News Archive

Abbott Labs to buy diagnostics company Alere for $5.8 billion

Abbott Laboratories (ABT.N) said it would buy Alere Inc (ALR.N) for $5.8 billion to become a leader in point-of-care testing, a fast-growing market as physicians increasingly adopt rapid tests that speed up treatment.

Point-of-care tests provide results to doctors in a matter of minutes as they can be conducted in the physician’s office, an ambulance or even at home.

Waltham, Massachusetts-based Alere, which has annual sales of $2.5 billion, makes tests for infections such as HIV, tuberculosis, malaria and dengue.

The deal comes at a time when deadly viruses such as Zika are spreading alarmingly across the globe, putting the spotlight on diagnostic test makers and vaccine developers.

It was not immediately clear if Alere or Abbott were involved in making tests for Zika, which has been linked to severe birth defects in babies.

“We view the deal positively as we think point-of-care testing is the fastest growing segment in the diagnostic market,” SP Capital IQ analyst Jeffrey Loo said.

The global diagnostics industry, which is roughly $60 billion in size, is growing at a rate of 5 percent, according to Goldman Sachs.

Abbott will pay $56 per share in cash, a premium of about 51 percent to Alere’s Friday closing. Alere shares were trading at $53.95 on Monday. Abbott was down 0.7 percent.

Abbott, which makes products ranging from Similac infant formula to Ensure beverages for adults, has struggled to boost sales growth after it sold its developed-markets generics business to Mylan NV (MYL.O) in 2014.

The company, which spun out AbbVie Inc (ABBV.N) in 2013, reported lower-than-expected quarterly revenue for the first time in four quarters last week.

Canaccord Genuity analyst Mark Massaro said the deal helps Abbott become the undisputed global leader in point-of-care diagnostics and help diversify its business.

Abbott, whose 2015 worldwide diagnostics sales were $4.6 billion in 2015, said its total diagnostics sales would exceed $7 billion after the close of the deal.

The deal will immediately add to Abbott’s earnings per share upon close and contribute significantly thereafter, the companies said.

Alere’s net debt, currently $2.6 billion, will be assumed or refinanced by Abbott.

Evercore is the financial adviser to Abbott, while Kirkland Ellis LLP is legal counsel.

JP Morgan is Alere’s financial adviser, while Cravath, Swaine Moore is legal counsel.

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Fed’s Fischer says persistent volatility could harm U.S.

NEW YORK If recent market volatility persists it could signal a slowdown in the global economy that hurts U.S. growth and inflation, the Federal Reserve’s second-in-command said on Monday.

Fed Vice Chairman Stanley Fischer, however, warned about jumping to conclusions given that some past bouts of financial market turbulence have not harmed the world’s largest economy.

“At this point, it is difficult to judge the likely implications of this volatility,” Fischer said in a speech less than a week after the Fed held interest rates steady but, notably, said it was closely monitoring international and financial conditions.

“If these developments lead to a persistent tightening of financial conditions, they could signal a slowing in the global economy that could affect growth and inflation in the United States,” he added. “But we have seen similar periods of volatility in recent years that have left little permanent imprint on the economy.”

(Reporting by Jonathan Spicer; Editing by Chizu Nomiyama)

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Yahoo to cut 15 percent jobs, close several units: WSJ

Yahoo Inc (YHOO.O) Chief Executive Marissa Mayer is set to reveal cost-cutting plans that include a reduction of 15 percent of the internet company’s workforce and the closure of several business units, the Wall Street Journal reported.

The plans are expected to be announced after Yahoo’s fourth-quarter results, the Journal reported, citing people familiar with the matter. Yahoo had about 11,000 employees as of June 30, according to its website.

The company, which is scheduled to report on Tuesday, could not be immediately reached for comment.

Activist investor Starboard Value LP in a letter to Yahoo last month ramped up pressure on the company, taking aim at Mayer and her leadership team and raising the prospect of a proxy battle.

Yahoo has struggled to grow its Internet business, which includes selling search and display ads on its news and sports sites and email service, in the face of competition from Alphabet Inc’s (GOOGL.O) Google unit and Facebook Inc (FB.O).

