.

Lubrizol Corp. ((LZ)), specialty chemical company, said it expects first-quarter performance to beat Wall Street expectations on increased revenues that are driven by improved price and product mix. Lubrizol earned 98 cents a share before a restructuring credit for the latest quarter compared with a year earlier period when it earned 68 cents a share from continuing operations before a restructuring charge of 2 cents a share. Shares climbed 7.53%.

Rural Cellular Corp. ((RCCC)) shares jumped 19.16% after the regional wireless communications provider said it sees both its service and roaming revenue climbing in the first quarter. The company said in preliminary results that quarterly service revenue grew 2% to approximately $98 million from $96 million. Roaming revenue rose 16% to about $36 million versus $31 million a year ago. Rural Cellular added 9,974 customers, which during the quarter brought its total to 715,632.

Sallie Mae ((SLM)) is in talks with private-equity firms in a deal that may be worth more than $20 billion. The discussions come as Sallie Mae is struggling with regulatory investigations over relationships between colleges and student-loan companies. A potential bidder for Sallie Mae is private-equity firm Blackstone Group, according to the report, which said although the talks appear to be in later stages, many hurdles remain and it''s not clear a deal would go through. Shares jumped 13.03%.

Irwin Financial Corp. ((IFC)), bank holding company, forecast a first-quarter loss from operations due to the conditions in the consumer mortgage market and a charge-off on a commercial credit in Michigan. The company said it expects the loss to be $5 million to $10 million during the quarter. Irwin Financial said it discovered misrepresentations about collateral for a loan, for which it will take a charge-off of $4.2 million. Shares fell 6.77%.

Cott Corp. ((COT)) shares jumped 26.2% boosted by a report speculating that Canada-based Cott Corp. may be in talks to buy the beverage arm of Cadbury Schweppes PLC.

Planar Systems Inc. ((PLNR)) cut its guidance. The monitor display maker projects an adjusted loss of 7 cents to 9 cents a share for the quarter ended March 31. Previously, the company forecast a loss of 4 cents to 7 cents a share. Planar sees revenue of $53 million to $54 million, down from a prior view of revenue of $57 million to $61 million. Shares fell 8.01%.

Semitool Inc. ((SMTL)) shares fell about 17% after the company cut its revenue view due to delays in order bookings. The company, which makes silicon wafer processing equipment for the microchip industry, said bookings for the quarter were hurt by delays in anticipated orders in all of its target markets. It now expects second-quarter revenue of $51 million to $53 million, below its prior projection for revenue of $55 million to $57 million.

[R]1:00AM NY, 5:00 PM Frankfurt European stocks closed higher, led by oil and pharma stocks.[/R]
European stock markets finished in the positive on Friday, lifted by strength among oil stocks and gains in the shares of drug companies. Higher crude-oil prices boosted shares of major oil companies. BP and Royal Dutch Shell both added 2.3%, while Total moved up 1.4%. Pharmaceutical stocks were led higher by Merck which moved steeply up on improved profit outlook. AstraZeneca rose 2.5%, GlaxoSmithkline climbed 2.4%. In deal news, shares of French-Spanish tobacco firm Altadis added 1.3% after a report that CVC Capital is close to forming a consortium to make an offer for Altadis. Cadbury Schweppes rose 1.7% on deal speculations. The U.K.''s FTSE 100 rose 0.7% at 6,462.40, the German DAX Xetra 30 climbed 1% at 7,212.07 and the French CAC-40 gained 0.7% at 5,789.34.


[R]11:30AM U.S. market averages lost direction on mixed data.[/R]
The U.S. market averages erased earlier advance, as mixed economic data offset gains generated by upbeat earnings and forecasts, as well as deal speculation. The Labor Department showed a higher-than-expected increase in overall producer prices, whereas core prices unexpectedly came in unchanged. Investors were also reluctant to trade actively, awaiting the earnings season to pick up steam next week.

Semiconductor, software and computer technology stocks declined, dragged by down by Apple Inc. ((AAPL)), whose shares fell 1.6% after saying it would delay the release of the next upgrade of its Mac operating system until October. Shares of Lam Research ((LRCX)) gained ground, rising up 0.7% after the semiconductor equipment maker reported better-than-expected Q3 earnings. Some transportation, software, and housing stocks came under pressure in morning trading. Drug stocks posted strong gains, with Merck ((MRK)), up 7.7% helping to lead the sector higher after the drug giant raised its Q1 and full year guidance. The advance was also due to news that a federal judge dismissed a class action investor lawsuit against the company related to its discontinued pain reliever Vioxx. Gold stocks moved to the upside, benefiting from a notable increase by the price of gold.

