Fiserv to Acquire CheckFree for $4.4 B

Elena
02 Aug, 2007
New York City

U.S. market averages kept trading higher, lifted by strong earnings from Nokia, Starbucks, Walt Disney. A takeover deal gave a boost to the market sentiment. Fiserv Inc., a provider of information management systems and services, agreed to buy online banking company CheckFree for $4.4 billion in cash. CheckFree''s shares surged 24%. Under the terms of the deal, Fiserve is offering $48 for each CheckFree share, a 30% premium over their closing price of $36.83 on Wednesday.

[R]11:30AM Market averages traded higher, lifted by earnings and deal news. Fiserv agreed to acquire Checkfree.[/R]

U.S. market averages kept trading higher, lifted by strong earnings from Nokia ((NOK), Starbucks ((SBUX)), Walt Disney ((DIS)). Among other earnings releases, drug store company CVS Caremark ((CVS)) rose 2.3% after it said its Q2 profit and revenue doubled. The company earned 47 cents per share, compared with 40 cents per share last year, beating estimates. Automotive parts supplier Lear Corp.((LEA)), rose nearly 4% after it reported earnings of $1.58 per share versus a loss of 10 cents per share a year ago, exceeding expectations of 91 cents.

A takeover deal also gave a boost to the market sentiment. Fiserv Inc. ((FSV)), a provider of information management systems and services, agreed to buy online banking company CheckFree Corp. ((CKFR)) for $4.4 billion in cash. CheckFree's shares surged 23%. Under the terms of the deal, Fiserve is offering $48 for each CheckFree share, a 30% premium over their closing price of $36.83 on Wednesday.

In other corporate news, Hewlett-Packard ((HPQ)) rose 3.3% after Bank of America started coverage of the firm with a buy rating. BoA also initiated coverage of IBM ((IBM)), sending it up 1.5%, Dell ((DELL)), rising 1.7% and Apple ((AAPL)), up 0.5%.

By sector, healthcare, telecommunication and wireless stocks posted modest gains, while oil services and oil stocks traded in negative territory, despite the rising crude oil price. In midday trading, the Dow Jones industrial average rose 64.95, or 0.49%, to 13,427.32.The Standard & Poor's 500 index rose 4.88, or 0.33%, to 1,470.69, and the Nasdaq composite index rose 17.51, or 0.69%, to 2,571.38. Bonds rose, with the yield on the benchmark 10-year Treasury note falling to 4.77% from 4.79% late Wednesday


[R]10:00AM New York, 3:00PM London – European markets across the region appear to stabilize after a week of turmoil.[/R]

European markets across the region traded higher after banks left rates unchanged meeting the forecast of most economists. With less than one hour of trading left, Germany left the region with a gain of 1.21% followed by 1% rise in France, UK, and Norway. The Netherlands, Spain, and Italy increased 0.7%.

In London trading financial stocks rally after the rates were left at 5.75%. The housing mortgage and bank stocks led the mild advance. Standard Charter Bank gained 2.5% and HBOS jumped 2.3%. Barclays advanced on higher than expected earnings.

Mitchells & Butlers plunged 5.5% after the company shelved its joint property venture spin-off citing credit market volatility. The company was planning to separate its pub properties portfolio to raise funds.

Unilever reported second quarter revenue in euros jumped 5% and net consolidated profit increased 18%. The revenue in the quarter was recorded at 10.5 billion euros and earnings of 1.21 euros. Earnings per share jumped to 40 euro cents, 18% increase from a year ago. After the news the stock gained 5%. The company guided underlying sales growth for the year to be at the upper end of its range between 3% and 5%.

On recommendations from UBS SAB Miller advanced 2.6% and Citigroup Man Group increased to 1.1%.

In Frankfurt trading stable rate decision from the ECB kept banks, telecom and retail stocks rising. Deutsche Bank increased 1.1% and Deutsche Telekom 1.5%. IKB Deutsche Industriebank plummeted 20% after the government decided to assume its faltering portfolio of 3.3 billion euros reported by local publication Die Welt.

Solarworld AG jumped 2% after reporting earnings 26.8 million euros. In the first quarter the company had reported sales gain of 60% and net income rise of 29.5%.

Fresenius Medical Care reported second quarter revenue gain of 11% and net income soared 38%. The company reported net revenue of $2.4 billion, net income of $179 million, and earnings per share of 60 cents.