Mayer’s turnaround efforts have had little tangible effect so far.

The company’s revenue has fallen slightly since she took the helm in mid-2012, and Yahoo’s share of U.S. web searches is essentially flat with three years ago, gaining no ground on market leader Google.

Yahoo’s shares were down 1.2 percent in afternoon trading on Monday.

Up to Friday’s close, the stock had lost about a third of its value in the past 12 months.

(Reporting by Abhirup Roy in Bengaluru; Editing by Sriraj Kalluvila)

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Wall Street lower on weak China data, fall in oil prices

U.S. stocks were lower on Monday as weak Chinese economic data exacerbated concerns about a global slowdown and oil prices resumed their slide.

The data from China showed that the world’s second-largest economy’s manufacturing sector contracted in January at the fastest pace since 2012.

Oil prices fell about 6 percent after the China data added to worries about demand and an OPEC source played down talk of an emergency meeting to stem the decline. Oil prices have fallen more than 70 percent since mid-2014.

Adding to the cautious note, data on Monday showed that U.S. consumer spending was unchanged in December and manufacturing activity continued to contract in January.

“The consumer spending numbers are a concern,” said Randy Frederick, managing director of trading and derivatives for Charles Schwab in Austin, Texas.

“We keep hearing that there is pent-up consumer demand that we are going to see down the line but we’ve seen little evidence of that.”

Consumer spending accounts for more than two-thirds of U.S. economic activity and is seen as a bright spot in an economy affected by weak export growth and unsold merchandise.

The reports follow a weak reading of the GDP, which showed that the U.S. economy expanded at an anemic rate in the fourth quarter.

Investors will keep an eye on the monthly employment numbers later this week to gauge the strength of the labor market.

At 12:32 p.m. ET (1733 GMT) the Dow Jones industrial average .DJI was down 96.39 points, or 0.59 percent, at 16,369.91, the SP 500 .SPX was down 10.87 points, or 0.56 percent, at 1,929.37 and the Nasdaq Composite index .IXIC was down 21.52 points, or 0.47 percent, at 4,592.43.

Eight of the 10 major SP sectors were lower, with the energy index’s .SPNY 3 percent fall leading the decliners. Oil majors Exxon (XOM.N) and Chevron (CVX.N) were down about 2.5 percent.

Slammed by collapsing oil prices, stocks have had a volatile start to the year with traders expecting the Fed to scale back the number of rate hikes this year.

Coming off the worst January since 2009, the SP 500 is already down more than 5 percent for the year. Traders are pricing in only a 17 percent chance that the Fed will raise rates in March, according to CME Group’s FedWatch.

Investors will pay close attention to Fed vice-chairman Stanley Fischer’s speech on monetary policy at 1 p.m. ET.

Fourth-quarter corporate reporting season is well under way, with SP 500 companies on average expected to post a 4.1 percent drop in earnings, according to Thomson Reuters I/B/E/S.

Internet giant Alphabet (GOOGL.O), which reports after the close, was up 0.5 percent at $765.48. Toy maker Mattel MAT.N will also report after the close.

Alere (ALR.N) jumped 45.2 percent to $54 after Abbott Laboratories (ABT.N) agreed to buy the diagnostics company for $5.8 billion. Abbott was little changed at $37.82.

Chipotle Mexican Grill (CMG.N) was up 5.1 percent at $476.11 after E. coli outbreaks that affected the burrito chain’s customers last year appeared to be over.

Twitter (TWTR.N) was up 8.5 percent at $18.23 after rumors of a private equity deal.

Yahoo (YHOO.O) was down 1.4 percent at $29.11 after the WSJ reported the company is set to reveal cost-cutting plans that include a reduction of 15 percent of its workforce.

Declining issues outnumbered advancing ones on the NYSE by 1,953 to 1,043. On the Nasdaq, 1,712 issues fell and 1,000 advanced.

The SP 500 index showed 20 new 52-week highs and four new lows, while the Nasdaq recorded 19 new highs and 79 new lows.

