Earnings Reports for Oct. 26

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Amgen Reports Bigger Profit

Biotechnologygiant Amgen Inc. said its third-quarter net income per share rose 18 percent, but the company loweredthis year’s sales projections for its lead drugs, Epogen andNeupogen.  Amgen, based in Thousand Oaks, Calif., said net income rose 20 percent to $359 million,while earningsper share rose to 33 cents a diluted share from 28cents a year earlier. Without one-time items, Amgen saidearnings per share rose 16 percent. Total revenues rose 12 percent to $950 million from $847million for the third quarter of 1999.

Analysts’ consensus forecast was for earnings per share of28 cents, as compiled by First Call/Thomson Financial.

Excluding one-time items, Amgen said it now expectsearnings per share for 2000 to be at the low end of itsprevious guidance of $1.06 to $1.08.

Third quarter sales of Amgen’s lead drug Epogen, used totreat kidney dialysis patients for anaemia, increased 11 percentto $496 million. Amgen lowered its expectations for he Epogensales growth rate for the year to the low double digits fromits previous guidance of the low teens.

The company said third quarter sales of Neupogen, used bycancer and AIDS patients, rose 13 percent to $353 million, butsaid total sales of the drug this year would fall short of thetotal sold in 1999.BACK TO TOP

Sony’s Profits Slump 57 Percent

Electronics giant Sony said today its net profit sank 57.4 percent in the July-Septemberquarter, a steeper-than-expected fall that was aggravated by astrong yen and the roll out of the PlayStation 2 video gameplayer.

The world’s second-largest consumer electronics maker saidgroup net profit, calculated under U.S. accounting rules,totalled $183.2 million, or 13 cents per share.

That was well below the range analystshad expected, although some took smaller losses in the gamedivision, which makes the Internet-enabled DVD-playingPlayStation 2 as a positive sign.

Sony’s shares, which have slumped 35.8 percent this year,closed down 0.58 percent in Asia today, ahead of therelease of its earnings results. The stock has been weighed downby global jitters over technology stocks as well as its gamesdivision, which generated 32 percent of its operating profit lastyear.

“The market factored in so much potential growth during the‘high-tech bubble’ which lasted until earlier this year,” saidHitoshi Ichio, strategist at Commerz Securities. “Investors arestill in the process of scaling down expectations, so they’relikely to react only to the negative bits.”

Sony blamed a stronger yen for the steep profit decline,saying group operating profit for the July-September quarter rose51 percent from a year ago in local currency terms.

Sony is now relying heavily on sales of digital products suchas video cameras, minidisc audio players and its VAIO line ofpersonal computers to generate profit while it spends heavily toramp up production of and advertise the PlayStation 2.

Sony said it had sold a total of 3.54 million PlayStation 2sso far, and reiterated that it was on track to reach its targetof selling 10 million of the sleek black-colored consoles by theend of the business year to March 31.

“PlayStation 2 is our important gateway to the future,”Masayoshi Morimoto, Sony’s senior executive vice president, toldreporters. PlayStation 2 hits U.S. store shelves on today.

Sony hopes that the successor to the world’stop-selling video game player will begin to pay off in the secondhalf of the business year.

Some analysts are already seeing signs of that. SocieteGenerale Securities analyst Mamoru Takagi said: “Results arelargely in line with expectations, but with a positive spin aslosses in the game business have shrunk.”

Production problems have plagued the PlayStation 2 so far.

Initial U.S. shipments were halved after Sony said it washaving problems meeting the production schedule.

Sony said it is spending more money than expected to keepproduction on schedule after a second plant took too long toreach full capacity.

It is also airlifting new consoles to meet demand.

“They seem to have made progress in improving profitability[in the game sector]. Unfortunately they are still havingdifficulty with shipments and this is a risk factor that couldweigh on Sony’s share price,” said Societe Generale’s Takagi.

The other question is whether software games — the realcream of the video game businesses — will post better sales.

Usually, two or three games are sold along with the console,but users appear content for now with older titles and DVD(digital versatile disk) playback capability.

Eight million PlayStation 2 software games, produced by bothSony and other companies, have been shipped so far, but thatstill pales in comparison to the 690 million games shipped forits predecessor.

By contrast, the electronics division posted an operating profit of 131.8 percent from ayear earlier.

