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First-quarter GDP revised lower, Lockheed Martin (LMT) won $1.9 billion Air Force deal and durable goods orders dropped in May

Markets were heading lower after news was released that the U.S. economy sank further than previously expected during the first-quarter. The Commerce Department announced that gross domestic product dropped at an annual rate of 2.9%, which marks the worst performance on record in five years. Last month, it was reported that the economy only fell 1.0% during the first-quarter. Some have been placing the blame for the large drop on the harsh winter weather. The Commerce Department said that the gap between the second and third estimates for GDP was the largest one record since 1976. Stuart Hoffman, chief economist at PNC Financial, said “We have ample evidence that the first quarter was just a temporary setback for the economy, and we are climbing out of the hold in the current quarter.”

Shares of Lockheed Martin Corporation (LMT) were on the rise after the company won a $1.9 billion deal with the U.S. Air Force. The contract was awarded to Lockheed to build two missile-warning satellites for the Space-Based Infrared System. This will be the fifth and sixth satellites for SBIRS. The $1.9 billion deal saved the U.S. Air Force nearly $1 billion from a block-buy contracting. Colonel Mike Guetlein, production program manager, said, “We eliminated unnecessary layers of program oversight and contract reporting, restructured our test program and streamlined the production schedules.”

In a separate report released by the Commerce Department, orders for goods drop in May. Orders for long-lasting manufactured goods fell an unexpected 1% last month. Demand declined on everything from transportation, machinery, computers and electronic products. Durable goods orders, which include items from toasters to aircrafts, were upwardly revised in April by 0.8%. The boost was partially attributed to orders for defense equipment. Economists were expecting orders to stay flat last month.

That’s all for today,

Warren Gates, Oakshire Financial

... Read More.

Orcale Corp (ORCL) to buy MICROS (MCRS), U.S. home sales up and Lululemon (LULU) shares on the rise

Markets were relatively flat on Monday morning as news was released that Oracle Corporation (ORCL) would be buying MICROS Systems, Inc. (MCRS) in a deal that will total nearly $5.3 billion. Oracle is a software maker based out of Maryland and MICROS provides software services and hardware for companies in the hospitality and retail industry. They will be paying about $68 per share, which is a 3% premium over the closing price on Friday. This deal will enable Oracle to push further their reach as they add to their business applications, technologies and cloud portfolios. Oracle’s president, Mark Hurd, said, “Oracle has successfully helped customers across multiple industries, harness the power of cloud, mobile, social, big data and internet of things to transform their business. We anticipate delivering compelling advantages to companies within the hospitality and retail industries with the acquisition of MICROS.”

Sales of existing homes in the U.S. were on the rise in May, a new report showed. The National Association of Realtors said that home sales were up a surprising 4.9% in May, bringing the annual rate to 4.89 million units. The increase last month was the largest on record since August of 2011. April’s numbers were also upwardly revised from 4.65 million to 4.66 million units. The data blew past economists’ expectations of a 2.2% increase that would have brought annual rate to 4.73 million. Michelle Girard, chief economist at RBS Markets said, “The long-awaited spring bounce in home sales looks to have finally appeared. As long as sellers feel assured of making a profit, they will feel emboldened to list their homes; and as buyer feel they have a good selection of well-located properties to choose from, they will continue to look and bid.”

Shares of Lululemon Athletica Inc. (LULU) were on the rise after the company’s founder, Dennis Wilson, is pushing for changes within the company. Wilson is in the process of putting together a new team of advisors that will house names like Goldman Sachs. A spokesman for the company said that the board and management team are “relentlessly innovating to drive global expansion and create value for Lululemon shareholders.”

That’s all for today,

Warren Gates, Oakshire Financial

... Read More.

Darden Restaurants (DRI) shares sinking, Kraft (KRFT) places recall and Oracle Corp (ORCL) shares fall on earnings.

Markets were relatively flat as shares of Darden Restaurants Inc. (DRI) were sinking after quarterly profit fell 35%. The large drop was partially attributed to charges that were linked to the restructuring plans to reshape the company, they are most widely known for owning Red Lobster and Olive Garden. Darden said they earned $86.5 million, or 65 cents per share, during their fiscal fourth-quarter. This time last year the company earned $133.2 million, or $1.01 per share. Recently the company has been in talks with Golden Gate Capital to sell Red Lobster in a deal worth $2.1 billion. There has been a challenge on the sale from Starboard Value LP and Barington Capital Group LP, which could prolong the sale, expected to close in the first-quarter of 2015. Sales at Red Lobster restaurants open at least a year fell 5.6% during the quarter. Olive Garden showed a drop of 3.5%. The company also owns LongHorn Steakhouse, which showed an increase of 2.4% at restaurants open at least a year. David Palmer, an analyst with RBC, said, “Upon the completion of the sale of Red Lobster, nearly 60% of Darden’s revenues will come from Olive Garden. And given our forecast for another quarter of under-performance, we are not yet convinced that an Olive Garden turn is on the horizon.”

Shares of Kraft Foods Group, Inc. (KRFT) were slightly higher after the company placed a recall on 260 cases of Velveeta. The recall is on cases that were shipped to Walmart stores in 12 states. Kraft said that the cheese product released does not have the correct levels of sorbic acid. The lack of the preservatives could cause the products to spoil too early or cause a food-borne illness. The states that the cases were shipped to include: Colorado, Illinois, Indiana, Iowa, Kansas, Michigan, Minnesota, Nebraska, North Dakota, Ohio, South Dakota and Wisconsin.

Shares of Oracle Corporation (ORCL) were sinking down over 5% after the company released fourth-quarter earnings. The company reported adjusted profit of 92 cents per share on revenue of $11.32 billion. This missed analysts’ expectations of 95 cents per share of revenue of $11.5 billion. There was a bright side in their new report; Software ad Cloud revenues were up 4% to $8.9 billion. There was also a rise in revenue at their GAAP Cloud software-as-a-service platform-as-a-service of 25% to $322 million.

That’s all for today,

Warren Gates, Oakshire Financial

... Read More.

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