Redback Networks, Inc. (RBAK)

[PowerPole]

U.S. stock futures rise on tech hopes, Asia rally:

Ericsson buying Redback for $2.1 billion in deal that will challenge Cisco...

By Steve Goldstein, MarketWatch
Last Update: 8:06 AM ET Dec 20, 2006

http://tinyurl.com/yxjopv

LONDON (MarketWatch) -- U.S. stock futures advanced on Wednesday, on hopes for technology sector gains after Ericsson agreed to buy a network hardware company and by a recovery in Asian stock markets after Thailand's government reversed course on a widely-derided decision to limit foreign investment.

S&P 500 futures rose 2.10 points at 1,438.30 and Nasdaq 100 futures rose 7.00 points at 1,810.25. Dow industrial futures gained 12 points at 12,563.

On Tuesday, the Dow industrials hit a record high, led by gains in the energy sector on a rise in crude oil prices. The Dow rose 30 points, the S&P 500 rose 3 points, while the Nasdaq Composite lost 6 points.

Asian stocks reversed Tuesday's losses, after Thailand's government reversed a decision on capital controls.

Thailand's benchmark SET index rallied 11% -- though that didn't fully offset Monday's losses -- and the Nikkei 225 advanced 1.4% in Tokyo. European stock markets also rose on Wednesday. Read more about Thailand's rebound.

Crude oil futures rose 38 cents at $63.84 a barrel after Tuesday's gains, with weekly energy data on tap. Analysts expect gasoline inventories to rise.

The euro rose slightly on the dollar, while the dollar was flat against the yen.

Of companies in focus, Ericsson (ERIC) agreed to buy Redback Networks (RBAK) for $2.1 billion cash, an 18% premium to Tuesday's close. The deal in part will allow the Swedish telecommunications equipment maker to more closely compete against Cisco Systems (CSCO).

Redback shares rallied 17% at $24.32 in pre-open trading, while Ericsson advanced 0.8% to $40.91

Juniper Technologies (JNPR), which was downgraded by CIBC World Markets, slipped 2.1% at $18.81

Cisco was unchanged at $27.64

Arcelor Mittal (MT) continued steel sector consolidation with its deal to buy Mexico's Sicartsa for $1.44 billion from Grupo Villacero. Mittal shares tacked on 1.5% to $42.03 ahead of the open.

Harrah's Entertainment (HET) late Tuesday agreed to be bought by two private-equity firms for $90 a share in cash, or $27.8 billion when including assumed debt. Texas Pacific Group and Apollo Management topped a bid from Penn National Gaming (PENN), according to published reports.

Outside of M&A, Dell Computer (DELL) late Tuesday named Donald Carty as its new chief financial officer, replacing James M. Schneider. The move is effective Jan. 1 and comes amid a probe into stock options accounting. The stock edged up 2 cents to $26.14 in pre-open trading.

Pepsi Bottling (PBG) forecast 2007 earnings for the first time with a per-share forecast between $1.92 and $2 a share that came in below Wall Street estimates. It held to its 2006 outlook.

Ford Motor (F) was upgraded, for a second-straight day, by KeyBanc Capital to hold from sell. Analyst Brett Hoselton said that while fundamentals aren't expected to improve meaningfully in 2007, he does see earnings deterioration at the automaker tapering off.

Greenbrier Companies (GBX) said fiscal first-quarter earnings would miss its earlier expectations due to weakness at its North American railcar making unit.

Women's clothing retailer Christopher & Banks (CBK) forecast fourth-quarter earnings below consensus estimates.

Medical products maker FoxHollow Technologies (FOXH) cut its fourth-quarter sales outlook. Merck & Co. (MRK) last month bought an 11% stake in the company.

Quarterly results are due from FedEx (FDX), Darden Restaurants (DRI), and after the close of trading, Nike Inc. (NKE) and Bed Bath and Beyond (BBBY).

Steve Goldstein is MarketWatch's London bureau chief.