What’s the Story?

by CC January 25, 2012 9:12 am • Commentary


As for Europe, we are once again in moderate freakout mode over Greek debt talks, which have been about to wrap up any minute now for going on six months.

IMF chief Christine Lagarde suggested this morning that public-sector creditors might have to take a haircut on Greek debt, along with the private-sector creditors who are balking at bigger haircuts than they’ve already agreed to take. The euro is down about 0.7% at last check, and European stocks are lower.


European stocks traded mostly lower on Wednesday, weighed by losses from L.M. Ericsson AB and Novartis AG after both reported sharp profit declines.

The Stoxx 600 index XX:SXXP -0.65%  fell 0.7% to 254.33, extending Tuesday’s decline.

The U.K.’s FTSE 100 index UK:UKX -0.62%  declined 0.6% to 5,718.11 and the French CAC 40 index FR:PX1 -0.69%  lost 0.6% to 3,302.21.

In Germany, the CAX 30 index DX:DAX -0.48%  moved 0.5% lower to 6,385.37.

“As we have seen some stellar gains over the last few days we now see some profit being booked with downside market risk being more evident,” said Atif Latif, director of trading at Guardian Stockbrokers, in emailed comments.

Pharmaceutical and telecommunication companies weighed heavily on markets with shares of Ericsson SE:ERICB -12.99% ERIC -15.25%  tumbling 13.8% after the firm reported a 65% profit decline for the fourth quarter. President and Chief Executive Hans Vestberg said the company “saw weaker development in networks.”

Tracking the negative news from Ericsson, Alcatel-Lucent FR:ALU -8.69%  fell 8.6%, Nokia Corp. FI:NOK1V -2.39%  dropped 2.7%, Telecom Italia SpA IT:TIT -1.71%  shed 1.2% and Telekom Austria AG TKAGY -0.96%  moved down 2.4%.

Novartis CH:NOVN -3.46%  shed 3.5% as the drug company said profitability will decline this year because of competition from generic rivals, dragging peer companies in the red. Novo Nordisk A/S DK:NOVOB -0.52%  declined 0.5%, AstraZeneca PLC UK:AZN -0.49%   traded 0.5% lower and Bayer AG DE:BAYN -1.41%  fell 1.5%.

Also in the sector, Roche Holding AG CH:ROG -2.61%  surrendered 2.4% after it made an unsolicited $5.7 billion bid for DNA-technology firm Illumina Inc. ILMN +40.37% . Roche offered $44.50 a share for outstanding Illumina common stock, a 64% premium.


Oil prices are down 0.9% to $98.09 per barrel in the opening minutes of pit trade. Weekly oil inventory numbers will be released at 10:30 AM ET. Meanwhile, natural gas prices continue to climb off of the multi-year lows that they set last week. The energy component is currently up 2.3% to $2.66 per MMBtu. Precious metals are under pressure, such that gold is trading with a 0.7% loss at $1653 per ounce, while silver prices were last quoted with a 0.9% loss at $31.70 per ounce. General weakness in the commodity complex has the CRB Index down 0.3%. In the backdrop, the dollar has advanced about 0.5% against a collection of competing currencies.


Apple’s fiscal first-quarter earnings more than doubled, as both profit and revenue hit record highs, led by strong sales of the iPhone and iPad. Shares jumped 8.1% at $454.25 in recent premarket trading as the results blew past analyst expectations.

Yahoo’s fourth-quarter earnings fell 5.3% on a bigger tax provision, while the Internet company’s operating income improved thanks to lower operating and revenue costs despite weaker revenue. Shares were down 0.6% to $15.59 in recent premarket trading.

Boeing’s fourth-quarter earnings rose 20% as the aerospace company’s revenue increased due to higher commercial airplane deliveries. For the year, the company projected per-share earnings of $4.05 to $4.25 on revenue of $78 billion to $80 billion, compared with recent estimates from analysts polled by Thomson Reuters of $4.96 and $78.55 billion, respectively. Shares were down 1.1% to $74.50 premarket.