[R]09:45AM Wall Street opened in the positive, reflecting strong earnings.[/R]

Wall Street opened moderately higher, driven by strong corporate profits and positive economic data. Nokia ((NOK)) rose 8% as its Q2 profit doubled and its operating margin reached highest levels in three years. The world''s largest mobile phone maker earned 2.82 billion euros, up from 1.14 billion euros last year, with sales up 28%. The company increased its global market share to 38%, up from 34% a year ago.

Starbucks ((SBUX)) gained 2.2% on earnings and sales growth, while Viacom ((VIA)) rose 2.7% on stronger-than-forecast Q2 profit. Further in earnings news, Getty Images ((GYI)) posted 45% earnings jump on higher revenue, but the stock dropped 13% due to a decline in traditional segments. Unilever ((UL)) drew attention after it said 2007 sales will hit the upper end of its target. The stock rose 3%.

On the economic news front, the Labor Department report said that weekly jobless claims in the latest week rose 4,000 to 307,000. In early trading, the Dow Jones industrial average rose 26.66, or 0.20%, to 13,389.03.The Standard & Poor''s 500 index rose 3.25, or 0.22 % to 1,469.06, and the Nasdaq composite index rose 7.48, or 0.29%, to 2,561.35. Bonds held steady, with the yield on the benchmark 10-year Treasury note at 2.79%, the same as late Wednesday.


[R]9:15AM New York, 2:00PM London – European banks kept interest rates unchanged.[/R]

The Bank of England kept the interest rates unchanged at 5.75% and the European Central Bank left interest rates unchanged to 4%. After several successive rate hikes in the last twelve months banks are still assessing the impact of increased interest rates on the economies of Europe and the U.K.

With the highest rates among the Group of Seven nations, UK is likely to stay put on interest rates at least for the next meeting. UK has targeted inflation rate of 2% but in the recent months inflation has exceeded that. With the rising economic growth businesses have managed to pass price hikes to customers fueling inflation to 3.1% in March before settling to 2.4% in July. Majority of the economists are project annual economic growth between 2.5% and 3% for the current fiscal year in the UK.

The 13-member nations group where euro is the currency is experiencing one of the lowest unemployment levels in decades. The rising fuel prices and falling levels of unemployment have forced bankers to keep rates high in the euro zone. The rates are likely to be revised higher after September meeting but lot depends on cost of fuel and food and widening contagion of credit losses from the U.S. to Europe. The inflation in the region has remained below 2%, banks target, but there enough inflationary pressures in the pipeline. The unemployment in the region is hovering around 6.9%.

After the news on interest rates the euro and the pound traded nearly unchanged and stock markets in the region edged up a fraction. Most market analysts and economists had factored that rates will not be revised.


[R]09:00AM U.S. stock futures pointed higher, driven by strong earnings from Nokia, Starbucks.[/R]

U.S. stock futures pointed to some recovery Thursday, although investors remained cautious amid fears that a tightening in U.S. lending could hurt corporate and economic growth. Market also welcomed news that both the Bank of England and the European Central Bank interest rates unchanged, in line with expectations.

Nokia ((NOK)) jumped over 7% in pre-market trading after it said its Q2 earnings more than doubled. Eastman Kodak Co.((EK)) and Viacom ((VIA)) reported better-than-expected quarterly results. Further in earnings news, Lenovo Group posted a 12-fold jump in quarterly profits, beating analyst expectations.

Walt Disney & Co. ((DIS)) edged up after posting a 5% profit rise and agreed to buy Club Penguin for $300 million. Starbucks ((SBUX)) added 1.2% after it reported an in-line-with-estimate 9% profit rise on 20% sales growth.

On the economic news front, the Labor Department report said that weekly jobless claims in the latest week rose 4,000 to 307,000. After early losses, S&P 500 futures rose 3.1 points at 1,473.00 and Nasdaq 100 futures added 6 points at 1,966.50. Dow industrial futures rose 22 points.


[R]8:15AM Eastman Kodak swung to profit in Q2.[/R]

Eastman Kodak ((EK)) said Thursday it swung to a Q2 profit, benefiting from lower costs, a $31 million increase in traditional earnings and a $97 million increase in digital earnings. During the quarter, the company earned $592 million, or $2.06 a share, compared with a loss of $282 million, or 98 cents a share last year, easily beating estimates of 39 cents per share on revenue of $10.19 billion.

The company posted a loss from continuing operations of $135 million, or 47 cents a share vs. a loss of $355 million, or $1.24 a share, a year ago. Eastman Kodak said quarterly net sales declined 6.6% to $2.51 billion. The company’s sales in its consumer digital imaging group fell to $1 billion from $1.11 billion a year ago, while sales in its graphic communications unit gained 2% to $929 million. The company expects 2007 revenue decline on the range of 4% to 7%.