Investment News Briefs: Oil Rises More Than $2; Home Depot, Target Beat Estimates

Retailers Beat Street Estimates; GM Ups Its Production, Recalls 1,350 Workers; HP Beats Street But Faces Falling Sales; PPI Decline; Merger Creates Largest U.S. Homebuilder; Oil Rises More Than $2 a Barrel

• Home Depot Inc. (HD), Saks Inc. (SKS) and Target Corp. (TGT) all beat analyst estimates in their second quarter thanks to cost-cutting measures. Home Depot reported a net income of $1.12 billion, or 66 cents a share, down from $1.2 billion, or 71 cents in the same period a year ago. Excluding costs to close its higher-end Expo business, Home Depot earned 64 cents a share. Twenty-five analysts polled by Bloomberg News were expecting earnings of 59 cents. Saks lost $54.5 million, or 39 cents a share, lower than analysts’ consensus of 52 cents. Target reported a profit of $594 million, or 79 cents a share, beating analysts’ estimates of 66 cents.
• The government’s “Cash for Clunkers” program is helping General Motors Co., which has called back 1,350 workers to its Ontario, Canada and Lordstown, Ohio plants as it adds shifts and overtime to ramp up production on its Chevrolet Equinox, GMC Terrain and Chevrolet Cobalt vehicles. “We are running our plants to maintain maximum flexibility and keep production tightly aligned with customer demand,” said Tim Lee, GM group vice president overseeing global manufacturing and labor. “The uptick is an encouraging sign that vehicle sales are turning around and we will ramp up quickly to meet that demand.”
• U.S. prosecutors are building criminal cases against more than 150 American clients of Swiss bank UBS AG (UBS) for tax evasion now made easier by a deal over access to secret account information, Reuters reported. A court document showed prosecutors have requested a sharply reduced prison sentence for ex-UBS banker Bradley Birkenfeld, who was an informant to help track down wealthy American UBS clients. UBS was expected to give U.S. authorities the names of about 5,000 more Americans suspected of using the Swiss bank to evade taxes.
• Hewlett-Packard Co. (HPQ) beat Wall Street estimates in its third quarter with a profit of $1.6 billion, or 67 cents a share, a 19% decline from its $2.0 billion profit or 80 cents a share in the same period last year. Excluding one-time charges, H-P earned 91 cents a share, besting predictions of 90 cents according to analysts polled by Thomson Reuters. The company is still seeing sales of printer supplies, computers and corporate hardware decline.
• Wholesale prices fell 0.9% in July, making for a 6.8% price drop in the past year, the Labor Department said yesterday (Tuesday). The news likely means that the U.S. Federal Reserve will continue to keep interest rates at their record lows of 0% to 0.25%. “In this economy, there really is no pricing power at all,” said Brian Bethune, chief U.S. financial economist at IHS Global Insight in an interview with The Associated Press.
• Pulte Homes Inc. (PHM) completed its $1.3 billion purchase of Centex Corp. (CTX), making it the largest homebuilder in the United States. The news comes as signs appear that the worst housing slump since the Great Depression may be nearing its bottom. “The deal is both offensive and defensive,” Pulte Chief Executive Officer Richard Dugas told Bloomberg News. “We’re likely not to experience a lot of downside from here, but it’s quite possible that we could be operating in this tough environment for a while.”
• Oil futures for September delivery surged yesterday (Tuesday) $2.44, or 3.6% to close at $69.19 a barrel on the New York Mercantile Exchange, MarketWatch.com reported. Oil gained due to “the firmer tone to equity markets after a two-day thrashing and the softer tone to the dollar,” said Linda Rafield, senior oil analyst at Platts in an interview with MarketWatch. “I can’t say that either the dollar or equities have made such a big move” to justify a $2 plus move in oil,” Rafield said. “I suspect this was a bit of short-covering ahead of this week’s oil data.”

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