Circuit City Tops Estimate

Elena
19 Dec, 2005
New York City

European pharma stocks advanced, boosted by Pfizer which rose 11% after the exclusivity of two of its patents was upheld. In corporate news, FPL Group and Constellation Energy Group agreed to merge, forming a company with a market capitalization of about $28 billion. Google gained 3.2% on a reported 5% stake in Time Warner''s AOL division for $1 billion, pacing out Microsoft Corp.

U.S. MARKET AVERAGES

U.S. stock averages opened higher, boosted by the surging pharmaceutical sector which gained after the exclusivity of two Pfizer patents was upheld. Market sentiment was also lifted by an $11 billion energy deal between FPL Group and Coonstellation Energy Group, and Google Inc.'s reported 5% stake buy in Time Warner Inc.

The Dow Jones industrial average is up 8.80 points, the S&P 500 is ahead 2.56 points and the Nasdaq 100 is up 0.89 points.

The drug sector sharply rose, including a 10% advance in Pfizer and a 6% gain in Merck ((MRK)). The gold sector climbed, continuing a recovery from the end of last week.

The HMO sector was among the worst performers in early trading, down by 2% with Coventry Health Care ((CVH)) leading the decliners with a drop of 2.9%. Aetna ((AET)) fell 2.5%, with losses of 2.4% coming from Wellpoint ((WLP)) and UnitedHealth ((UNH)).

Honeywell International Inc. agreed to pay $366 million for Britain''s First Technology, a maker of crash-test dummies and gas detection equipment, but the shares rose above the offer price on speculation that others, including General Electric Co., may try to launch a better bid.

MOVERS AND SHAKERS

Pfizer ((PFE)) rose 11% after a federal judge upheld the exclusivity of two of Pfizer's patents related to its Lipitor cholesterol-lowering drug.

Time Warner Inc. ((TWX)) entered into talks to sell a 5% stake in its AOL unit to Google Inc. (GO0G)) for $1 billion. Time Warner’s shares gained about 1%. Google’s shares rose 2.8%.

FPL Group Inc. ((FPL)) and Constellation Energy Group Inc ((CEG)) agreed to merge, forming a company with a market capitalization of about $28 billion. The companies reported that under the deal, each Constellation Energy share will be exchanged for 1.444 common shares of the combined company, while each FPL Group share will be converted to 1 share of the combined entity. The new company formed in the merger will be called Constellation Energy. Shares of FPL Group inched up 0.3%, while shares of Constellation Energy dropped 3.8%.

Poore Brothers ((SNAK)) announced that its president and CEO, Thomas Freeze, and chief financial officer, Richard Finkbeiner, agreed to leave the company. It also said that, primarily due to severance payments associated with the above departures and professional services fees the company sees a net loss for the fourth quarter, which is below previous annual guidance of 8 cents to 10 cents a share. The stock dropped 20%.

ECONOMIC NEWS

No important economic news is due out today.

INTERNATIONAL MARKET NEWS

Asian-Pacific benchmarks advanced across the region with the Nikkei finishing up after three straight losing sessions. The Japanese bellwether rose 1.4% on bargain hunting and strong exporter-related issues. Among other regional markets, South Korea’s Kospi climbed 1.4%, Taipei’s Weighted index gained 1.3%, and Hong Kong’s Hang Seng was up 1%.

European stocks turned mixed at mid-day trading, pressured by the energy sector but supported by surging drug stocks which gained after the exclusivity of two Pfizer patents was upheld. The German DAX 30 declined 0.2%, the French CAC 40 added 0.1%, followed by London’s FTSE 100, up 0.1%.

OIL, METALS, CURRENCIES

Crude oil prices advanced, reversing from recent declines. Light sweet crude for January delivery rose42 cents to $58.48 a barrel on the Nymex. Heating oil slightly rose to $1.7405, while gasoline was flat at $1.5692. Natural gas gained 27 cents to $13.899 per 1,000 cubic feet. London Brent climbed 36 cents to $57.49.

Gold prices climbed 1.2%, following last-week sharp declines. In London spot gold rose $6.05 to $509.29 per troy ounce.

The U.S. dollar climbed the most in three weeks against the yen, recovering from recent losses. The dollar bought 116.19 yen, up from 115.67.

EARNINGS NEWS

Circuit City Stores ((CC)), consumer electronics retailer, reported Q3 earnings from continuing operations of 6 cents a share, up from an equivalent loss of 3 cents a share a year-earlier. Sales advanced 14% and same-store sales advanced 13.1%. The company topped analyst estimate for a profit of 4 cents a share.