By Steve Goldstein, MarketWatch
Last Updated: 8:42 AM ET Dec 23, 2005
LONDON (MarketWatch) -- Futures were pointing to a flat start on Wall
Street Friday after Ford Motor Co.'s agreed health-care deal, stronger-than-
forecast durable goods orders and M&A speculation didn't generate much
excitement in the last trading day before Christmas.
S&P 500 futures were recently up 0.1 of a point at 1,275.70 while Nasdaq
100 futures were flat at 1,700.50.
On Thursday, benign inflation data and broker commentary lifted Dow
industrials 55 points at 10,889, the Nasdaq Composite rose 14.8 points at
2,246 and the S&P 500 rose 5.3 points at 1,268.
Led by demand for transportation equipment, orders for new U.S.-made
durable goods jumped 4.4% in November. The increase was much larger than
forecast. Economists were expecting orders to rise 1.5%. However, excluding
transportation orders, durable goods orders fell 0.6% in November, the third
straight monthly drop.
More data is due to be released Friday. A final reading of December
consumer sentiment is expected to remain unchanged at 88.7, and November new
home sales data, expected at 10 a.m., are seen showing 1.31 million sales from
1.42 million the previous month.
Ford Motor Co. will be in focus after striking a health care deal with the
United Auto Workers that it expects to result in savings of $850 million year
before tax. However, the group has also injected 1.2 billion pounds ($2.1
billion) into its ailing Jaguar unit, the Financial Times reported.
There was some M&A activity on Friday, headlined by Luxembourg-based
Arcelor raising its hostile offer for Canada's Dofasco to $4.2 billion. The
C$63 a share bid is under Thursday's closing price of C$63.90, as some
analysts believe Germany's ThyssenKrupp will come back with a higher bid.
Albertson's tumbled another 13% in pre-open trading after confirming a
media report that takeover talks have broken off.
Reported private equity buyouts also were a feature on Friday. Affiliated
Computer Services is reportedly in talks to be bought by investors including
Texas Pacific Group, Bain Capital and the Blackstone Group for about $8
billion. The New York Times reported a deal could be reached as early as next
week, with the bidders offering around $62 a share. Bain Capital also is in
talks to buy Texas Instruments' sensors-and-controls business for between $2
billion and $2.5 billion, The Wall Street Journal reported.
Apax Partners will pay $1.6 billion, or $16.80 a share, for Tommy
Hilfiger.
In the drugs sector, Wyeth and AstraZeneca both kept up their deal-making
activity. Wyeth, a day after agreeing to license a drug from Exelixis, agreed
to pay up to $416.5 million for rights to a constipation and post-operative
bowel dysfunction drug from Progenics Pharmaceuticals.
AstraZeneca, a day after agreeing to license AtheroGenics' atherosclerosis
drug, agreed to buy privately held U.K. biotech KuDOS Pharmaceuticals for $210
million in cash. Despite gains for AstraZeneca, London's FTSE 100 closed a
holiday-shortened session lower, while Seoul and Hong Kong shares rose.
Japanese markets were closed for a holiday.
Broker calls
Merrill Lynch upgraded software company Red Hat Inc. to buy from neutral,
citing improved estimates for cash flow from operations, greater comfort with
the slowdown in bookings growth and its belief that fiscal 2007 operating
margin guidance was room for upside. Merrill said that following a
conversation with management, off balance sheet deferred revenue sequentially
doubled to $20 million, which indicates adjusted booking growth of 36%, "which
looks very healthy compared to a broader server market growing at 10% to 12%
annual growth rate."
Cephalon was upgraded to overweight from equal-weight at Morgan Stanley
and its price target upped to $70 from $56. Morgan Stanley said the settlement
with Ranbaxy over Provigil, following its settlement with Teva Pharmaceutical,
gives the broker increased confidence in earnings over the next few years.
This MarketWatch update is provided courtesy of Thomson Financial.
This is Thomson Financial's Market Commentary, which is issued three times
daily; Pre-Open ( 9:00 a.m.), Post-Open (10:15 a.m.), and Close (5:00 p.m.).
The information herein is believed to be true and accurate. We take no
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SOURCE Thomson Financial Corporate Group
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