U.S. Stocks Decline After Early Rise

123jump.com Staff
23 Jun, 2008
New York City

U.S. stocks edged higher in the morning after the dollar edged lower, crude oil and other commodities prices edged higher. Walgreen Company advanced after it reported 2% rise in net income. BCE Inc advanced after the Supreme Court of Canada ruled that the buy out may proceed, despite a challenge from the bond holders. European market edged higher led by a rise in Germany, France and UK. Markets in Mumbai and Shanghai dropped 2%.

[R]10:05AM New York – U.S. stocks edged higher in the morning trading. Gold fell $20.[/R]

U.S. stocks opened higher on a rise in commodities and crude oil prices and a drop in dollar against euro and yen. Walgreen Company reported lower than expected earnings but the stock advanced.

The commodities prices in the morning trading edged higher on a little bounce in crude oil and natural gas prices. Gold dropped $20.70 to $883 an ounce despite dollar declining. The U.S. dollar edged lower 0.01 cent against euro to $1.5495 and against Japanese yen closed at 107.83.

At the opening, the 10-year bond yield is near 4.14% and 30-year bond yield at 4.70%.

European markets edged higher at late afternoon trading led by 0.6% rise in Germany, France and UK. Stockholm market index led the decliners with a drop of 1.6%.

Gainers and Losers

Walgreen Company ((WAG)) edged 74 cents higher after it reported sales rise of 10% and earnings gain of 2%.

North American Energy Partners ((NOA)) jumped 4.5% or $1.55 to $22.25 after it reported sales rise of 58% and net income surge of 94%.

The largest telephone company in Canada BCE Inc ((BCE)) surged $2.75 to $36.84 after the Supreme Court in Canada said the plan to take the company private should be carried despite the current credit market difficulties faced by the private equity buyers. The court did not release it reasons for the ruling as it heard the case on an accelerated schedule to meet the deadline for the purchase of June 30.

The deal values the company at c$42.75 and is the largest leveraged buyout in the history. The court’s ruling is a blow to the bondholders. Most analysts view the purchase price too high and the financing for the deal is still uncertain.

Asian markets review

In Tokyo Nikkei 225 Index closed lower 84.61 or 0.61% to 13,857.47, in Hong Kong Hang Seng index decreased 30.64 or 0.13% closed to 22,714.96. In Australia ASX 200 index lower 4.60 or 0.09% to close 5,283.70. In Malaysia KL Composite index decreased 11.26 or 0.93% closed to 1,195.41.

In South Korea Kospi Index decreased 15.41 or 0.89% to close at 1,715.59, in Thailand SET index closed higher 0.00 or 0.00% to 768.90 and Indonesia JSE Index edged decreased 9.03 or 0.38% to 2,362.74. Sensex index in India decreased 277.97 or 1.91% to 14,293.32.

Earnings Review

Walgreen Company, drugstore retailer reported third quarter sales increased 10% to $15.0 billion from $13.7 billion a year ago. Net income in the quarter increased 2.0% to $572 million or 58 cents per diluted share compared to net income of $561 million or 56 cents per share, a year ago.

Total same store sales open for more than a year were up 3.4% in the quarter, while front-end comparable drugstore sales rose 4.6% in the quarter.

Walgreen Company ((WAG)) in the last one year traded as high as $48.09 in September 2007 and as low as $32.50 in January 2008. Based on the Friday’s closing price the company has a market cap of $34.74 billion.

North American Energy Partners Inc ((NOA)) in the last one year traded as high as $21.43 in July 2007 and as low as $9.68 in February 2008. Based on the Friday’s closing price the company has a market cap of $744.20 million.

North American Energy Partners Inc, a provider of heavy construction, mining, piling and pipeline services in western Canada reported fourth quarter revenues increased 58% to $323.6 million from $205.4 million a year ago. Net income in the quarter increased 94.27% to $22.7 million or 63 cents per diluted share compared to net income of $1.3 million or 4 cents per share, a year ago.

Fiscal 2008 consolidated revenue increased to $989.7 million, a 57% gain over fiscal 2007. While revenue gains were realized across the group, the Pipeline and Heavy Construction and Mining segments accounted for approximately 85% of the $360 million increase. Fiscal 2008 gross profit increased to $163.3 million, a 77% increase over last year''s $92.4 million. As a percentage of revenue, gross profit improved to 16.5% from 14.7%.

The Company posted net income of $39.8 million or $1.11 per share (basic), in fiscal 2008, up significantly from net income of $21.1 million or $0.87 per share (basic), during the same period last year. Unrealized non-cash losses on foreign exchange and derivative financial instruments reduced net income by $5.5 million, net of tax, in the current year versus a benefit of $6.1 million, net of tax, in the prior year. Excluding these items, basic earnings per share would have been $1.27 per share compared to $0.62 per share in the prior year. In addition, the comparison of earnings per share to the prior-year period is impacted by weighted average number of common shares of 35.8 million compared to 24.4 million in the prior year.

The Piling segment revenue rose 36% to $40.7 million in the fourth quarter, ending the year with revenue of $162.4 million, a 49% increase over fiscal 2007. Full-year revenue also improved, climbing 327% from 2007 to $200.7 million and supporting segment profits of $25.5 million, compared to a loss of $10.5 million in 2007.