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U.S. Breaking News — see today's Wall Street Breakfast for earlier news
IBM Buys Software Developer Telelogic
IBM said Monday morning it has agreed to buy Telelogic AB for 5.2 billion kronor ($745 million), about 21% more than its share price before takeover speculation began. Telelogic designs software for developing and testing computer applications. Its products include the DOORS requirements management suite; TAU software and systems development; and SYNERGY software-change management. It also consults, implements, and trains users. Its customers are primarily aerospace, auto and communications companies, including Alcatel, Boeing, DaimlerChrysler, Ericsson, GE, Lockheed Martin, Motorola, NEC, and Siemens. IBM has bought more than 50 companies since 2002, mostly software designers, in the face of slower growth in services and hardware; software is its most profitable unit. Analyst Stefan Ward: "IBM is the market leader in the segments in which Telelogic operates, so the deal is completely logical, since there's good potential for synergies." He called the offer "a bit low." On June 4, Telelogic said it had received a 5.2 billion krona offer, without naming the bidder. In its release, IBM described the merger's potential synergies: "A consumer electronics company could use IBM and Telelogic technologies to help design the software in an intelligent home network that controls the entertainment devices, security systems, appliances, and lighting. An automotive manufacturer would use IBM and Telelogic solutions to help build and deliver software that runs the navigation systems in vehicles." IBM shares are up 6.1% YTD and 32.8% over the last year.
Sources: Press release, Bloomberg, MarketWatch, Hoover's
Commentary: IBM: Playing a Shell Game • IBM Expands Security Software Lineup With Watch fire Acquisition • Buying Amazon Could Bring IBM New Opportunities
Stocks/ETFs to watch: International Business Machines Corp. (NYSE:IBM). Competitors: Cisco Systems Inc. (NASDAQ:CSCO), SAP AG (NYSE:SAP), Microsoft Corp. (NASDAQ:MSFT), Sybase Inc. (SY)
Conference call transcript: International Business Machines Q1 2007
Related: Telelogic's product line
JoS. A. Bank: Q1 Net Up 43%, Beats Street
JoS. A. Bank Clothiers reported Q1 (ended May 5) net income increased 42.6% to $8.4 million, or $0.45/share, topping the Street's estimate of $0.41. Revenues rose 14% to $129.5m, coming in just above analysts' average estimate of $129m. JoS. A. Bank was higher by $0.27, or 0.63%, to $43 in pre-market activity as of 8:00 A.M. EST. It gained 3.3% to $42.73 in normal trading Friday. JoS. A. Bank has traded between $22.14 - $43.25 over the past year. Same-store-sales on the quarter were up 3.8%. Last Thursday, Jos. A. Bank reported a 13.5% increase in same-store-sales for the month of May, easily beating analysts' average forecast of 3.3%.
Sources: Press release, MarketWatch
Commentary: Jos. A. Bank Gets No Respect From Wall Street • May Same-Store Sales Roundup • Irrational Market Reactions: Jos. A Bank Clothiers, Bed Bath & Beyond • Jos. A. Bank: Mystery Beat Quarter
Stocks/ETFs to watch: Jos. A. Bank Clothiers Inc. (NASDAQ:JOSB). Competitors: Men's Wearhouse Inc. (MW), Macy's, Inc (NYSE:M)
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Asian Headlines (via Bloomberg.com)
• Asian Stocks Rise on Japan's Economic Growth; Mitsubishi UFJ, Samsung Gain Asian stocks gained for the first time in three days after Japan raised its first-quarter growth estimate for the region's biggest economy.
• Japan Economy Grew 3.3 Percent Last Quarter, Faster Than Initial Estimate Japan's economy expanded more than the government initially reported in the first quarter after higher-than-expected spending by companies.
• DLF's Initial Share Sale May Raise Maximum $2.4 Billion on Property Boom DLF Ltd., the developer attempting India's biggest initial share sale, may raise the maximum 96.3 billion rupees ($2.4 billion) it is seeking after a shortage of homes and offices spurred gains in rival Unitech Ltd.'s stock.
• Inflation in China Probably Accelerated Last Month as Pork Prices Soared China's inflation probably accelerated in May as pork prices soared, increasing the likelihood that interest rates will be raised.
European Headlines (via Bloomberg.com)
• European Stocks Advance on Takeover Speculation, Led by ThyssenKrupp, BHP European stocks rose for the first time in six days as renewed takeover speculation lifted mining and steel companies.
• Rexam Agrees to Buy Owens-Illinois Plastic Packaging Unit for $1.8 Billion Rexam Plc (OTCQX:REXMY), the world's largest maker of beverage cans, will acquire the plastics business of Owens- Illinois Inc. (NYSE:OI) for $1.83 billion, adding about 50 percent to its sales in the plastics industry.
• EADS Chief Operating Officer Gut Quits; MBDA's Lahoud Is Named Successor European Aeronautic, Defence & Space Co., the owner of planemaker Airbus SAS, said Chief Operating Officer Jean-Paul Gut is quitting amid policy disagreements and will be succeeded by Marwan Lahoud, head of missile-maker MBDA.
• French, Italian Industrial Production Unexpectedly Fall on Euro's Strength French and Italian industrial production both unexpectedly fell in April as a stronger euro crimped exports, suggesting Europe's fastest growth in six years may have peaked.