General Dynamics Division to Buy Axsys Technologies for $643 Million
One of General Dynamics'
units will buy optical and infrared specialist
for $643 million the two companies announced Thursday.
General Dynamics Advanced Information Systems, a unit of General Dynamics that specializes in defense systems, will purchase Axsys for $54 per share, which represents a paltry 8% premium over Axsys' Wednesday closing price of $50 per share. The acquisition is expected to close in the third quarter of this year and both companies' boards have already approved the deal. General Dynamics expects the deal to add to its earnings beginning in 2010; its shares fell 43 cents or 0.7%, in morning trading Thursday.
We removed shares of General Dynamics from our "recommended" list back on May 15 when the stock was trading at $55.84. The company has a dividend yield of 2.59% based on last night's closing stock price of $58.59.
The stock has technical support in the $48 to $52 price area. If the shares can firm up, we see overhead resistance around the $60 to $63 price levels. We would remain on the sidelines, but we do watch this former recommendation very closely. General Dynamics holds a Dividend.com DARS Rating of 3.4 out of 5 stars.
Intel Buying Wind River Systems in $884 Million Deal
Chip-making giant Intel
said Thursday that it will acquire device software optimization experts
in a deal valued at $884 million.
Intel said it will acquire all of Wind River's outstanding shares at a price of $11.50 each, representing a healthy 44% premium over the company's Wednesday closing price of $8 per share. Wind River makes development software that helps companies like Intel write and test software for various devices.
Intel intimated that the acquisition will help it develop software and chips used in embedded systems and mobile devices. The $884 million deal is said to close during the summer of 2009. Wind River will operate as a wholly-owned subsidiary of Intel after the deal is finalized.
Intel shares rose 23 cents or 1.2%, in morning trading Thursday.
We had removed shares of Intel from our "recommended" list back on Sept. 9 when the stock was trading at $20.97. We had added the stock to our "recommended" list back in early August when it was at $23. The company has a dividend yield of 3.51% based on last night's closing stock price of $15.94.
The stock has near-term technical support in the $12 price area. If the shares can firm up, we see overhead resistance around the $17 to $19 price area. Intel is not recommended at this time and holdsa Dividend.com DARS Rating of 3.2 out of 5 stars.
Rio Tinto Might Offer Shares as Deal for Chinalco Crumbles
Mining giant Rio Tinto
said Thursday that it is exploring a range of options, including a possible share offering, as its proposed $19.5 billion deal to merge with Aluminum Corp. of China looks to be falling apart.
reported today that
Aluminum Corp. of China
, or Chinalco, is walking away from the deal as the two sides could not come to an agreement over a $7.2 billion convertible bond that was to be a big part of the merger.
Rio said that it is currently pursuing options "for maximizing shareholder value and improving the group's capital structure," which could include a huge "rights issue" share offering, or even a possible joint venture with rival
. Rio Tinto shares fell $14.68 or 7.7% in morning trading Thursday.
We removed shares of Rio Tinto from our "recommended" list back on May 13, when the shares were trading at $166.20. The company has a dividend yield of 2.87%, based on last night's closing stock price of $189.62.
The stock has technical support in the $150 price area. If the shares can firm up, we see overhead resistance around $200. We would remain on the sidelines for now. Rio Tinto holds a Dividend.com DARS Rating of 3.4 out of 5 stars.
Ciena Posts $503 Million Second Quarter Loss on Goodwill Charge, Lower Revenue
Telecom and networking company Ciena
said Thursday that it lost half a billion dollars in the latest quarter, hurt by a massive one-time impairment charge.
The Linthicum, Md., based company reported a second-quarter net loss of $503.2 million or $5.53 per share, compared with a profit of $23.8 million or 23 cents per share, in the same period last year.
Excluding one-time items such as a $455.7 million goodwill impairment charge, Ciena said it lost 25 cents per share. Revenue fell a whopping 41% in the latest quarter to $144.2 million from $242.2 million last year. On average, Wall Street analysts expected a loss of 9 cents per share, excluding items, on higher revenue of $156.7 million.
Ciena's products revenue fell significantly in the second quarter, plunging 45% $118.8 million, while services revenue fell a more respectable 2%, to $25.4 million. Ciena shares rose 67 cents or 6% in morning trading Thursday.
Shares of Ciena are way off 52-week highs of $28 a share. The stock has technical support in the $7.75-$9.00 price area. If the shares can continue to rebound from today's poor report, we see the next level of overhead resistance around the $12-16 price levels. We do not currently rate this non-dividend paying stock, but we do follow the telecom & networking equipment play closely.
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At the time of publication, the author had no positions in stocks mentioned, although positions may change at any time.
Tom Reese and Paul Rubillo are senior editors of Dividend.com. Visit Dividend.com for more dividend stock ratings, picks, news, and analysis for long-term and income-seeking investors.