Earnings Reports for Jan. 30

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Amazon Announces Job Cuts, Narrower Q4 loss

Internet retail giant Amazon.com posted a reduced quarterly loss today, justbeating Wall Street estimates, but said it would cut 15 percent ofits workforce, 1,300 employees, and take a restructuring charge of more than $150million.

Amazon, which sells everything from books to electronics tohardware at its online store, said it would cut 1,300 jobs,closing a distribution center in McDonough, Georgia, and itscustomer service center in Seattle. It also said it would operateits Seattle distribution center only seasonally.

The company statement gave no immediate reason for therestructuring, but analysts had expected the move because ofcontinued losses by the company, which is under pressure frominvestors to turn a profit, and because of a disappointing holidaysales season.

For the three months ended Dec. 31, its pro forma net loss was$90.4 million, or 25 cents a share, compared with $184.9 million,or 55 cents, a year earlier. Wall Street analysts tracked by FirstCall/Thomson Financial had expected Amazon to lose 26 cents ashare.

Amazon shares closed at $18-15/16, down $1-3/16, or 5.9percent, on Nasdaq before the announcement.

Amazon said quarterly revenues of $972 million were up 44percent from $676 million a year earlier. That was more than thecompany's recent forecast of $960 million.

Earlier this month, Amazon said it had slashed its year-endinventory balance by 20 percent to less than $175 million.Analysts have said the 5-year-old company is relativelyinexperienced at stocking the right mix of goods.

Analysts viewed the holiday quarter as a crucial time forAmazon to prove its growth first, profits later strategy couldwork. The company has expanded beyond its core books businessinto music, software, hardware and even lawn furniture.

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Higher Medical Costs Hurt Aetna

Aetna, the largestU.S. health insurer, said today fourth-quarter earningsfrom continuing operations fell 65 percent percent, as highermedical costs cut into profits.

Hartford, Conn.-based Aetna, which has about 19 millionhealth-care members in the United States, said fourth-quarterearnings from continuing operations dropped to $28.7 million,or 20 cents a share, following the recent divestiture of itsfinancial services and international segments. That compareswith operating earnings of $81 million, or 55 cents a share, inthe same period a year ago.

The latest quarter's results beat analysts' consensusforecast of 16 cents, according to First Call/ThomsonFinancial. First Call said the forecast excluded Aetna'sfinancial services and international businesses, as well assecurities gains and losses.

Aetna's medical loss ratio — a crucial industrymeasurement that compares medical costs such as paying doctorsand hospitals against revenues — in its commercial healthmaintenance organization, or HMO, business rose to 87.2 percentin the quarter. The company's total revenues fell about onepercent to $6.6 billion.

Aetna's stock has underperformed the Standard &Poor's Health Care Managed Care index by more than 55 percentin the past year.

Including charges totaling $381.9 million, the companyposted a fourth-quarter operating loss of $353.2 million, or$2.49 per share. These charges relate to the write-off ofgoodwill mostly associated with Medicare market exits,restructuring plans announced in December and change-in-controlcosts related to the sale of its international and financialservices businesses to Dutch financial services giant ING GroepNV last month.

With the sale, Aetna, one of the oldest U.S. insurers,became purely a health insurer. Its business now consists ofhealth care, including dental, group insurance and relatedbenefits, as well as a large case pensions unit.

Including discontinued operations, which comprise thosebusinesses sold to ING, Aetna reported a net loss of $406.3million, or $2.87 per common share, for the fourth quarter.This reflects a loss of $372.0 million, or $2.63 per commonshare, from continuing operations as a result of previouslymentioned charges and the loss of $34.3 million fromdiscontinued operations. The net loss compares with net incomeof $134.4 million, or 92 cents a common share, for the fourthquarter 1999.

Since the sale, Aetna has taken aggressive steps to tackleproblems in its health insurance business, including plans tocut 5,000 jobs, or 13 percent of its work force.

Aetna, which has posted sluggish financial growth recentlyeven as its managed care peers have enjoyed robust profits amidpremium price increases, said the medical loss ratio in itsMedicare HMO business was 97.5 percent in the quarter,significantly higher than in the prior-year period.

Aetna's total health membership stood at 19.3 million as ofDec. 31, a 6 percent decline during the year, the company said.Membership increased by 81,000 from the third quarter of 2000,but is expected to decrease overall in 2001 due to largelyplanned attrition at the company's Prudential Health Carebusiness and Medicare HMO and commercial HMO product marketexits.BACK TO TOP

Hershey Foods Posts Sweet Earnings On Strong Holiday Sales

Hershey Foods, thelargest U.S. chocolate maker, said today itsfourth-quarter earnings per share rose 20 percent, beating WallStreet's estimates, on increased sales.

The Hershey, Pa., maker of Hershey bars, Hershey Kisses andReese's candies, said net income for the period rose to $116million, or 84 cents per diluted share, from $98 million, or 70cents a share, in the year-ago period.

Hershey, which has been expanding its product offeringswith different sizes and flavors of old favorites, was expectedto earn 82 cents a share, based on a recent poll of analysts byFirst Call/Thomson Financial.

Sales rose to $1.19 billion from $1.11 billion, boosted bystrong sales around the Halloween and Christmas holidays.

The stock has outperformed the Standard &Poor's 500 Index by nearly 50 percent in the past 12 months.BACK TO TOP

Procter & Gamble's Core Profit Rises

Household products makerProcter & Gamble said today second-quarter profit rose4 percent before unusual charges, beating Wall Streetforecasts, as price increases, tax gains and the divestiture ofits Clearasil business offset higher raw material costs.

The Cincinnati, Ohio-based maker of Tide laundry detergent, Cresttoothpaste and a host of other products also said it wascomfortable with the high end of analysts' earnings estimatesfor the full fiscal year.

"I think the stock should do fairly well because obviouslyfolks were concerned that they (P&G) were going to guide down[earnings estimates] for the back half of the year and maybeeven miss this quarter," said Jim Gingrich, consumer productsanalyst at Sanford Bernstein.

P&G said earnings for the second quarter, ended Dec. 31,were $1.31 billion, or 93 cents per diluted share, up from$1.26 billion, or 88 cents a share, a year earlier. The resultsfor both years exclude restructuring charges.

Analysts on average had expected the company to earn 92cents a share, according to First Call/Thomson Financial, whichtracks such estimates.

"We delivered the earnings per share results we said wewould — for the second quarter in a row," P&G Chief ExecutiveOfficer Alan Lafley said. Lafley succeeded Durk Jager as chiefexecutive last June, after the company's stock was rocked by aseries of missed profit forecasts. "Still, we can and must dobetter. Our goal is to get back to consistent annualdouble-digit earnings per share growth."

Second-quarter revenue fell 4 percent, to $10.18 billionfrom $10.59 billion a year earlier, as the weak euro cut intosales. Unit volume fell 2 percent compared with record levels ayear ago.