In deal news, shares of Sallie Mae ((SLM)) climbed 11% amid reports that the largest U.S. student-loan company was in talks to sell itself to private equity firms. In late morning trading, the Dow Jones industrial average was up 17.64, or 0.14%, at 12,570.60. The Standard & Poor''s 500 index was up 0.58, or 0.04%, at 1,448.38, and the Nasdaq composite index fell 2.46, or 0.10%, to 2,477.86. Bonds fell after the consumer sentiment data, with the yield on the benchmark 10-year Treasury note rising to 4.76% from 4.74% late Thursday.


[R]9:45AM U.S. markets opened mixed. Apple weighed on the Nasdaq, while Merck helped the Dow.[/R]
Wall Street started trading mixed on Friday. On the one hand, the market sentiment was lifted by hopes that the Fed Reserve will cut interest rates to boost the nation''s economy, but on the other, technology shares weighed by a product delay at Apple Inc. ((APPL)). The company''s shares dropped 1.2% after it said that the next upgrade of its Mac operating system, Leopard, will be released in October. At the same time, the Dow was supported by Merck & Co. ((MRK)) which surged 7.6% on lifted outlook. Goldman Sachs also upgraded the drug maker to neutral from sell on the back of its raised forecasts. Although it was Merck that provided the biggest boost, General Electric ((GE)) and McDonald''s ((MCD)) also helped the blue-chip average, rising 0.7% and 1.3%, respectively. GE said its Q1 results came in line with analyst expectations and reaffirmed its earnings guidance for 2007. McDonald''s said its worldwide same-store sales rose 8.2% and projected Q1 earnings of 62 cents. In the first hour of trading, the Dow rose 21.87, or 0.17%, to 12,574.83. The Standard & Poor''s 500 index was up 0.45, or 0.03%, at 1,448.25, and the Nasdaq composite index fell 3.61, or 0.15%, to 2,476.71.

[R]Core producer prices remained flat.[/R]
The Department of Labor released its report on wholesale prices in the month of March, showing that prices rose more than economists had expected. At the same time, core prices unexpectedly came in unchanged. The Labor Department said that its producer price index rose 1.0 percent in March following a 1.3 percent increase in February. The increase came in above economist estimates of an increase of about 0.7 percent. The bigger than expected increase in producer prices was largely due to a notable increase in energy prices, which rose 3.6 percent in March after rising 3.5 percent in the previous month. A notable increase in food prices also contributed to the increase in producer prices, with food prices rising 1.4 percent in March following a 1.9 percent increase in February. However, the report also showed that the core producer price index, which excludes food and energy prices, was unchanged in March after rising 0.4 percent in the previous month. Economists had expected core prices to increase by about 0.2 percent.

[R]Trade deficit narrowed to $58.4 billion.[/R]
The Department of Commerce released its report on U.S. international trade in goods and services in the month of February on Friday, showing that the trade deficit unexpectedly narrowed compared to the previous month. The report showed that the trade deficit narrowed to $58.4 billion in February from a revised $58.9 billion in January. Economists had expected the deficit to widen to $60.5 billion from the $59.1 billion originally reported for the previous month. The narrower trade deficit reflected a decrease in the value of imports, which fell 1.8 percent to $182.4 billion in February from $185.7 billion in the previous month. The drop in the value of imports came amid a 2.1 percent drop in the value of goods imports. Nonetheless, the value of exports also fell during the month, dropping 2.2 percent to $124.0 billion in February from $126.8 billion in January. The value of exports of goods and services both fell. The report also showed that the goods deficit narrowed to $64.5 billion in February from $65.2 billion in January, while the services surplus fell to $6.0 billion from $6.3 billion.


[R]9:15AM Stock futures gained on tame inflation.[/R]
U.S. stock futures pointed to a higher opening on Friday, boosted by news of tame core producer prices and positive earnings and forecasts from GM, Merck and McDonald''s. The Labor Department reported that wholesale prices rose 1% in March due to more expensive gasoline and food, while core prices remained unchanged. General Motors ((GM)) rose 1% before the open after the bellwether''s Q1 results came in line with analysts expectations. Merck ((MRK)) rose 4.3% after lifting its profit forecast for the year, citing a strong demand for its products. McDonald''s ((MCD)) said worldwide same-store sales rose 8.2% and said it expects Q1 earnings of 62 cents, up vs. analyst expectations of 57 cents per share. Apple ((APPL)) fell 1.3% in pre-market trading after saying it would delay the release of Leopard, the next upgrade of its Mac operating system. Dow futures expiring in June rose 26.00, or 0.21%, at 12,630. Standard & Poor''s 500 index futures rose 2.80, or 0.19%, to 1,458.30, and Nasdaq 100 futures rose 2.75, or 0.15%, to 1,830.50.