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Global Investing Roundups
American Eagle's 4Q Profit Drop, Beats Forecasts; Drake Considers Liquidating Major Hedge Funds; Biggest Budget Deficit in U.S. History; Gas and Oil Gush to New Highs; Microsoft's Virtual Acquisition; Southwest Grounded; Humana Halves Outlook; China Digital Profits on Deal with Intel
- Clothing retailer American Eagle Outfitters Inc. (AEO) reported a 6.4% drop in quarterly profit, but beat analysts' expectations. Net income for the fourth quarter ended Feb. 2 fell to $140.5 million, or 66 cents per share. Chief Merchandising Officer Susan McGalla said the retailer's top priority was improving its struggling women's business, Reuters reported.
- Hedge fund firm Drake Management told investors that it is considering liquidating three of its hedge funds, citing "challenging market conditions." Its letter to investors said that its Global Opportunities fund – which was down almost 25% in 2007 – has had "sharply negative performance" in the face of "extreme volatility of certain capital markets over the last six months," Reuters reported.
- The U.S. government reported a $175.56 billion budget deficit for February, a record for any month, as a slowing economy caused receipts to fall and government spending continued to grow. February receipts fell to $105.72 billion from $120.31 billion in February 2007, the U.S. Treasury said yesterday (Wednesday), as both corporate and individual income tax payments slowed. The February gap marked a 46.3% increase over the previous all-time single-month deficit of $119.99 billion in February 2007.
- Gasoline and oil prices extended their record-setting streaks yesterday (Wednesday), with gas nearing $3.25 and crude surpassing $110 for the first time. The national average price of a gallon of regular gas rose by 1.9 cents overnight to $3.246 a gallon, a new record, according to AAA and the Oil Price Information Service. Light, sweet crude for April delivery rose $1.19 to $109.94 a barrel on the New York Mercantile Exchange after earlier rising to a new trading record of $110.20.
- Microsoft Corp. (MSFT) said yesterday (Wednesday) that it would acquire virtualization technology firm Kidaro for an undisclosed amount. Microsoft said Kidaro's technology will fit into its desktop virtualization product, which allows companies to deliver a "virtual" computer desktop different from the software running on the local machine over the internet, .
- Southwest Airlines Co. (LUV) had to cancel 4% of flights yesterday (Wednesday) after a review of maintenance records led the carrier to ground 38 737 airliners. Just last week, Southwest, which is generally considered one of the better managed carriers, was fined $10.2 million by the Federal Aviation Administration for failure to complete required maintenance, The New York Times reported.
- Health and supplemental benefits company Humana, Inc. (HUM) lowered its earnings outlook yesterday (Wednesday) in response to increasing healthcare costs. The company cited "one-time" expenses due to its Medicare prescription plans as the root cause for the reduction in full-year earnings. The announcement caused shares to plunge over 13%, a decline of $6.50, to close at $40.88.
- Shares of China Digital TV Holding Co. Ltd. (STV) soared yesterday (Wednesday) after announcing a deal that Intel Corp. (INTC) would provide processing chips for China Digital's televisions. Full details of the venture were not disclosed, however, shares of China Digital shot up 28% for the day, an increase of $4.70, to close at $21.26.