Boeing and Air India in $11 B Deal

Elena
11 Jan, 2006
New York City

U.S. stocks opened below the flat line on lowered Q4 profit guidance from DuPont and BP PLC. However, brokerage upgrades on Apple Computer and Hewlett-Packard provided support. Banc of America Securities raised its Apple price target to $87 from $78 and UBS raised its price target on the stock to $100 from $86. Apple climbed 3.4% extending gains on new products announcements and positive revenue. The stock hit a new multi-year high.

U.S. MARKET AVERAGES

U.S. stocks opened below the flat line, dragged by Dow Component DuPont and BP PLC which posted slashed Q4 profit guidance. However reported brokerage upgrades of Apple Computer and Hewlett-Packard offered some support to the tech sector.

In economic news, the government released its weekly petroleum inventory report to show that crude oil inventories dropped by 2.9 million barrels for the week ended Jan 6 to 318.7 million barrels, while gasoline inventiories rose by 4.5 million barrels.

The chemical sector was the most notable decliner, dragged by DuPont ((DD)), falling about 3.4% on profit warning. Energy stocks moved slightly lower in early going with the oil sector being the worst performer in the group, down less than 0.5%.

The computer hardware sector moved slightly higher. Apple ((AAPL)) climbed 2.7% higher, adding to sharp gains Tuesday in the wake of new product announcements and positive revenue figure and extending its multi-year peak. UBS increased its price target on the stock to $100 from $86 and kept a buy rating on the stock, citing Apple's revenue guidance.

In the first hour of trading, the Dow Jones industrial average fell 2.32, or 0.02%. The Standard & Poor''s 500 index fell 0.11, or 0.01%, and the Nasdaq composite index fell 1.79, or 0.08%.

Bonds rose, with the yield on the 10-year Treasury note falling to 4.42%from 4.43% late Tuesday.

MOVERS AND SHAKERS

Yahoo Inc. ((YHOO)) was downgraded by Merrill Lynch to neutral from buy, citing the recent appreciation of the company's shares and its assessment of fair value at $46 to $48 a share However, the bank expects a strong Q4 in the sector, and, for Yahoo in particular. Yahoo’s shares declined 2.6%.

Caribou Coffee ((CBOU)) said it expects to report a loss of 10-20 cents a share, with comparable coffeehouse sales to be in the range of 3 to 7%. Under a new license agreement, General Mills ((GIS)) will use the Caribou Coffee marks and coffee in the production of gourmet coffee flavored products. The stock dropped 20.6%.

DuPont ((DD)), chemical company, announced that its Q4 earnings would fall short of expectations, due to operations disruptions from hurricane's Katrina and Rita, as well as weak performances in a number of its businesses. The Dow Component lowered Q4 profit to 10 cents a share from earlier projections of 20 to 25 cents a share, below estimates of 24 cents per share. The company’s shares fell 2.9%.

SanDisk Corp ((SNDK)) was downgraded to neutral from overweight at J.P. Morgan, with the broker citing valuation. It believes Q4 results should meet or beat its above-consensus forecast for 70 cents in earnings per share on sales of $746 million. The stock dropped 3.1%.

ECONOMIC NEWS

Crude oil inventories showed a sharp decline in the latest week, according to government statistics released Wednesday, adding to the slide posted in the previous week. Stocks of gasoline and distillate fuel oil advanced during the period.

The Department of Energy's Energy Information Administration revealed that crude oil inventories dropped by 2.9 million barrels for the week ended January 6, falling to 318.7 million barrels from the prior week's level of 321.6 million barrels. This followed a decline of 1 million barrels in the previous week. Oil inventories were 11.4% higher than their levels of the same time last year.

Gasoline inventories posted a week-over-week increase of 4.5 million barrels, the government said, compared to the previous week's increase of 1.4 million barrels. Gasoline stocks were 4.1% below their levels of last year. Inventories of distillate fuel oil rose by 4.9 million barrels in the most recent week.