(Reporting by Tanya Agrawal; Editing by Don Sebastian)

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Oil drops 6 percent on China data, slim chances of OPEC deal

NEW YORK U.S. crude oil prices fell 6 percent on Monday as weak economic data from China, the world’s largest energy consumer, reversed a four-day rally from last week and an OPEC source undermined chances of an emergency meeting to stem the decline.

China’s manufacturing sector contracted at the fastest pace since 2012 in January, adding to worries about demand from the world’s second-biggest economy at a time when the market is already weighed down by a large supply overhang.

“China is the last standing consumer of oil outside of the U.S.. The problem is that everyone is relying on them,” said Carl Larry, director of business development at Frost Sullivan in Houston.

“As long as we keep in this scenario where China is the only real consumer to pick up the pace, we’re going to see moves lower every time China has an issue with their economy.”

Brent April crude futures LCOc1 were down $1.64, or 4.6 percent, at $34.35 a barrel by 12:09 p.m. EST (1709 GMT).

U.S. West Texas Intermediate (WTI) CLc1 fell $1.99, or 5.9 percent, to $31.63.

A drop in all three major U.S. stock indexes after data showed manufacturing activity was weak in January and consumer spending was unchanged in December, also weighed on oil prices. Traders have been watching the equity markets closely to get a reading of the health of the economy.

A mild winter has also dented demand for oil and latest weather forecasts calling for warm weather through mid-February sent U.S. New York Harbor heating oil hoc1 futures down 5 percent.

A senior OPEC source told a Saudi Arabian newspaper on Monday it was too early to talk about an emergency meeting of the Organization of the Petroleum Exporting Countries.

Oil prices soared last week, with Brent crude surging over 30 percent from the 12-year low touched earlier in the month, after Russian energy officials said they had received proposals from OPEC lynchpin Saudi Arabia on managing output and were ready to talk.

In a sign investors were speculating on an oil rebound, data from the InterContinental Exchange showed net long positions in Brent rose the most in four years last week.

But analysts raised doubts about the possibility of a cutback on production, particularly as OPEC member Iran, which last month was allowed to return fully to markets after years of sanctions, is so far unwilling to participate in cuts.

Iraq, another OPEC member determined to ramp up production, reported rising exports in January.

“Seems like every time market participants say prices have bottomed, they have been wrong,” said Dominick Chirichella, senior partner at Energy Management Institute in New York.

“There’s nothing that says prices have bottomed – supply is still greater than demand by a lot, Chinese demand may be slackening, the global economy may be slackening and the likelihood of an OPEC emergency meeting seems very low, as it did last week”

(Additional reporting by Karolin Schaps in London and Henning Gloystein in Singapore; Editing by Marguerita Choy)

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Alphabet to give first peek at cost of ‘moonshot’ bets

How much is Google-parent Alphabet Inc (GOOGL.O) spending on “moonshots” – self-driving cars, glucose-monitoring contact lenses, Internet balloons and other ambitious projects?

Investors will get their long-awaited answer when Alphabet reports fourth-quarter results after markets close on Monday.

The report will be the first time Alphabet will break out results for what it calls “Other Bets,” which includes Google Fiber; smart home accessory maker Nest Labs and the secretive “X”, home to the self-driving cars project.

The results will also show how successful Google was in targeting ads at a fast-growing number of mobile users, especially after Facebook Inc’s (FB.O) stellar report.

A strong report could boost the stock enough for Alphabet to surpass Apple Inc (AAPL.O) as the most valuable company in the world.

“For the first time they (Alphabet) have a real catalyst to the stock, aside from a standard beat-and-raise,” said James Cakmak, an analyst at Monness, Crespi, Hardt Co Inc.

The market has wanted four things from Alphabet: consistent revenue growth, margin stabilization, greater disclosure and share buybacks, and they will get all of them this quarter, RBC Capital Markets analyst Mark Mahaney said.

The reading may not be pretty.

A Raymond James survey showed that 72 percent of investors expect “Other Bets” lost more than $1.5 billion in 2015.

