Mittal Launches $23 B Bid for Arcelor

Elena
27 Jan, 2006
New York City

Asian-Pacific benchmarks rallied Friday, led by huge gains in the Nikkei which rocketed 3.6% to 16,460, posting the biggest one-day rise in four-years. The index jumped 556.66 points, lifted by record-high results released by Sony. European averages gained on Mittal Steel''s bid for Arcelor with the German DAX 30 up 1%. Microsoft posted Q2 profit rise of 34 cents a share on 9% revenue growth. Procter & Gamble posted 29% profit growth in Q2, raised 2006 outlook.

U.S. MARKET AVERAGES

U.S. stock futures advanced Friday with technology standing out among early leaders. Market sentiment rose on strong results released by software giant Microsoft and ahead of economic data, expected to show the first quarterly U.S. economic growth below 3% in ten periods.

Microsoft ((MSFT)) said its quarterly profit rose almost 6% as revenue climbed more than 9%, helped by its video-game unit and by strong demand for software used to run personal computers and corporate servers.

Procter & Gamble ((PG)) released Q2 earnings rise of 29% with the profit growth partly attributable to the acquisition of razor and battery maker Gillette. The company raised its full-year guidance to $2.58 to $2.62 per share from its previous forecast of $2.54 to $2.60 per share.

In a comparatively lighter day of earnings releases, a number of key companies are set to announce their results. Oil giant Chevron ((CVX)) is a noteworthy company due to release its results, expected to post a quarterly rise. Black & Decker ((BDK)) and FPL Group ((FPL)) are among the other major firms set to report.

J.P. Morgan downgraded Wal-Mart Stores Inc. to neutral from overweight, citing possible turbulence over the next 12 to 24 months with a new field organizational structure and upscale merchandise and marketing initiatives.

The broker upgraded Target Corp to overweight from neutral on innovative merchandise and sustainable, high-teens earnings-per-share growth.

Dow Jones futures were recently higher 37 points, S&P 500 futures rose 4.5 points, and Nasdaq 100 futures rose 15.5 points.

ECONOMIC NEWS

The U.S. economy grew at its slowest pace in three years in the fourth quarter, according to a report from the Department of Commerce. The report showed that the gross domestic product for the quarter grew much less than economists had been expecting.

The Commerce Dept. said that its advanced reading of the fourth quarter GDP showed an annual rate of growth of 1.1 percent, the slowest rate of growth since the fourth quarter of 2002. Economists had expected growth of about 2.8 percent compared to the 4.1 percent growth seen in third quarter.

The deceleration in GDP growth in the fourth quarter was primarily due to a slowdown in consumer spending, an acceleration in imports, a downturn in federal government spending, and a slowdown in spending on equipment and software.

The slowdown in consumer spending played a big part in the deceleration seen in the fourth quarter, with consumer spending growth coming in at 1.1 percent for the quarter. This marked the slowest pace of growth since the second quarter of 2001.

The report also showed an acceleration in the pace of core inflation, with the index of consumer prices excluding food and energy prices rising 2.2 percent in the fourth quarter after an increase of 1.4 percent in the third quarter.

INTERNATIONAL MARKETS NEWS

Asian-Pacific benchmarks ended Friday session sharply higher, boosted by strong U.S. corporate earnings and better-than-anticipated results from key industrial shares. The Japanese Nikkei skyrocketed 3.6% to 16,460, posting the biggest one-day advance in four years. The index recorded 556.66 points, recovering all last-week losses on the back of record-high quarterly results released by Sony. South Korea’s Kospi gained 0.35%, Singapore Straits Times advanced 0.4%, while Australia’s All Ordinaries climbed 1.15% on oil and gas prices.

European stocks were lifted at mid-day dealings by merger-and-acquisition news, led by the world’s top steelmaker Mittal Steel’s offer to buy rival Arcelor for $22.7 billion. The German DAX 30 surged 1%, the French CAC 40 advanced 0.7%, and London’s FTSE 100 climbed 0.9%.

OIL, METALS, CURRENCIES

Crude oil prices were pushed back above $67 a barrel on continuous tensions in Nigeria and Iran. Light sweet crude for March delivery gained 83 cents to $67.09 a barrel. London Brent rose 85 cents to $65.77.

European gold prices climbed, rebounding from yesterday’s declines. In London gold traded at the fixed price of $559.75, up from $559. In Zurich the precious metal traded at $559, up from $558.50. In Hong Kong gold fell $2.50 to close at $559.60. Silver traded unchanged at $9.52.

