Stocks Fall on Manufacturing Weakness

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The company continues to expect fourth-quarter revenue and earnings per share (EPS) to be within ranges previously forecast in December.

Novatel Wireless (NVTL) reported fourth-quarter EPS of 40 cents, vs. 14 cents one year earlier (non-GAAP, excluding stock-based compensation charges), on 53% higher revenue. However, the company sees first quarter non-GAAP EPS of 27 cents on $110 million in revenue, which is reportedly below analysts' expectations for the period.

Analog Devices (ADI) reported better-than-expected first-quarter EPS from continuing operations of 40 cents, vs. 44 cents one year earlier, on a 2.0% revenue decline. The company sees second-quarter revenue of $615-$640 million and EPS from continuing operations of 39-42 cents. ADI settled patent infringement lawsuits with Linear Technology; the companies won't be required to pay damages in connection with the settlement.

Choicepoint (ADI) entered into a deal to be acquired by Reed Elsevier, a publisher and information provider owned equally by Reed Elsevier PLC (RUK) and Reed Elsevier NV (ENL) in a $4 billion deal. Terms: $50 cash per Choicepoint share.

KLA-Tencor (KLAC) will make a friendly tender offer to acquire ICOS Vision Systems (IVISF) in a $465.8 million deal. Terms: 36.50 euros in cash per ICOS share. Separately, ICOS posted fourth-quarter income from operations of 2.6 million euros, vs. 1.7 million euros one year earlier, on a 4.6% revenue rise.

In an SEC filing, Furniture Brands (FBN) said Sun Capital Securities has offered to acquire the company "at a substantial premium" to its recent stock price of "$10.18."

Zale Corp. (ZLC) posted second-quarter EPS from continuing operations of $1.16, vs. $1.57 one year earlier, on 7.3% lower same-store sales and 7.2% lower total sales.

Major European indexes finished higher Thursday, though below the best levels of the session. In London, the FTSE 100 index gained 0.77% to 5,938.70. In Paris, the CAC 40 index rose 1.07% to 4,864.23. Germany’s DAX index added 0.63% to 6,943.37.

Equity indexes in Asia finished higher Thursday. Japan’s Nikkei 225 index jumped 2.84% to 13,688.28. In Hong Kong, the Hang Seng index gained 0.14% to 23,623.00.

Treasury market

Treasuries rallied Thursday as a weaker reading in the Philadelphia Fed index reignited fears of economic recession. The 10-year note rose 33/32 in price to 97-27/32 for a yield of 3.76%. The 30-year bond climbed 35/32 to 97-12/32 for a yield of 4.54%. A flight to safety and out of equities contributed to the bullish backdrop for

Treasuries.

Concerns over a "stagflationary" scenario in which sagging growth is accompanied by rising inflation are driving investor psychology in the bond market, says S&P MarketScope.