Stocks Rise on GM, Intel, AT&T

Elena
06 Mar, 2006
New York City

U.S. stocks advanced at opening lifted by AT&T acquisition of BellSouth Corp. for $67 billion, GM stake-sale plans and brokerage upgrade of Intel. General Motors announced plans to sell a 17.4% equity stake in Japanese Suzuki Motor Corp., or about 92.36 million shares, for an estimated $2 billion. Citigroup upgraded Intel to buy from hold. Research in Motion rose 13% after it reached a settlement in its patent litigation with NTP.

9:45 AM ET - U.S. Market Update

AT&T's agreement to buy BellSouth for $67 billion, with General Motors' stake-sale plans and a brokerage upgrade on Intel Corp boosted stocks to open higher.

AT&T ((T)), long-distance telephone company, agreed to acquire BellSouth ((BLS)), the No. 3 U.S. regional phone company, for $67 billion. Under the agreement, each common share of BellSouth will be exchanged for 1.325 shares of AT&T common stock. Once the acquisition of BellSouth is completed, AT&T will gain total control of Cingular Wireless, the largest mobile phone company in the U.S. Currently, AT&T holds a 60% stake in Cingular, while BellSouth has the remaining 40% stake.

General Motors ((GM)) announced plans to sell a 17.4% equity stake in Japan's Suzuki Motor Corp., or about 92.36 million shares, for an estimated $2 billion.

Citigroup raised its rating on Intel Corp ((INTC)) to buy from hold. The brokerage also raised its rating on Nucor Corp. ((NUE)) to buy from hold.

Energy stocks moved lower in the early going on retreating oil prices. The transportation group was also weak. Technology stocks showed weakness as well, including a decline in the networking and disk drive sectors.

Telcom stocks stood out among movers to the upside, rallying on AT&T deal to buy BellSouth. The sector climbed nearly 2%, while BellSouth posted an advance of more than 10%.

The Dow Jones industrial average was up 0.88 at 11,022.47, the Nasdaq Composite Index gained 3.74 to 2,306.34 and the Standard & Poor's 500 index dipped 0.05 to 1,287.18.

8:00 AM ET - International Markets News

Asian-Pacific benchmarks closed mostly higher. The Nikkei surged 1.5% to 15901.16, boosted by upbeat data showing 9.5% rise in capital spending. Across the region, South Korea’s Kospi climbed 1.2%, Singapore Straits Times rose 0.8% to reach a new six-year high, while Shanghai Composite lost 0.4%. Hong Kong’s Hang Seng traded flat ahead of global bank HSBC earnings release.

European stocks advanced significantly at mid-day, lifted by telecom-consolidation news. The Linde-BOC Group deal also provided support. The German DAX 30 rose 0.7%, the French CAC 40 climbed 00.9%, and London’s FTSE 100 hit a fresh four-year high rising 0.9% to 5910.

Oil, Metals, Currencies

Crude oil prices retreated ahead of two important meetings in Vienna- one on Iran’s nuclear program and the other one on OPEC output levels. Light sweet crude April delivery declined 25 cents to $63.42 a barrel. London Brent for April delivery lost 36 cents to $63.82 a barrel.

European gold prices lost ground. In London gold declined to $568 bid per troy ounce, down from $568.60. In Zurich the precious metal fell to $567.40 from $568.30. In Hong Kong gold fell $1 to $567.80. Silver opened at $10.10, up from $10.20.

The U.S. dollar traded mixed against other major currencies. The euro traded at $1.2036, down from $1.2037. The dollar bought 117.23 yen, up from 116.34. The British pound was quoted at $1.7553, up from $1.7500.

8:30 AM ET - Earnings News

Lexar Media Inc., ((LEXR)), electronic memory card manufacturer, expects to report a Q4 net loss in the range of 25 cents to 28 cents a share. Lexar added that it expects revenue for Q4 to be in the range of $237 million to $240 million. The company announced it has pushed its results back to March 14 to complete its accounting analysis of inventory and other reserves.

Bedford Property Investors Inc, ((BED)), real estate investment trust, reported Q4 net income of $1.23 share, down from $4.31 a share in the year-earlier period. The company added that funds from operations were 40 cents a share, up from 33 cents a share, beating analysts’ forecast of 38 cents a share in funds from operations.

Bayer AG, ((BAY)), drugmaker, reported that its Q4 profit dropped 33% after it set aside 275 million euros ($330.5 million) to settle claims that it colluded on prices of rubber and plastic in the U.S. The company earned 46 million euros ($55.3 million) in Q4 down from 68 million euros a year ago. Revenue advanced 16 % to 7.1 billion euros ($8.5 billion) from 6.11 billion euros.

Corporate News

General Electric's ((GE)) entertainment division, NBC Universal, agreed to acquire iVillage, an online destination aimed at women for $8.50 per share in cash. The purchase price equates to about $600 million. The deal is expected to close in the second quarter, pending shareholder and regulatory approvals.

General Motors ((GM)) announced plans to sell a 17.4% equity stake in Japan's Suzuki Motor Corp., or about 92.36 million shares, for an estimated $2 billion.

Education Management Corp. ((EDMC)) agreed to be acquired for $3.4 billion by Providence Equity Partners and the investment arm of Goldman Sachs.