Stocks Inch Higher Amid Corp. News

Elena
12 Sep, 2005
New York City

Asian markets advanced led by the Nikkei up 1.6% at 12896.43 to a four-year high on Junichiro Koizumi's LDP victory and GDP growth by 0.8%. European markets traded higher at midday . Oracle agreed to acquire Siebel System at the total value of $5.85 billion. Wachovia agreed to acquire Westcorp for $3.42 billion. eBay is buying Skype Technologies for $2.6 billion.

U.S. major averages started the Monday session mixed in line with the futures’ predictions. Stocks are largely driven by merger and acquisition deals and declining oil prices.
The business software Oracle is acquiring its rival Siebel Systems; the online auctioneer eBay is buying the Internet-telephone company Skype Technologies, and the financial services company Wachovia Corp. is acquiring the automobile finance company Westcorp.Crude-oil future slipped 43 cents to $63.70 a barrel.
There are very few earnings reports and no major economic data.

The Dow Jones industrial average is down 3.50 points, while the Nasdaq is up 1.67 points and the S&P is down 0.44 point.

Treasury yields are higher in the early going. The 10-year yield, which briefly ticked below 4% soon after Hurricane Katrina hit the Gulf coast, is up 3.7 basis points to 4.160%.

MOVERS AND SHAKERS

Siebel Systems ((SEBL)) advanced 13.5% after Oracle Corp. ((ORCL)) said it would buy the company for $3.6 billion. Oracle lost 1.3% while its German competitor SAP ((SAP)) gain 0.65%.

eBay Inc. ((EBAY)) dropped 0.9% after it agreed to aquire Skype Technologies SA for $2.6 billion in cash and stock and up to $1.5 billion in incentives.

Wachovia Corp. ((WB)) could gain in early dealings due to its $3.91 billion stock acquistion of Westcorp ((WES)) that would increase earnings in the second year after the purchase. Westcorp owns 84% of WFS Financial ((WFSI)) and Wachovia bought the rest 16% of the company. Wachovia jumped 0.55%, Westcorp was up 0.75% while WFS Financial climbed 0.15%.

Delta Air Lines ((DAL)) was down 23% due to the rumours about a bankruptcy protection as early as Thursday.

Northwest Airlines Corp. ((NWAC)) are expected to rise after the company ended talks with its striking mechanics on Sunday without an agreement. The company lost 4 cents on Friday.

Citigroup Inc. ((C)) was 1.4% higher after the bank was upgraded to overweight from neutral by Prudential.

ECONOMIC NEWS

No major economic news release is expected today.

INTERNATIONAL MARKET NEWS

Asian-Pacific benchmarks closed the trading session in the positive territory with the Nikkei rising to a new four-year high of 1.6% after the general election victory of Prime Minister Junichiro Koizumi’s LDP and on better-than-anticipated GDP data. In the regional markets, South Korea’s Kospi rose 0.5%, Singapore Strait Times gained 0.75%, and Hong Kong’s Hang Seng added 0.2%. In currency markets the dollar bought 109.78 yen.

European stocks gained in mid-day dealings on strong U.S. markets close Friday, oil prices below $65 a barrel, weak euro and deal news from the insurance and utility sector. The German DAX 30 added 0.4%, the French CAC 40 rose 0.4%, and London’s FTSE 100 advanced 0.2%. The euro declined 0.7% to trade at $1.232.

ENERGY, METALS, CURRENCIES

Oil prices hover above $64 a barrel on slow recovery of U.S. oil refineries and signs of slowing world demand growth. Light sweet crude October delivery added 8 cents to trade at $64.16 a barrel. London Brent gained 4 cents to $62.88.

Gold prices climb to a 17-year high on uncertainty with the dollar and interest rates. In London the precious metal traded at $449.00 per troy ounce, up from $448.00.

The U.S. dollar advanced against its major counterparts. The euro fell ahead of national elections in Germany. The European currency traded at %$1.2304, down from $1.2420. The Dollar bought 109.87yen, up from 109.73. The British pound was quoted at 41.8271, down from $1.8392.

EARNINGS NEWS

Lowrance Electronics, Inc., ((LEIX)) telecommunication company, reported a dividend of 30 cents per share on record 4Q results for fiscal 2005, with 59% sales increase compared to the same period last year.

Greg Manning Auctions Inc., ((GMAI)) merchant and auction house network operator, reported 4Q net income for the year was $1.33 per share, up from $1.14 per share in the year-ago period on 28% revenue growth, including inventory sales plus commission income. Aggregate sales, that consist of inventory sales and consignment sales advanced 36%% in the same quarter, compared with the previous fiscal year period.

Metal Storm, ((MTSC)) industrial position sensors producer, reported a half year loss that totaled $5.9 million for the six months ended 30 June 2005, down from a loss of $5.7 million in the last year’s period. This result includes a $1.4 million loss from Metal Storm's former US subsidiary, ProCam Machine LLC (ProCam), sold on 1 June 2005. Some key objectives were achieved in the first half including the announcement in June of a $422,297 contract with Dragonfly Pictures to integrate Metal Storm's first flying demonstration of its technology on an Unmanned Aerial Vehicle (UAV).

Bakers Footwear Group Inc., ((BKRS)) specialty retailer of fashion footwear, announced 2Q earnings per share of $0.19, up vs. a net loss of 10 cents a share in the second quarter last year. Comparable store sales rose 12.7% up from a 3.0% rise last year and net sales advanced 27.8% to $45.3 million from $35.4 million for the comparable year-ago period.


CORPORATE NEWS

Delta Air Lines Inc. is likely to file for bankruptcy-court protection this week at the earliest and is closing in on an agreement on $1.7 billion in financing that would keep the carrier airborne while it takes badly needed steps to restructure. The filing, due to be made in U.S. Bankruptcy Court in New York, would occur as soon as Delta directors proceed with a final vote to authorize Chapter 11. The board must give the go-ahead to debtor-in-possession financing, bound to be released by creditors led by General Electric's commercial finance unit. Terms of the pact in question will enable Delta to cash in on $650 million approximately in new financing, with the remaining $1 billion or so meant to pay off a loan from GE last November. Thursday is the most likely date to complete the debtor-in-possession financing and other details so that the board could convene for a vote.

Oracle ((ORCL)) agreed to acquire Siebel Systems ((SEBL)) for $10.66 per share. The total value of the deal is $5.85 billion, or $3.61 billion net of Siebel’s cash on hand of $2.24 billion.company said the deal, which is expected to close in early 2006, has a total value of $5.85 billion, or $3.61 billion net of Siebel's cash on hand of $2.24 billion. The deal is expected to close at the beginning of 2006.

Wachovia ((WB)) revealed that it has agreed to acquire Westcorp ((WES)) for $3.42 billion in stock. Wachovia also revealed that it will acquire the publicly-held stake of WFS Financial ((WFSI)), a company that is 84%-owned by Westcorp, for $490 million. Wachovia said that the owing to the acquisition it will become the nation's 9th largest auto loan originator.