The U.S. dollar advanced against other major currencies. The euro was quoted at $1.2195, down from $1.2209. The dollar bought 116.53 yen, up from 116.33. The British pound stood at $1.7789, down from $1.7802.

EARNINGS NEWS

FPL Group Inc., ((FPL)), electric energy producer, reported Q4 earnings of 53 cents a share, up from 47 cents a share a year-earlier, topping analyst forecasts of 40 cents a share. Q4 results incorporated a gain related to the mark-to-market impact of non-qualifying hedges. If not for the gain, the company earned 46 cents a share.

Black & Decker Corp., ((BDK)), tool maker, reported Q4 net income of $1.27 a share, down from $1.62 a share in the year-ago period. Adjusted earnings came to $1.93 a share after charges for taxes related to repatriating foreign earnings, beating analyst estimate of $1.90 a share. Sales in Q4 advanced to $1.73 billion from about the same level in the previous period.

Microsoft, ((MSFT)), software company, reported that Q2 earnings advanced 5% to 34 cents per share, up from 32 cents per share in the same period last year on 9% revenue growth. The company predicted earnings for the March quarter of 32-33 cents per share on revenue of $10.9-$11.2 billion.

Manor Care Inc, ((HCR)), health care services company, reported Q4 net earnings of 40 cents a share, down from 55 cents in the year-ago period. Q4 profit included the impact of approximately 15 cents for unusual items related to debt refinancing, hurricane-related losses and a higher tax rate. Without the charge, the company matched the analyst estimate for earnings of 55 cents a share. Quarterly revenue went up to $864 million from the previous year's $806 million.

ITT Industries Inc, ((ITT)), manufacturer of engineered products, reported a Q4 net loss of 91 cents a share, down from last year’s profit of $1.29 a share in the same period. The quarterly loss includes the impact of special items amounting to $218.6 million, primarily related to a previously announced non-cash asset impairment charge in the company''s switches business. If not for items, ITT would have come in with earnings from continuing operations of $1.43 a share, beating on that basis analyst estimate for earnings of $1.41 a share.

Compuware Corp, ((CPWR)), information technology software maker, posted Q3 net earnings of 10 cents a share, down 9.6% from 11 cents a share a year ago, in line with the analysts’ forecasts. Revenue dropped 7.5%. Compuware announced that it made organizational changes aimed at improving sales, but doesn''t plan any layoffs.

Frontier Airlines Inc, ((FRNT)), airline, reported a Q3 net loss of 28 cents a share, narrower than a net loss of 31 cents a share in the year-earlier period. If not for certain items, the company''s loss was 25 cents a share, missing analyst mark of a loss of 19 cents a share.

Massey Energy Co, ((MEE)), coal company, reported a Q4 net loss of $2.76 a share, down from a net profit of 2 cents a share in the year-ago period. Q4 included an after-tax charge of $216.2 million related to the company''s recent debt repurchase and exchange offers. If not for special items, the company earned $3.1 million. Revenue advanced 15%, to $517.9 million from $452.3 million.

Emulex Corp, ((ELX)), HBA producer, reported Q2 net earnings of 19 cents a share, up vs. 16 cents a share in the same period last year. Aside from items, earnings came in at 28 cents a share vs. 21 cents last year, missing on that basis analyst estimate by a penny. Revenue advanced to $110.3 million from $91.7 million.

Certegy Inc., ((CEY)), payment processing company, reported a Q4 net income rise of 2.6% to 57 cents a share on 5% revenue growth, missing analyst view for earnings of 61 cents a share. The company announced that if not $2.9 million of mergers and acquisitions costs earnings were 61 cents a share. The company also stated it hopes to use its upcoming merger with Fidelity National Information Services to cross-sell its products to Fidelity customers globally.

CORPORATE NEWS

Mittal Steel ((MT)) announced that it made a bid for steel producer Arcelor for more than $22 billion. The deal would value Arcelor at 28.21 euro per share, a 27% premium over the company's closing price on the Paris exchange on Thursday. Mittal said it also agreed to resell Canadian steel maker Dofasco, which Arcelor recently agreed to acquire, to German steelmaker ThyssenKrupp. ThyssenKrupp lost a bidding war for Dofasco earlier in the week, when Dofasco accepted a deal from Arcelor to be acquired for C$5.6 billion, or 3.95 billion euro.