WellPoint Inc.’s fourth-quarter earnings fell 39% on investment losses and higher costs, as the health-benefits provider also increased its dividend by 15%. Results missed expectations, and the company expects full-year earnings for 2012 to also be below consensus. Shares dropped 7.4% to $64.25 in recent premarket trading.

General Dynamics Corp.’s fourth-quarter earnings fell 17% as the defense company’s margins were hurt by charges at its aerospace business. Shares declined 1.2% to $70.46 in recent premaket trading.

Corning Inc.’s fourth-quarter profit slumped 53% as the company struggled, as expected, with sliding prices for liquid-crystal-display glass. Shares fell 4.9% to $13.90 premarket.

Xerox Corp.’s fourth-quarter profit more than doubled from a year-earlier period that was hurt by heavy charges, while revenue came in lighter-than-expected due to softer sales in the company’s technology business. The printer-and-copier maker said economic weaknesses in Europe was behind the lighter technology revenue, which covers the sales of printers, supplies and other items. Shares were down 0.4% to $8.64 premarket.

US Airways Group Inc.’s fourth-quarter earnings dropped 36% as the airline struggled under a sizable jump in fuel costs that masked stronger revenue. Shares were up 3.4% to $6.63 in recent premarket trading as core earnings far exceeded analyst estimates.

CA Inc.’s fiscal third-quarter earnings rose 32% as the business-software maker saw revenue growth in each of its three segments. Shares surged 16% to $26.55 in premarket trading as the company also unveiled a capital allocation program that targets the return of up to $2.5 billion to shareholders through fiscal year 2014.

Textron Inc. swung to a fourth-quarter loss on several one-time items, though revenue grew more strongly than expected. The company also gave an upbeat forecast, projecting full-year earnings that beat analysts’ expectations. Shares gained 7.5% to $23.22 in recent premarket trading.

Advanced Micro Devices Inc. swung to a fourth-quarter loss as write-downs tied to the chip maker’s investment in its spun-off foundry business offset stronger personal-computer processor sales. Shares slipped 4.3% to $6.25 premarket as Advanced Micro’s soft revenue overshadowed its stronger-than-expected core earnings. The stock had fallen 15% over the past year through Tuesday’s close.

Kinder Morgan Energy Partners LP said it plans to spend roughly $140 million to further expand coal export operations along the Gulf Coast and reached a long-term throughput agreement with Arch Coal Inc. Kinder Morgan Energy said the companies are in final discussions to include port space for coal shipments at Kinder’s facilities on the East Coast. Shares were up 0.3% to $88.60 premarket.

Fusion-io Inc.’s fiscal second-quarter earnings loss narrowed as the data-efficiency specialist more than doubled its top line, but its costs took up a bigger proportion of the revenue than in the year prior. Share dropped 11% at $26.90 premarket.

Tempur-Pedic International Inc.’s fourth-quarter earnings rose 22% as the mattress company reported stronger sales of mattresses and pillows. Shares rose 8.1% to $67.30 in recent premarket trading as the company projected 2012 results that exceeded expectations.

Polaris Industries Inc.’s fourth-quarter earnings jumped 17% as the company reported another quarter of strong sales growth that surged ahead of expectations. Still, the company had cautioned the fourth quarter could see a greater impact from volatility of foreign currencies and higher input costs. Shares fell 3.5% to $60.51 premarket.

Radian Group Inc. said it entered a three-pronged transaction with units of fellow insurer Assured Guaranty Ltd. that it said would significantly increase its capital position and preserve liquidity. Shares in mortgage insurer Radian were up 3.4% at $3.05 in premarket trading.

Williams Partners LP unveiled plans Tuesday to offer 6.5 million common units as the company looks to raise money to fund capital expenditures and for other general partnership purposes. Units slipped 3.5% to $62.60 premarket.