Afternoon BUZZERS: Lowe’s and Best Buy DROP, Coventry Health Care and Aetna POP
Shares of Lowe’s (NYSE:LOW) dropped 6.64 percent after reporting financial results for the second quarter. Net income fell 10 percent to $747 million (64 cents per share), compared to $830 million (64 cents per share) a year earlier. Revenue also fell 2 percent to $14.25 billion. “Our results fell short of our overall expectations,” commented Robert A. Niblock, president and chief executive officer. “However, I have confidence in our strategy and in our employees, and while we recognize the significant magnitude of change that we’ve asked the organization to absorb as we transform our business, we fully understand that we must improve our level of execution.” Shares of competitor Home Depot (NYSE:HD) edged slightly lower.
Coventry Health Care (NYSE:CVH) shares surged 19.18 percent this afternoon. The health insurer will be bought by competitor Aetna (NYSE:AET) for $5.6 billion in cash and stock. Reuters reports, “The acquisition of Coventry will help Aetna to lift its share of revenue from its government business to over 30 percent from 23 percent. Aetna said it expects to finance the cash portion of the transaction with a combination of cash on hand and by issuing about $2.5 billion of new debt and commercial paper. The deal is expected to add modestly to Aetna’s operating earnings per share in 2013, 45 cents in 2014 and 90 cents in 2015.”
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Best Buy (NYSE:BBY) shares declined 7.70 percent this afternoon. The struggling electronics retailer appointed Carlson executive Hubert Joly as chief executive today. Founder Richard Schulze has turned down an offer from the board to conduct due diligence after offering to take Best Buy private. “I still hope to work with the board on a mutually beneficial transaction — but you should know that I am not going away,” Schulze wrote in a letter to the board.
Shares of Groupon (NASDAQ:GRPN) have begun to recover, up over 1 percent this afternoon. Some of the company’s early backers were running for the exits, but shares have turned positive. The WSJ reports, “At least four Groupon investors who held stock in the daily-deals company before it went public have sold or significantly pared back their holdings in recent months. Since its initial public offering in November, Groupon has shed more than three-quarters of its stock-market value, or about $10 billion.”
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