Chinese Economy in Focus (VELT, ZOLL, TUDO, YOKU, PCBC, REE)
Stocks traded mixed on a relatively quiet news day. The big news came over the weekend when China reported a $31.5 billion trade deficit, which according to China’s official news agency was its largest in 22 years. The news brought some fear the world’s second-largest economy could see a hard landing. However, the combination of stronger domestic buying, a weak eurozone, and the Chinese New Year when manufacturers cut back production, likely led to the surprising trade deficit. Overall, we continue to remain positive given the strong jobs data in the U.S., but we’re still looking for a market pullback sometime this spring.
The Chinese Internet Stocks Index was the top performing tickerspy Index on the day, led by Tudou Holdings (TUDO) with a 157% gain. The Rare Earth Stocks Index was the day’s worst performing tickerspy Index, with Rare Element Resources (REE) down -7%.
Stocks closed mixed on the day, with the Dow up 38 points to 12,960. The S&P was up fractionally to 1,371, while the Nasdaq fell -5 points to 2,984. Oil slipped -$1.06 a barrel, while gold fell -$11.80 to $1,699.80 an ounce.
In earnings news, shares of Velti (VELT) surged 27.2% after the mobile marketing firm reported a fiscal fourth-quarter profit of $25 million, or 40 cents per share, compared with $2 million, or 5 cents per share, a year earlier. On an adjusted basis, Velti earned 59 cents per share versus 34 cents per share last year. On an adjusted basis, Velti earned 59 cents per share versus 34 cents per share last year. Revenue climbed 52% to $87.1 million. Analysts had expected EPS of 47 cents per share on revenue of $81.1 million. The company forecast first-quarter revenue of $44-$48 million, while analysts were expecting $45.7 million. For the full year, Velti expects revenue of $280-$295 million versus the $281.2 million consensus.
Shares of Zoll Medical (ZOLL) soared 23.8% after the company agreed to be acquired by Japan’s Asahi Kasei for $2.1 billion. Asahi Kasei’s offer is equivalent to $93 a share, a 24% premium to where Zoll closed on Friday. The deal is expected to close in the second quarter. Seven pros counted Zoll among their top holdings at the end of Q4 and 40 tickerspy members own the stock in their portfolios.
Shares of Tudo Holdings more than doubled after the Chinese video website agreed to be acquired by rival Youku (YOKU) in an all-stock deal valued at $1 billion, or approximately $39.89 a share. Tudou’s ADR shareholders will receive 1.595 ADRs of Youku for each Tudou ADR they own.
Shares of Pacific Capital Bancorp (PCBC) climbed 57.0% after UnionBanCal, a unit of Japan’s Mitsubishi UFJ Financial Group, said it will acquire the bank for $1.51 billion. Under the deal announced Monday, Pacific Capital stockholders will receive $46 per share, which is a 60 percent premium to the company’s Friday closing price of $28.69. Two pros counted Pacific Capital among their top holdings at the end of Q4 and 80 tickerspy members own the stock in their portfolios.
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