Profits from the electronics division, which makes digitalaudio, video, camera products, and the purple-gray colored VAIOline of personal computers, will continue to grow through thesecond half to March 31, Sony’s chief financial officer TeruhisaTokunaka said.

“We’re expecting double-digit growth seen in the first halfto continue in the second half,” Tokunaka said, referring to theApril-September period and the electronic division’s 18 percentsales growth in local currency terms. He said it could be closeto 20 percent in the second half.BACK TO TOP

DaimlerChrysler’s Woes

The German-American automaker earned $448 million inthe third quarter, falling just shy of the latest estimates on WallStreet.

A survey of analysts by First Call/Thomson Financial produced aconsensus estimate of 31 cents per share. The company reported 27cents per share.

DaimlerChrysler says its results were dragged down by anoperating loss at its Chrysler division.

The North American unit had been forced to entice car buyerswith big discounts to make room for new vehicles.

The company had somewhat prepared markets for thedisappointment, announcing last month that it would fall short ofearlier estimates.

Overall earnings at the Stuttgart-based automaker were buoyed bygrowth in profits from Mercedes-Benz and other units, whichcounterbalanced the Chrysler division.

Investors didn’t like the news. After being up as much as 1.5percent earlier in the day, DaimlerChrysler shares traded flat atin Frankfurt after the figures were released.The company’s shares have steadily sunk this year and are tradingabout 33 percent below their January high.

Revenues for the quarter rose 3 percent. That was helddown by a flat sales at the Chrysler group of $13.4billion.

The Mercedes-Benz and Smart car division was the only part ofthe company reporting improved results. It increased earnings 5percent, to $657 millionthanks to a 15 percent increase in sales of Mercedes luxury cars inthe United States and Europe and improved sales of the Smartminicar.

Profits in DaimlerChrysler’s commercial vehicle division totaled$256 million, down 4 percent from last year’sresults. Revenues were down 1 percent.

The results follow Ford Motor Co.’s report last week that itsprofits fell 7 percent because of a tire recall, and General MotorsCorp.’s release earlier this month that is earnings decreased 5.5percent because of losses in Europe.

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Dow Chemical Beats the Street

Dow Chemical, the No. 2 U.S. chemical company,said today its third-quarter profits were up 2.5 percent from a year ago, beating estimates, despite sharply higherraw material costs.

Net income climbed to $328 million, or 48 cents per diluted share, from $320 million, or 48 cents per diluted share a yearago, the company said. Sales rose 17 percent to $5.51 billion from $4.69 billion.

The figures beat Wall Street’s average estimate of 44 cents a share, according to a survey of analysts by FirstCall/Thomson Financial. Shares of the company closed at $25-15/16 Wednesday on the New York Stock Exchange, just up from a year-low of $23.

“We remain confident that we will achieve measurably higher year-over-year earnings in 2000, though we continue to see challenging industry conditions,including volatile feedstock costs, some currency fluctuations and the potential for slower economic growth around the world,” the company’s chieffinancial officer J. Pedro Reinhard said in a statement.

He added that the company, which is acquiring rival Union Carbide in a deal that will make it second only to DuPont inworldwide sales, is positioned “to achieve our goal of growing earnings by 10 percent per year”.

Along with other chemicals companies, including DuPont, Dow was hurt in the quarter by sharply higher costs for raw materials derived from crude oil andnatural gas. BACK TO TOP

Inktomi Beats Estimates

Inktomi Corp., which makes Internet search and traffic managementtechnology, posted a fourth-quarter pro forma profitthat beat Wall Street expectations by 2 cents.

The company posted pro forma earnings of $8.8 million or 7cents per diluted share in the fourth quarter, compared with aloss of $6.1 million or 6 cents per diluted share in theyear-ago quarter. The results excluded amortization of goodwill, employee stock compensation and a one-time charge forpurchased in-process research and development.

The Foster City, Calif.-based company said itsfourth-quarter revenues jumped 190 percent to $78.6 millionfrom $27.1 million as sales in its network products and portalservices businesses soared.

Analysts who follow the company had on average beenforecasting a profit of 5 cents per share, according to FirstCall/Thomson Financial, which tracks estimates.

“The year 2000 was historic for Inktomi as we completed oursecond year as a public company, achieved operatingprofitability on an annual basis and furthered our vision ofInktomi as essential to the Internet,” David Peterschmidt, thecompany’s chief executive, said in a statement.

