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Gold Index
Updated 02-Jul-09
Quotes at time of story, top stories today:
Dish Wins Stay in TiVo Patent Dispute
Early this morning, TiVo (TIVO 9.37, -1.40) announced that U.S. Court of Appeals for the Federal Circuit granted the request of EchoStar and its related companies to stay the contempt order imposed by the U.S. District Court pending the outcome of EchoStar's appeal.
TiVo accuses Dish Network (DISH 16.02, -0.46) of infringing on its DVR patent, but the court ruling granted a stay on a contempt order that would have forced Dish Network and Echo Star to disable Dish DVRs.
Exelon Raises Bid for NRG
Exelon (EXC 50.39, -1.17) said Thursday that it is raising its bid for NRG Energy (NRG 25.38, -0.67) by 12.4% from its original offer.
Exelon said it increased its offer to acquire all of the outstanding NRG common stock in an all-stock transaction with a fixed exchange ratio of 0.545 of a share of Exelon common stock for each NRG share, a 12.4% increase over the initial exchange offer of 0.485. The new offer has a value of approximately $8 billion.
"We listened to NRG investors and balanced their views with the best interests of Exelon shareholders. An exhaustive analysis by our internal team, informed by the best third-party experts, resulted in additional synergies, allowing us to increase our offer to NRG shareholders," said John Rowe, chairman and chief executive officer of Exelon.
Xilinx Warns of Sales Slump
Chip maker Xilinx (XLNX 20.34, -0.23) this morning disclosed that its June quarter sales are expected to be down approximately 5% sequentially vs. consensus of a sales increase of ~0.5% quarter-over-quarter. This is a revision from previous sales guidance of down 4% to up 4% sequentially.
The company said the shortfall in sales is primarily due to supply constraints on certain Virtex-5 devices that are in high demand. Xilinx currently expects most of the existing delinquency issues to be resolved in the September quarter.
Gross margin guidance of 61% to 63% and operating expense guidance of flat to slightly down sequentially remain unchanged.
Factory Orders Stabilizing
Total factory orders for May were up 1.2%, a bit more than an expected 0.9% gain.
Durables orders, which comprise about half the total, were unrevised from the previously reported 1.8% gain.
Nondurable orders were up 0.7%. A near flat number had been expected. This accounted for the larger than expected overall gain.
Orders were up 0.5% in April after declining 1.9% in March. Orders had plunged in December and January, but have now stabilized over the past four months.
This is a good sign that suggests industrial production may stabilize, but orders still remain below about 20% the levels of last year. Whether stabilization is good news in this context is a matter of the cup being half full or half empty.
J&J to Buy $1B Stake in Elan
Johnson & Johnson (JNJ 56.43, -0.64) and Elan Corp (ELN 8.51, +1.51) announced a definitive agreement whereby Johnson & Johnson will acquire substantially all of the assets and rights of Elan related to its Alzheimer's Immunotherapy Program (AIP Program), through a newly formed company.
Additionally, Johnson & Johnson, through its affiliate, will invest $1 billion in Elan in exchange for newly issued American Depositary Receipts (ADRs) of Elan which will represent 18.4% of Elan's outstanding ordinary shares.
The AIP Program represents Elan's interest in a collaboration with Wyeth (WYE 44.95, -0.42) to research, develop and commercialize selective products for the treatment and/or prevention of neurodegenerative conditions, including Alzheimer's disease.
Johnson & Johnson said upon closing, the transaction will have an estimated dilutive impact of $0.02 to $0.03 on 2009 adjusted earnings per share. The companies anticipate concluding the transaction in the second half of 2009.
Illumina Lowers Revenue Guidance
After the close Wednesday, Illumina (ILMN 33.28, -4.86) announced it expects second quarter revenue of approximately $161 million vs. the First Call consensus of $172 million, due to a direct result of a shortfall in the company's array business.
The company said despite the challenges it saw in the second quarter, it believes the fundamentals in its markets remain intact and that its competitive position, execution and new product flow are as strong as ever.
Given the Q4 upside opportunities related to the stimulus, offset by the near-term weakness in the array business, the company is also lowering its fiscal 2009 revenue outlook to the original range it provided entering the year of $690 million to $720 million vs. consensus of $717 million. Prior guidance was $700 million to $720 million.
Lousy Jobs Data in Every Respect
Not good. Nonfarm payrolls fell 467,000 in June. This is worse than an expected 367,000 and still well above the largest decline registered in the 2000-2001 recession of 325,000.
Optimists had hoped that the trend toward smaller declines would produce a decline of about 300,000 this month -- but companies do not hire/fire based on such trends.
Further large payroll declines are likely. Until weekly unemployment claims drop below 400,000, payrolls are going to continue declining. (This morning, unemployment claims for the week ended June 27 were reported at a still very high 614,000.)
Further bad news is included in the payroll report. Average weekly hours fell to 33.0 from 33.1. Hours tend to lead payrolls and the fact that employers are cutting back hours suggests that hiring is a long ways off.
Also negative from an economic standpoint is that fact that hourly earnings in June were flat. This is below an expected meager 0.1% gain and indicates that consumer purchasing power is falling (when combined with lower payroll levels).
This report is quite bad across the board. It could undermine the belief that economic recovery is not too far off simply because a slew of recent data had shown a "slower rate of decline."
The unemployment rate was up only 0.1% to 9.5%. This smaller gain was due to fluctuations in the labor force that had also produced an outsized unemployment rate jump last month. The unemployment rate will likely pop up further over the next several months.
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