“We believe revenues from Other Bets will be fairly immaterial for Alphabet given the early stages of most of these businesses,” Raymond James analysts wrote in a note.

To be sure, almost all of Alphabet’s revenue comes from its Google unit.

The unit houses its Internet and related businesses such as search, ads, maps, YouTube and Android as well as hardware products such as its Chromebooks.

Google’s revenue has been bolstered by its efforts to drive sales from its mobile and video advertising as well as Chief Financial Officer Ruth Porat’s increased discipline on expenses.

Ad sales to mobile users is going to be the main driver to Google’s results, just as it was at Facebook.

Analysts on average are expecting Alphabet’s profit to rise to $8.10 per share from $6.88 and revenue to rise 14.7 percent to $20.76 billion, according to Thomson Reuters I/B/E/S.

Alphabet shares closed at $761.35 on Friday, valuing the company at about $517 billion, 4.4 percent shy of Apple’s valuation of about $540 billion.

(Reporting by Anya George Tharakan in Bengaluru; Editing by Savio D’Souza)

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Global factories parched for demand, need stimulus

LONDON/SYDNEY January surveys of global factory activity released on Monday showed the new year began much as the old one ended, with too much capacity chasing too little demand.

Global manufacturing expansion accelerated slightly but remained weak at the start of 2016 as faster growth in developed markets failed to offset a contraction in emerging economies.

JPMorgan’s Global Manufacturing Purchasing Managers’ Index (PMI), produced with Markit, came in at 50.9 last month, just above December’s 50.7. The index has been above the 50 mark that separates growth from contraction since late 2012.”The January PMI data signal that the upturn in global manufacturing remained lackluster at the start of 2016,” said David Hensley, director of global economic coordination at JPMorgan.

Stock markets and oil prices have been battered since the start of the year by concern the Chinese economy, the world’s second-largest, is struggling.

Such concern has eroded expectations for how quickly the Federal Reserve will raise U.S. interest rates, after its first increase in almost a decade in December.


China was again the epicenter of disappointment. The official measure of manufacturing fell to its lowest since mid-2012. The weakness also encompassed such bellwethers of high-tech trade as South Korea and Taiwan.

The official version of China’s PMI survey for manufacturing slipped to 49.4 in January from 49.7. The services index also disappointed, challenging hopes consumption would take over from industry as the driving force.

A private survey, the Caixin/Markit China Manufacturing PMI, underscored the trend by showing factory activity shrinking for an 11th month.

“The electricity production remained sluggish and the crude steel output continued the weak trend in January, reflecting an ongoing deleveraging process in the industrial sectors,” said Zhou Hao, an economist at Commerzbank.

“In the meantime, China has started an aggressive capacity reduction in many sectors, which could add downward pressure on the bulk commodity prices over time,” he said.

Japan’s results were more encouraging. Its factory barometer slipped only a tick to 52.3 in January as exports picked up. The gains in exports relied on a weak yen, hinting at another reason the BOJ acted so boldly when it introduced negative interest rates last week.

India also recorded an unexpected return to growth. Its erratic PMI jumped to a four-month high after slumping to a 28-month low in December.

Other countries in the region were not so fortunate. South Korea’s manufacturing index slipped into contraction. Its exports suffered their sharpest annual fall since August 2009.

China is South Korea’s largest market, taking about a quarter of its exports. The story was much the same for another electronics hub, Taiwan, where factory growth slowed amid lackluster demand.


Factory growth across the euro zone slowed at the start of 2016 as incoming orders failed to show any meaningful increase, even though companies cut prices at the deepest rate for a year, the Markit survey on Monday.

The Markit manufacturing PMI for the euro zone dropped to 52.3 from December’s 53.2.

“The euro zone’s manufacturing economy missed a beat at the start of the year. Growth of order books, exports and output all slowed,” said Chris Williamson, chief economist at survey compiler Markit.

“If the slowdown in business activity wasn’t enough to worry policymakers, prices charged by producers fell at the fastest rate for a year to spur further concern about deflation becoming ingrained.”

