American Express Scoops GE's Corporate Payment Services; Sharp Sheds Light on New Solar Plant; Fed to Investigate Countrywide Takeover; Lennar Falls Into Disrepair; Williams-Sonoma Lowers 2008 Guidance; MF Global Frees Up Capital; Oracle Earnings Disappoint; Google Slumps on Less Paid Clicks
American Express Co. (AXP) said Thursday that it agreed to buy General Electric Co.'s (GE) Corporate Payment Services, a commercial credit card and corporate purchasing business, for $1.1 billion. The all-cash deal will give American Express more than 300 large corporate clients, notably its largest client, GE. American Express said it expects that deal will have a "minor dilutive impact" on earnings per share and return on equity "in the early years following the transaction."
Osaka-based Sharp Corp. (OTC:SHCAY) said it would spend $729 million to build a new solar cell plant next in western Japan, Reuters reported. The new plant will be built next to a Sharp plant that builds liquid crystal display panels. Sharp's new plant is further evidence that there is a growing demand for solar, and that of course gives investors a few opportunities to capitalize early.
The Federal Reserve said yesterday (Thursday) it would hold public meetings on Bank of America Corp.'s (BAC) planned acquisition of Countrywide Financial Corp. (CFC). The central bank is required by law to consider whether the merger offers benefits such as greater convenience and increased competition, or produces conflicts of interest or excessive concentration of resources, Bloomberg reported.
Lennar Corp. (LEN), one of the nation's largest homebuilders, reported a first quarter loss yesterday (Thursday), after taking charges to adjust land values, and new home sales and collapsed. Lennar reported a loss of $88.2 million, or 56 cents per share, in the three months ended Feb. 29 compared with profit of $68.6 million, or 43 cents per share, in the year ago quarter. "There is a growing consensus that the deterioration of the housing market has likely led us into recession," chief executive Stuart Miller said in a statement, "and the stabilization and recovery of the housing market will likely lead us out."
Williams-Sonoma Inc. (WSM) posted a 2.9% rise in fiscal fourth-quarter net income and will cut its 2008 forecast in response to "one of the most challenging macro-economic environments we have seen in many years." The company boosted its quarterly dividend by 4.3% to 12 cents a share after reporting net income of $124.6 million, or $1.15 a share, for the quarter ended Feb. 3. Net income was $121.1 million, or $1.06 a share, a year earlier.
MF Global Ltd. (MF) stock rose $0.31, a 3% increase, to close at $10.04 yesterday on news that it will no longer provide Man Investments, a subsidiary of parent company Man Group PLC, with clearing services for certain over-the-counter forward foreign exchange trades. The change is expected to free up $800 million in capital that had been reserved to secure unrealized gains from the trades. MF Global has been suspected of having liquidity problems since late last week when Money Morning Investment Director Keith Fitz-Gerald warned of a possible "British Contagion."
Oracle Corp. (ORCL), the third largest U.S. software company, announced earnings after the market closed Wednesday. Sales were $5.35 billion for the fiscal quarter ended Feb. 29, a 21% increase over the prior year, but below analyst estimates of $5.42 billion in sales. Profit was $1.34 billion, or 26 cents per share, an increase from $1.03 billion, or 20 cents per share, for the same period a year ago. Shares dropped $1.51, a 7% decline, to close at $19.43 yesterday (Thursday), the day after the announcement.
Shares of Google Inc. (GOOG) slumped $14.11, a 3% decline, to close at $444.08 yesterday (Thursday), the day after data released from comScore Inc. showed that Google's paid clicks increased only 3% in February, compared to the same period in the prior year. Paid clicks tally the number of times Web users click on ad-supported links, generating revenue from the company's advertising customers, DowJones reported.