Upbeat Earnings Drive Stocks Higher

Word on the Street

• GM takes over AmeriCredit Corporation – This morning, government-majority owned, General Motors announced an agreement to purchase subprime lender AmeriCredit Corporation (ACF) for approximately $24.50 per share. The all-cash transaction is worth $3.5 billion and the news sent AmeriCredit shares sharply up in early morning trading.
• China’s largest search engine, Baidu (BIDU), reported that its second-quarter net profit rose 118.5 percent to 837.4 million yuan (about $123.53 million). Baidu credited healthy growth in its customer base and improved efficiency for the strong performance, but also noted the surge in Internet search related to the World Cup.
• The New York Times Co. (NYT) posted its first quarterly revenue growth since 2007 . The publishing company’s second-quarter revenue inched up 1.2% to $589.6 million, as a 21% spike in digital ad revenue offset a 6% decline in print-ad sales.
• The government reported that the number of Americans filing for initial unemployment insurance climbed last week . New claims for unemployment insurance jumped by 37,000 to a seasonally adjusted 464,000.
• Existing home sales declined for the second consecutive month, slipping 5.1% from 5.66 mln in May to 5.37 mln in June. Although that’s a drop from the prior month, the seasonally adjusted annual rate of 5.37 million units was a 9.8% increase from June 2009. Declines are expected to continue in the coming months and drag on the economic recovery.
• Pharmaceutical company Bristol-Myers Squibb Co. (BMY) posted better-than-expected quarterly earnings, withstanding tougher drug-price controls in Europe, currency fluctuations and the costs of US healthcare reform.
• Social network Facebook now has more than 500 million active users after six years of operation. CEO Mark Zuckerberg’s confident assertion that his company could almost “guarantee” growing to 1 billion active users is becoming a likely possibility.

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• Your Future Phone – Flashy as the 3G iPhone seems, it’s only the beginning.
• Why are CEOs so cocky these days? – Things may look bleak to many of us, but company chiefs are growing more confident about the recovery. That’s good news, because they’ve been right before.