With eurozone consumer price inflation at only 0.4 percent last month, nowhere near the ECB’s target of around 2.0 percent, the ECB is likely to cut its deposit rate even further into negative territory when it meets next month, a Reuters poll found last week.

British factories enjoyed a brighter start to the year than expected, helped by surging output at large manufacturers, but companies cut staff at the fastest rate in three years and export orders fell, a survey showed on Monday.

The British Markit/CIPS manufacturing purchasing managers’ index rose to a three-month high of 52.9 in January from 52.1 in December.


In the United States, the Markit manufacturing PMI rose slightly, to 52.4 in January from 51.2 in December.

An alternative reading from the U.S. Institute of Supply Management (ISM) showed manufacturing activity in January contracted for the fourth month in a row, though at a slightly slower pace, with the index at 48.2 from 48.0 the previous month.

Canadian factory activity also contracted but at a slower pace in January. The RBC/Markit Canadian Manufacturing Purchasing Managers’ Index (PMI) edged up to 49.3 last month from 47.5 in December. The six-month stretch below 50 is the longest since the survey began in late 2010. “While Canadian business conditions continued to deteriorate in January, we saw signs of stabilization in the manufacturing industry supported by strong export sales alongside a pick up in the U.S. economy and a weakening Canadian dollar,” said Craig Wright, chief economist at RBC.

Brazil’s manufacturing activity also contracted in January, but at the slowest pace in nearly one year, according to Markit.

The HSBC/Markit PMI rose to 47.4 from 45.6 in December, but output, new orders, employment and purchasing levels at Brazilian manufacturers all dropped as the country sank into what is expected to be its worst recession since 1901.

(Editing by Larry King, Clive McKeef and Dan Grebler)

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U.S. factory activity edges up; momentum remains weak

WASHINGTON U.S. manufacturing activity appeared to stabilize a bit in January, but a recovery is unlikely in the near term as factories grapple with a strong dollar and lower oil prices force energy firms to further cut spending.

Other data on Monday showed consumer spending was flat in December as households reduced their purchases of automobiles and unseasonably mild weather hurt heating demand. However, a jump in savings to a three-year high suggested consumption could rebound in the months ahead.

The Institute for Supply Management said its index of national factory activity increased 0.2 percentage point to a reading of 48.2 last month, the fourth straight month of contraction.

A reading below 50 indicates a contraction in manufacturing. However, the index remains above the 43.1 threshold which is associated with a recession.

The buoyant dollar has combined with tepid global demand to undermine U.S. exports. At the same time, businesses are working to reduce a huge pile of unsold merchandise clogging warehouses, which has left little scope to place new orders with factories. Manufacturing accounts for 12 percent of the economy.

In a separate report, the Commerce Department said consumer spending was unchanged in December after an upwardly revised 0.5 percent increase in November. Spending on long-lasting manufactured goods such as autos dropped 0.9 percent. Purchases of nondurable goods also declined 0.9 percent.

Consumer spending, which accounts for more than two-thirds of U.S. economic activity, was previously reported to have increased 0.3 percent in November. Spending increased 3.4 percent in 2015 after advancing 4.2 percent in 2014.

That data was included in last Friday’s fourth-quarter gross domestic product report, which showed consumer spending growth slowed to a 2.2 percent annual rate from the third quarter’s brisk 3 percent pace.

Moderate consumer spending, weak export growth and the ongoing inventory bloat helped restrict economic growth to a 0.7 percent pace in the fourth quarter. More cutbacks in investment by energy firms struggling with lower oil prices also hurt GDP growth.

But with the labor market strengthening and some of the impediments to growth largely seen as temporary, economists expect output to pick up in the first quarter of 2016. First-quarter growth estimates are for now mostly above a 2 percent rate.

U.S. stocks were trading lower and the dollar weakened against a basket of currencies. Prices for U.S. government debt also were lower.


In December, income rose 0.3 percent after a similar gain in November. Wages and salaries increased 0.2 percent after shooting up 0.5 percent in November. Income in 2015 was up 4.5 percent, the largest increase since 2012, after rising 4.4 percent in 2014.

Income at the disposal of households after accounting for inflation in 2015 recorded its biggest increase since 2006.

