After the closing bell on Tuesday Hewlett-Packard announced plans to acquire Mercury Interactive Corp. for USD52 per share through a cash tender offer. H-P said the deal, which has an enterprise value of about USD4.5bln net of existing cash and debt, to acquire the management software and services firm would cut its profit before one-time items by around 4 cents per share in fiscal 2007. Ahead of the news 5yr default in the company finished with a market of 18/21 on Tuesday.

Earlier in the session on Tuesday Xerox Corp, saw its net income fall 39% to USD260mln, or 26 cents per share, while revenue edged 1% higher at USD3.98bln. Xerox said its net income was down due to a USD343mln benefit related to the finalization of an IRS audit in the year-ago quarter. Xerox also said its financial strength has allowed it to increase its share buyback program by USD500mln to USD1.5bln. Xerox said it expects Q3 earnings to be in the range of 20 cents to 22 cents per share. 5yr default in the company has tightened slightly towards the close on Tuesday, with a market of 113/118, which is down from Monday's closing market of 111/124.

Also seeing its net income slip in the Q2 was Whirlpool Corp, due to the Maytag integration. Whirlpool's income fell to USD91mln, or USD1.14 per share, from USD96mln, or USD1.42 per share, a year ago. The company said Q2 net earnings include the results and integration costs of the company's recent acquisition of Maytag. 5yr default in Whirlpool finished with a tight market of 43/48, which is compared to Monday's close of 46/49.

In the auto sector General Motors Corp said it may report a profit in the Q2 on job cuts and sales of sport-utility-vehicles. GM plans to announce a profit of 80 cents per share, not counting an estimated USD3.8bln charge for employee buyouts. 5yr default in GMCO could be seen closing with a market of 748/752 on Tuesday, which is 17 bps tighter than Monday's closing market of 765/770. Making a marginal tightening effort on Tuesday was 5yr default in GMAC which close with a market of 218/221 on Tuesday vs Monday's close of 215/225. Ford Motor Credit saw its default tighten 20 bps on Tuesday to a closing market of 445/450 which is compared to the prior day's close of 465/470. 5yr default in HCA Inc continued its widening trend on Tuesday as it surged out 82.5 bps to a closing market of 455/465, which is up from Tuesday's close of 370/385.

Andre Hinckson