Placer Dome Says $9 B Inadequate

Elena
23 Nov, 2005
New York City

Gold mining company Placer Dome Inc. said its board is recommending shareholders to reject a $9.2 billion takeover bid by Barrick Gold Corp., calling the offer ''inadequate''. The Labor Dept. reported that initial jobless claims in the week ended November 19 rose to 335,000 from the previous-week upwardly revised figure of 305,000. Economists had expected jobless claims to increase to 315,000 from the 303,000 originally reported for the previous week.

U.S. MARKET AVERAGES

U.S. stocks opened lower Wednesday on holiday mood and data on initial jobless claims which showed a sharp unemployment growth, but the downward pressure was light and was easily overcome by major averages which have recently moved into the positive territory, led by the Nasdaq with an advance of 0.2%. Trading eased down before Thanksgiving and Wednesday session is expected to be of light volume, especially in the afternoon, though optimism that the Federal Reserve may stop raising rates is likely to provide further support.

The Dow Jones industrial average is down 12.73 points, while the S&P 500 is off 1.36 points and the Nasdaq 100 is down 1.74 points.

Energy prices are expected to play a significant role in today’s trading, with the government scheduled to release its weekly petroleum inventory statistics during the mid-morning. On Tuesday oil jumped over $1, threatened by cold weather.

The disk drive sector is rising higher in early going Wednesday by about 1% after reversing Monday’s losses on Tuesday, helped by SanDisk ((SNDK)). SanDisk is helping the sector with an advance of 1.8%, but the biggest supporter is Advanced Digital Information Corp. ((ADIC)) with an increase of 2.2%.

Led by the disk drive stocks, technology in general is showing strength in the early going. The computer hardware, networking and semiconductor spaces are showing modest gains as well. The airline space is the most conspicuous mover to the upside, climbing by 1.4%.

The gold sector is the worst performer, coming off an 18-year high set over the past few days. Energy stocks are also weak, including a 1.3% decline in the oil service space.

On corporate news front, French steelmaker Arcelor SA announced it will launch a hostile bid of C$56 a share - or C$4.3 billion in all - for Canadian counterpart Dofasco Inc. The all-cash takeover bid represents a premium of approximately 27.3% over the 44 Canadian dollar closing price of Dofasco''s common shares on Nov. 22, Arcelor said it won''t buy shares until it can purchase at least 50% of the Canadian company. Buying the Canadian firm would raise Arcelor''s annual production by around 10% to 55 million tons.

MOVERS AND SHAKERS

Sitel Corp. ((SWW)) ,provider of outsourced customer-support services, retained Citigroup Global Markets to help the board evaluate strategies to boost value for shareholders. In a statement, the company didn't provide specific possible alternatives. The stock jumped 11.3%.

Hormel Foods Corporation ((HRL)), manufacturer of food products, posted Q4 better-than-expected earnings of 59 cents a share, up from 50 cents in the same period last year, beating analysts’ expectations of 57 cents a share. The company projected 2006 earnings below expectations and the stock fell 6.6%.

Michaels Stores Inc. ((MIK)), retailer, reported third-quarter net earnings of $55.4 million, or 40 cents a share, compared with $42.5 million, or 31 cents a share, in the year-earlier quarter., exceeding estimates of 37 cents a share on revenue of $846 million. Same-store sales rose 0.8%. Company’s shares rose 7% on the favorable news.

Alexion Pharmaceuticals ((ALXN)) reported disappointing results for a late-stage clinical trial of a drug to reduce the incidence of heart attacks and deaths following coronary artery bypass graft surgery. Consequently the stock dropped 26%.

ECONOMIC NEWS

The Department of Labor released its report on initial jobless claims in the week ended November 19 on Wednesday, a day earlier than usual due to the Thanksgiving Day holiday. The report showed a bigger than expected increase in jobless claims.

The Labor Dept. said that initial jobless claims in the week ended November 19 rose to 335,000 from the previous week''s upwardly revised figure of 305,000. Economists had expected jobless claims to increase to 315,000 from the 303,000 originally reported for the previous week.

The increase was partly due to 21,000 new jobless claims related to Hurricanes Katrina, Rita, and Wilma. With the increase, the total number of hurricane-related job losses over the last 12 weeks rose to 582,400.

INTERNATIONAL MARKET NEWS

Asian-Pacific benchmarks advanced across the region on strong exporter-related issues, boosted by U.S. interest rate speculations. The Nikkei was closed for a national holiday. Among other regional markets, the biggest gainer was South Korea’s Kospi, surging 3% after yesterday’s 2% decline, followed by Hong Kong’s Hang Seng, up 1.2% and Singapore Straits Times, rising 0.8%. The only decliner was Australia’s All Ordinaries, down 0.2%.

European markets traded higher at mid-day dealings, supported by Wall Street gains overnight, earnings reports and merger-and-acquisition activity. The German DAX 30 gained 0.3%, the French CAC 40 advanced 0.5%, and London’s FTSE 100 added 0.1%. The euro steadied at $1.1807.

OIL, METALS, CURRENCIES

Crude oil prices eased down but remained above $58 a barrel on cold weather in the northern hemisphere and expectations of higher heating oil demand. Light sweet crude for January delivery lost 33 cents to $58.51 a barrel. London Brent fell 16 cents to $56.25.

European gold prices retreated from 18-year highs on subsiding trading activity before Thanksgiving. In London gold was fixed at $488.85 per troy ounce, down from $491.20. In Zurich gold fell to $488.75 from $490.90. In Hong Kong gold dropped $3.30 to close at $489.95. Silver traded unchanged at $8.13.

The U.S. dollar traded mixed against other major currencies. The euro was quoted at $1.1804, down from $1.1814. The dollar bought 118.54 yen, down from 118.78. The British pound traded at $1.7251, up from $1.7222.

EARNINGS NEWS

Air France-KLM ((AKH)), air transport company, announced that Q2 profit more than tripled to 2.73 euro a share, up from 76 euro cents a share in the year-ago period. Sales rose 10%. Fuel costs increased 29%, reflecting a 3% rise in volumes, a 49% surge in jet fuel prices and a hedging impact of 23%.

Patterson Cos ((PDCO)), equipment distribution company, reported that Q2 net income advanced to 32 cents a share, a penny up from 31 cents share in the same period last year, missing analyst estimate by a penny. The company added that sales advanced 11% in Q2. The company stated that Patterson Dental, its largest business, reported sales growth of 9%. Patterson expects Q3 earnings between 38 cents and 40 cents a share.

Nexus Telocation Systems Ltd ((NXUS)), provider of stolen-vehicle-retrieval and roadside-assistance services in Israel, posted a narrow Q3 loss of 14 cents a share, from 37 cents a share in the year-ago period as revenue more than doubled. The company reversed to Q4 operating earnings of $870,000 from an operating loss of $313,000.

Hormel Foods Corp ((HRL)), manufacturer and marketer of consumer-branded meats and food products, posted Q4 net earnings of 59 cents a share, up from 50 cents in the same period last year, beating analysts’ expectations of 57 cents a share. Sales rose 9.9%. The company projected earnings in a range of 44 cents to 50 cents a share for the fiscal 2006, including a charge of 4 cents for adoption of FAS 123R, the accounting rule for share-based payments. And for the year, Hormel''s pegged its profit range at $1.86 to $1.96 a share, also including the 4-cent charge.