Boeing Handle MAX Fallout; Occidental Gets Hostile – The Motley Fool
The stock market was roughly flat on Wednesday morning, with a high earnings front on the earnings front, and big goals were kept to make big moves. Just after. 11.30 EDT, Dow Jones Industrial Average (DJINDICES: ^ DJI) was down 9 points to 26,647. S & P 500 (SNPINDEX:: GSPC) were less than 1 point to 2934, while Nasdaq Composite (NASDAQINDEX:) IXIC) collected 13 points to 8,134 .
One of the most sought-after economic reports came from aviation giant Boeing (NYSE: BA) who has worked under the burden of having had his 737 MAX aircraft grounded all over the world in the wake of two big deadly crashes. Meanwhile, Occidental Petroleum (NYSE: OXY) decided that it would not abandon its ambitions to purchase Anadarko Petroleum (NYSE: APC) hostile bid in a attempt to throw a wrench into Chevron s (NYSE: CVX) merger plans.
Boeing manages to keep its height
Shares in Boeing were higher by 1[ads1]% after the aircraft manufacturer reported the result for the quarter. Boeing's numbers showed greater exposure to events over recent months than many investors had expected, including a 2% revenue growth over the year, contributing to a 13% decrease in both net and core earnings per share. [19659011] A red Boeing aircraft on an airport ramp with three others in the background. "src =" https://g.foolcdn.com/image/?url=https%3A%2F%2Fg.foolcdn.com%2Feditorial%2Fimages%2F520425%2Fba-aircraft.jpg&w=700&op=resize "/>
Image source: Boeing
From a financial point of view, Boeing discovered that lower deliveries of 737 aircraft than expected exceeded the upward effect of higher volumes in the defense and service segments, and the producer managed to deliver 149 commercial aircraft during the period, but it was down by almost a fifth from the same period a year ago.
Nevertheless, investors seemed to take heart from a couple of developments: first, Boeing said it was "making steady progress" in certification of a software update for 737 MAX that is supposed to solve the issues that are believed to have contributed to the last two crashes, as CEO Dennis Muilenburg explained, "We are focused on security, return 737 MAX for service, and earn and regain trust in customers, regulators and the airline." demand levels are linked $ 487 billion healthy, reflecting Boeing's order book.
Nevertheless, some investors are concerned that Boeing chose to withhold further guidance on financial performance and suspend its repurchase program. Boeing's balance sheet is strong and has good liquidity, but the aircraft manufacturer appears to be preparing for massive settlement contributions that may force it to tap into the cash position.
An Energy War
Shares in Occidental Petroleum fell 3% following the energy company's decision to make a hostile bid to buy Anadarko Petroleum. Anadarko's share jumped 12% in the wake of the announcement, as the shareholders weighed the potential for a bidding war between Occidental and Chevron, who had previously made their own friendly bid.
Under the new agreement, Occidental would pay $ 76 per share in cash and shares to Anadarko shareholders, split half and half with $ 38 in cash and 0.6094 shares in the Occidental share. The offer values Anadarko at around $ 38 billion, or $ 57 billion when including the debt assumption. Occidental called its offer as a "superior proposal" to Chevron's bid, which included only $ 16.25 per share in cash and 0.3869 Chevron stock shares for each Anadarko share.
Vikings Hollub, the western president, marked the complementarity of the two companies' assets, as well as setting up the story that Occidental has had in pursuing Anadarko. The agreement would create a power plant in the Permian Basin with the potential to reach the scale of a global energy leader.
However, industry analysts are skeptical about the hostile bid going out. The synergies between Anadarko and Chevron are even more convincing in the eyes of many investors, and this may cause shareholders to choose Chevron, even with Occidental, which offers a 20% premium to the competitor's bid. Due to the increase in Anadarko's share over the value of the Chevron bid, at least some shareholders on a bidding war are hoping to break out which could further increase the profits of any deal.
