After a slow start, stocks recovered to post gains to begin the holiday-shortened trading week. Deals dominated the headlines today, with the proposed merger of the nation's two satellite radio operators topping the business news and pushing the Nasdaq composite to the strongest gain of major indexes. Oil prices retreated sharply as warmer weather arrived in the Northeast, which is expected to slow demand for heating oil. The 10-year Treasury noted advanced, with the yield falling to 4.68%.
XM Satellite Radio Holdings (Nasdaq:
XMSR -
News) and Sirius Satellite Radio (Nasdaq:
SIRI -
News) announced plans to merge. The stocks rose on the news even though the deal faces considerable regulatory obstacles. Under the terms announced by the companies, Sirius will give XM shareholders 4.6 Sirius shares for each XM share, or $17.02 per share based on last Friday's closing prices. The deal is being billed as a 50-50 merger of equals. The key to the deal will be convincing regulators that the two existing satellite radio companies compete not only with each other but just as much with traditional radio, MP3 players, music-playing cell phones, Internet media, and other devices that did not exist when their broadcast licenses were granted in 1997. Current regulatory rules prohibit the two licenses from being owned by the same company, though the Federal Communications Commission could change that.
In other merger news, concrete and gravel supplier Vulcan Materials (NYSE:
VMC -
News) announced it will purchase smaller building materials company Florida Rock Industries (NYSE:
FRK -
News) in a cash-and-stock deal valued at $4.6 billion. Florida Rock rocketed 42% and spurred considerable interest in the sector. Also rising were Martin Marietta Materials (NYSE:
MLM -
News), Eagle Materials (NYSE:
EXP -
News), and Texas Industries (NYSE:
TXI -
News). Separately, British drug company Shire (Nasdaq:
SHPGY -
News) agreed to buy New River Pharmaceuticals (Nasdaq:
NRPH -
News) for $2.6 billion in cash. New River shares rose 8%, while Shire gained 5%.
Strong growth overseas combined with expense controls helped discount retailer Wal-Mart (NYSE:
WMT -
News) post a nearly 10% gain in fiscal fourth-quarter net income. Performance at Wal-Mart's domestic stores continued to be soft, but investors overall seemed pleased with the results as the stock rose 4%. The company said it expects same-store sales to rise between 1-3% in the current quarter, which would be less than the 3.8% increase in the corresponding quarter a year ago, but a sequential improvement over the 1.0% in last year's final quarter.
Home Depot (NYSE:
HD -
News), meanwhile, reported a -28% drop in FQ4 profits and its first full-year earnings decline. Home Depot posted a profit of $925 million, or 46 cents a share, in the fiscal Q4 ended January 29th, down from $1.3 billion, or 60 cents per share, a year earlier. The most-recent results, which included 4 cents a share in severance payments to former Chairman and CEO Bob Nardelli and other executives, were in line with analyst expectations.
After the market closed, technology bellwether Hewlett-Packard (NYSE:
HPQ -
News) said its profit in fiscal Q1 ended January 31st increased 26% to $1.6 billion, or 55 cents a share, from $1.2 billion, or 42 cents a share, a year ago. Revenue rose 11% to top $25 billion. The stock is trading moderately lower after hours.
Published By BullMarket.com staff
Labels: EXP, FRK, HD, HPQ, MLM, NRPH, SHPGY, SIRI, TXI, VMC, WMT, XMSR