With income outpacing spending in December, savings surged to $753.3 billion, the highest level since December 2012, from $717.8 billion in November.

Higher savings and rising house prices should help to soften the blow to household wealth from a recent stock market sell-off and drive spending in early 2016.

With consumption soft, inflation retreated in December.

A price index for consumer spending slipped 0.1 percent after ticking up 0.1 percent in November. In the 12 months through December, the personal consumption expenditures (PCE) price index, however, rose 0.6 percent after increasing 0.4 percent in November.

That was the largest increase since December 2014. Year-over-year inflation rates are rising as the weak readings during the year drop out of the calculation.

Excluding food and energy, prices were unchanged after rising 0.2 percent in November. The so-called core PCE price index increased 1.4 percent in the 12 months through December after a similar gain in November.

Core PCE is the Federal Reserve’s preferred inflation measure and remains well below the U.S. central bank’s 2 percent target.

(Reporting by Lucia Mutikani; Editing by Paul Simao)

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Stocks retreat after grim China data, oil plummets

NEW YORK Global markets got February off to a cautious start on Monday following a rocky January, with stocks and oil falling in the wake of weak manufacturing reports around the world.

U.S. and European stocks fell, after disappointing euro zone manufacturing data dovetailed with the fastest contraction in China’s giant factory sector in over three years, and U.S. manufacturing sentiment remained weak.

Those surveys showed the new year began much as the old one ended, with too much capacity chasing too little demand. Economists were expecting a similar picture from the United States.

“My main question is will the U.S. economy be able to continue to grow just through the services sector when the manufacturing sector is having such a tough time?” asked Rabobank U.S.-focused economist Philip Marey.

The Dow Jones industrial average .DJI fell 58.9 points, or 0.36 percent, to 16,407.4, the SP 500 .SPX lost 7.6 points, or 0.39 percent, to 1,932.64 and the Nasdaq Composite .IXIC dropped 10.26 points, or 0.22 percent, to 4,603.69.

Oil prices, the other major factor influencing markets this year, also fell. U.S. crude CLc1 was down nearly 5 percent to $31.96, resuming a downtrend that had been interrupted of late on hopes for production cuts. Brent LCOc1 dipped as well, falling 3.7 percent to $34.65 a barrel.

Still, Brent was up from Friday and more than 30 percent higher than its 12-year low of almost $27 less than two weeks ago.

It was under pressure Monday as a senior OPEC source told a Saudi Arabian newspaper it was too early to talk about an emergency meeting of the Organization of the Petroleum Exporting Countries (OPEC) to stem the persisting drop in prices amid a world glut.

Crude jumped last week after Russian energy officials said Saudi Arabia had made proposals to manage output and was ready to talk.

Friday’s surprise move by Japan to cut interest rates to negative levels continued to provide support for bonds. Japanese government bond yields hit record lows, and bets the European Central Bank will cut its rates again next month also sent German five-year bond yields DE5YT=TWEB to all-time lows. [GVD/EUR]

In the United States, however, the bond market was lower, with the 10-year benchmark yield US10YT=RR rising to 1.95 percent.

In currency markets, the yen had steady at around 121.20 to the dollar JPY= and 131.40 to the euro EURJPY=. Friday’s BoJ move set off its biggest one-day fall – roughly 2 percent- in over a year. [FRX/]

Elsewhere, oil-rich Canada’s dollar fell half a percent against its U.S. counterpart CAD=D4 after the weak economic data dragged oil prices LCOc1 down from overnight highs as lofty as $36 a barrel. Fellow oil exporter Norway’s currency slipped 0.3 percent versus the euro.

MSCI’s 46-country All World share index .MIWD00000PUS, which lost over 6 percent last month in its worst start to a year since the height of the global financial crisis in 2008, was in the red, slipping 0.1 percent.

Chinese stocks .SSEC.CSI300 slipped more than 1 percent after the weak data strengthened calls for more stimulus.

(Additional reporting by Marius Zaharia, Karolin Schaps and Jemima Kelly; Editing by Bernadette Baum)

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