Saturday, April 28th, 2018
NEW YORK: Wall Street stocks finished a volatile session little changed Friday following mixed corporate earnings and a better-than-expected report on first-quarter US economic growth.
Earnings remained at the forefront of the investor agenda as Amazon rocketed higher following strong results while disappointing figures from ExxonMobil weighed on the Dow.
US growth came in at 2.3% in the January-March period, according to government data, down from 2.9% in the final quarter of 2017 but better than analyst expectations.
The Dow Jones Industrial Average dipped 0.1 percent to end the week at 24,311.19.
The broad-based S&P 500 rose 0.1% to finish at 2,669.91, while the tech-rich Nasdaq Composite Index increased a hair to 7,119.80.
US stocks have had a choppy week, alternating between worries about higher interest rates and ambivalence over corporate earnings that have been mostly good but sometimes not quite as strong as hoped for.
Amazon jumped 3.6% after reporting its quarterly profit had more than doubled to US$1.6 billion due in part to strength in Amazon Web Services, prompting some analysts like Canaccord Genuity tech analyst Michael Graham to lift their targets for Amazon shares.
“Thumping is the best word we can think of to describe AWS in Q1 as revenue growth accelerated for the second straight quarter,” Graham said. “Meanwhile, the e-commerce business continues its strong growth.”
Online travel booking firm Expedia surged 8.2% as it reported a 15% jump in first-quarter revenues to US$2.3 billion.
Dow member ExxonMobil dropped 3.8% after earnings-per-share lagged analyst expectations, even as net income jumped 16 perc to US$4.7 billion.
Analysts said Exxon Mobil's oil and gas production disappointed with the company reporting its weakest oil and gas output since 1999 at 3.9 million barrels of oil equivalent, down 6.3%.
US Steel sank 14.2% despite reporting a net profit of US$18 million, up from a year-ago loss of US$180 million. Analysts were perturbed by some operational problems at a plant in Michigan that the company said would impact second-quarter results. — AFP
US$1 = RM3.92
NEW YORK: A US judge late Friday temporarily blocked the planned takeover of US photocopy maker Xerox by Japan's Fujifilm, saying the deal prioritized the interests of the Xerox CEO over that of the company's shareholders.
The opinion, issued by Judge Barry Ostrager of New York's Supreme Court in Manhattan, came after two days of hearings for a lawsuit brought by Darwin Deason, one of Xerox's biggest investors.
Deason — who along with Carl Icahn controls 15.2% of Xerox shares — sued Xerox in February opposing the deal and alleging fraud.
Ostrager said the takeover deal “was largely negotiated by a massively conflicted CEO in breach of his fiduciary duties to further his self-interest,” The Wall Street Journal reported.
The deal was then approved by the Xerox board of directors, “more than half of whom were perpetuating themselves in office for five years without properly supervising Xerox's conflicted CEO.”
Fujifilm Holdings said in a statement that it was “disappointed” with the ruling.
“We strongly believe that all Xerox shareholders should be able to decide for themselves the operational, financial, and strategic merits of the transaction,” it said.
Fujifilm said it is “considering all options, including whether to appeal the decision.”
Under the planned deal, announced in late January, Xerox would be absorbed by an existing joint venture known as Fuji Xerox, falling under the control of Fujifilm, which until now held a 75% stake in the joint venture.
After the transaction is completed, Fujifilm would hold 50.1% of Fuji Xerox, compared with 49.9% for current Xerox shareholders, who also would receive a special cash dividend of US$2.5 billion.
Deason said Xerox made a secret deal in 2001 allowing Fujifilm to exit the Fuji Xerox joint venture if Xerox were taken over by any investor other than the Japanese firm.
The 77-year-old billionaire said this clause prevented the Xerox board from seeking another buyer, and this, in turn, harmed the company's shareholders.
In a letter published in February, Icahn and Deason claimed that the deal enormously undervalues Xerox and disproportionately favours Fuji.
According to the Journal, Ostrager's opinion dismissed arguments by the Xerox CEO and the company board for approving the deal as “counter-intuitive and not credible.”