INTERNATIONAL MARKETS NEWS

Asian-Pacific benchmarks closed largely higher, lifted by upbeat data indicating a robust growth in China’s trade surplus, which is a favorable factor for the inter-regional trade and development. The gainers were led by the Nikkei, climbing 1.5% to 16,363.59, followed by Hong Kong’s Hang Seng, up 0.5% and Taiwan’s Weighted index which reversed from losses to gain 0.4%. China’s Shanghai and South Korea’s Kospi dropped, 0.8% and 0.2% respectively.

European stocks advanced Wednesday morning on U.S. markets recovery at close and merger-and-acquisitions activity. The German DAX 30 climbed 0.6%, the French CAC 40 rose 0.5%, and London’s FTSE 100 gained 0.4%.

OIL, METALS, CURRENCIES

Crude oil prices steadied ahead of oil inventories report. Light sweet crude for February delivery gained 14 cents to $63.51 a barrel. Gasoline slightly fell to $1.7306 a gallon. Heating oil traded slightly down at $1.7305. Natural gas added 7 cents to $9.405 per 1,000 cubic feet. London Brent traded unchanged at $61.92.

European gold prices advanced. On Tuesday gold hit a 25-year high of $553 per troy ounce. In London gold opened at $542.25 per troy ounce, up from $541.10. In Zurich the precious metal advanced to $541.75 from $540.85. In Hong Kong gold dropped $6.10 to close at $540.40. Silver traded at $8.90, down from $8.99.

The U.S. dollar gained ground against most major currencies. The euro was quoted at $1.2070, down from $1.2071. The dollar bought 114.51 yen, up from 114.36. The British pound traded at $1.7653, up from $1.7651.

EARNINGS NEWS

Mercantile Bank Corp, ((MBWM)), banking services company, reported net income for the fiscal year ended December 31, 2005 of $2.31 earnings per share, up 29.8% from $1.78 reported for 2004. Net income for Q4 amounted to 59 cents per share, up 1.7% from 58 cents per share in the comparable period last year. Moderation in earnings growth primarily reflects the Company''s recent expansion initiatives.

SYNNEX Corp, ((SNX)), IT supply chain services company, reported that Q4 net income decreased 17% to 40 cents a share, down from 49 cents a share in the same period last year despite 11% revenue growth. Net income on a non-GAAP principles was, 41 cents per share, compared with net income of.43 cents per share in prior year quarter.

M&T Bancorp, ((MTB)), banking services company, reported that its Q4 net income advanced to $1.78, up from $1.66 a share in the year-ago period on cost controls and improved credit quality which helped offset pressure on margins from a flat yield curve. The company beat analysts’ projections of $1.75 a share.

Material Sciences Corp, ((MSC)), material-based solutions for acoustical applications company, posted Q3 net earnings of 15 cents a share, down 7.9% vs. 17 cents a share in the same time last year despite revenue growth. Gross margin dropped 0.7%.

Genentech Inc, ((DNA)), biotherapeutics manufacturer, reported that its Q4 net income was 31 cents a share, 64% higher than the 19 cents a share, earned in the same period a year ago. Sales were $1.9 billion vs. last year''s $1.3 billion. Non-GAAP earnings of 34 cents a share matched the analysts’ estimate Sales, however, exceeded the $1.85 billion forecast by analysts.

International DisplayWorks Inc., ((IDWK)), maker of LCDs for modules, cell phones and other wireless devices, reported Q4 net income of a penny a share down from 2 cents a share in the same time last year despite higher sales because of costs growth. Sales amounted to $24 million, up 68 percent from last year''s same period result. The company missed the analysts’ expectations of 4 cents a share for the period.

Infosys Technologies, ((INFY)), technical and system software company, reported that Q3 earnings per share rose to 53 cents, up from 42 cents per share in the year-ago period on 32.2% revenue growth.