Earnings Reports for Feb. 5 & 6
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Cisco Misses Expectations for the First Time
Computer networking giant Cisco Systems said today its fiscal 2001 second-quarter earnings rose 48 percent but missed Wall Street's earningsexpectations for the first time in several years as the companysounded a note of caution about the economy.
"Cisco missed both on revenue and earnings," said ChuckHill, research director at First Call/Thomson Financial.The company had repeatedly beat Wall Street estimates by apenny a share.
The San Jose, Calif.-based company said its profit before one-time items rose to $1.33 billion, or 18 cents a share, for its fiscal second quarter ended Jan. 27, from $897 million, or 12 cents a share, in the year-ago quarter. Analysts had on average expected Cisco to report pro forma earnings of 19 cents a share, according to First Call/Thomson Financial.
Sales, which had been widely watched for a slowdown, rose 55 percent to $6.75 billion from $4.36 billion in 2000, falling short of Wall Street's expectations for $7 billion to $7.2 billion.
Cisco, which makes an estimated 70 percent of the world'srouters that direct traffic on the Internet, also said it is"cautious" about the market pause.
"While we remain cautious about the implications of a briefpause in the current 10-year expansion of the U.S. economy, webelieve that Cisco has never been better positioned to help ourcustomers solve their two most important business issues:increasing productivity and creating new sources of revenue,"Cisco Chief Executive John Chambers said in a statement.
"We remain confident about the market opportunity ahead ofus over the next three to five years," he added. "Thisconfidence is based on the continued impact of the Internet onproductivity, and just how much more work needs to be donebefore every company is an e-company and a majority of theworld's countries are e-countries.
Chambers warned less than two weeks ago that January'sbusiness was "more challenging than we anticipated," leadingmany analysts to question whether Cisco's and thetelecommunications industry's growth are slowing.
In after-hours trading, Cisco's stock fell to $34-3/8 onInstinet after closing at $35-3/4, up $1-3/16, or 3.44 percent,on Nasdaq. In the past year, the Internet equipmentinfrastructure company's stock has underperformed the Nasdaq100 Index by almost 6 percent.
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Disney Earnings Helped by Theme Parks
Walt Disney, (Disney is the parent company of ABCNEWS.com) reported today a higher than expected rise in fiscalfirst-quarter earnings before one time charges, withimprovements in its theme park business, films and its hit showWho Wants To Be A Millionaire offsetting weaker advertisingsales in its broadcasting business and losses in its InternetGroup.
The Burbank, Calif., company, which owns a film studio, theABC and ESPN television networks and several theme parks,reported a profit of $341 million, or 16 cents a share, for thethree months ended Dec. 31, compared with $278 million, or 13cents a share, a year earlier. The results exclude one-timecharges and assume the same portfolio of assets in bothperiods.
The Wall Street consensus estimate compiled by researchfirm First Call/Thomson Financial was a profit of 15 cents ashare before charges.
Excluding losses of $228 million from its stake in theDisney Internet Group, the company reported a profit of $594million, or 28 cents a share.
Disney announced last week it would shut down itsmoney-losing Internet media network Go.com and dissolve itstracking stock for the Disney Internet Group, converting thoseshares into common stock as of March 20. The company said atthe time it would cut 400 jobs and take more than $800 millionin second-quarter restructuring charges.
For the first quarter, Disney took a one-time charge of$228 million for accounting changes related to its films and a$50 million charge for changes in derivative accounting.
Including those charges, the company reported net income of$63 million, or 3 cents a share, compared with $356 million, or17 cents a share, a year earlier.
Revenues climbed 7.2 percent to $7.31 billion from $6.82billion, on a pro forma basis.
The company's media networks segment, its largest, saw an 8percent decline in earnings, despite a 6 percent increase inrevenue. Disney said broadcasting results declined due to softadvertising, lower ratings and higher programming costs,although these factors were offset by more episodes of its hitABC show Who Wants To Be A Millionaire.
Disney said its theme parks earnings rose 8 percent on a 9percent increase in revenue during the quarter.
Film division results flipped to a profit from a loss inthe year-ago period, on a 15 percent increase in revenues,helped by the release of Toy Story 2 on video and films likeRemember The Titans and Unbreakable.
Consumer products earnings fell 13 percent on a revenuedecline of 6 percent.
The figures were released before financial markets opened.
Along with other media stocks, however, Disney has sunk inrecent months based on weakening advertising sales compared tolast year. The shares reached their 52-week low in December,briefly touching $26.
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PepsiCo Posts Sharply Higher Earnings in Q4
PepsiCo reported a nearly 25 percent increase in fourth quarter earnings on Monday, citing double-digit profit growth in both its snacks and beverage businesses and an extra week of results in the latest period.
The nation's biggest salty snacks maker and second biggest softdrink concern earned $611 million, or 41 cents a share, in thethree months ended Dec. 30 compared with $490 million, or 33 centsa share, a year ago.
Revenue rose to $6.4 billion from $5.7 billion a year earlier.
PepsiCo ends its fiscal year on the last Saturday in Decemberand that meant the latest quarter included 17 weeks compared with16 the previous year. The extra week boosted earnings by $44million, or 3 cents a share, on sales of $294 million.
Without the extra week, it earned $567 million, or 38 cents ashare, on sales of $6.1 billion in the latest period.
Analysts surveyed by First Call/Thomson Financial had beenlooking for earnings of 38 cents a share for the quarter.
"Our strength was broadbased with solid earnings growth acrossevery business, domestic and international," said Roger Enrico,chairman and chief executive.
He said the company expects "consistently healthy results"throughout this year.
Operating profits at the Frito-Lay snacks division rose 10percent in North America and 11 percent overseas if the extra weekis excluded in the latest quarter. The Tostitos and Lay's chipbrands led snack food volume growth in North America,
Pepsi-Cola North America's operating profit climbed 13 percentdespite investment in introducing lemon-lime Sierra Mist and a lineof Dole juice drinks. Pepsi-Cola profits overseas were flat incontrast to a $7 million operating loss last year.
Looking ahead, Pepsi plans several new product launchesincluding Pepsi Lemon Twist and the Code Red flavor extension ofMountain Dew, as well as contributions from its newly acquired SoBenoncarbonated beverages this year.
Profits rose 16 percent at the Tropicana juice division.
For the year, PepsiCo earned $2.18 billion, or $1.48 a share,versus $2.05 billion, or $1.37 a share, a year ago.
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