In a conference call with analysts, the company said globalsales were robust as Europe and Asia undergo a “technologyrenaissance.”

On another front, though, the company adjusted financialestimates, warning that the completion of its purchase ofFastForward Networks in the first quarter would have a dilutiveeffect in the first part of fiscal 2001.

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JDS Uniphase Beats Estimates

First-quarter operating earnings fromoptical networking components maker JDS Uniphase Corp. easilysurpassed Wall Street expectations amid soaring demand for itsproducts.

For the three months ended Sept. 30, the company created by themerger of San Jose-based Uniphase Corp. and Nepean, Canada-basedJDS Fitel reported a net loss of $1.02 billion, or $1.07 a shareamid charges for the merger, payroll taxes and other amortizations.That compares to a year-ago loss of $113.9 million, or 17 cents ashare.

Excluding those charges, JDS reported income of $177 million, or18 cents a share, compared to combined operating earnings of $65million, or 8 cents a share in the year-ago period.

Wall Street had expected that, excluding charges, the world’slargest fiber optics company would earn 16 cents a share, accordingto a survey of analysts by First Call/Thomson Financial.

Investors this year have been high on the fiber optics industrybecause of the promise of allowing data to be routed almostexclusively via laser light — virtually eliminating the electronicsrequired by most of today’s switches.

Analysts say fiber optics could play a crucial role in keepingthe Internet revolution on track amid a growing demand forhigh-speed audio and video.

JDS, which is buying rival SDL Inc., sells components such aslasers and modulators used in fiber-optic equipment.

The company’s stock had been pressured earlier this week byconcerns about weakening demand for fiber-optic equipment fromcustomers Nortel Networks and Lucent Technologies Inc., but JDSrose $3.44, or 5 percent, to $74.44 in trading today on theNasdaq Stock Market. Shares rose in after-hourstrading.

The company reported sales jumped 171 percent from the year-agoperiod, to $786.5 million from $230.1 million.

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WorldCom Dials Better Profits

Telephone and data servicescompany WorldCom reported today a 26 percent increasein third-quarter profits and confirmed it would unveil itsrestructuring plan next week.

Clinton, Miss.-based WorldCom said profits, excludingone-time items, increased to $1.4 billion, or 47 cents a share.That compared with profits of $1.1 billion, or 37 cents ashare, a year earlier.

The third-quarter results matched the average Wall Streetexpectation of 47 cents a share, according to research firmFirst Call/Thomson Financial.

WorldCom, the No. 2 U.S. long-distance telephone company,said revenues rose 12 percent to $10.0 billion. Its commercialservices revenues rose 19 percent, and domestic data revenuesjumped 23 percent to $363 million. International revenuesincreased 42 percent to $1.6 billion, driven by strong sales inEurope, as well as increasing revenues in Asia-Pacific andLatin America.

WorldCom said its planning efforts to restructure “into adata and Internet focused, high-growth business and avoice-based, high cash flow business are substantiallycomplete.”

Sources familiar with the situation have told Reuters thatthe company plans to create a tracking stock for its shrinkingconsumer and wholesale long-distance units,

That move would allow the company to concentrate on itsfast-growing data and Internet operations and shield itselffrom the price wars and increased competition in thelong-distance market. The restructuring also would follow rivalAT&T Corp.’s plan to create four new companies through trackingstocks and spinoffs.BACK TO TOP

Lockheed’s Earnings Off by More than a Third

Lockheed Martin’s third-quarter earnings fellmore than a third, but still beat Wall Street estimates asoperating profits fell in its missile, space and air defense units,the defense giant reported today.

Lockheed said third quarter earnings totaled $115 million, or 28cents a share, compared with $185 million, or 48 cents a share, forthe third quarter of 1999.

Lockheed beat Wall Street’s estimates by 4 cents a share,according to analysts surveyed by First Call/Thomson.

Including one-time charges, the company lost $704 million or$1.74 per share, due mainly to a write-off related to the sale ofan aerospace electronics division.

Operating profits were down in the company’s missile and airdefense products line. Deliveries of F-16 fighters and C-130transport planes also fell, the company said.

The company recorded a $980 million goodwill accounting chargein the three months ending Sept. 30 stemming from the pending saleof its Aerospace Electronics Systems to the British defense giantBAE Systems.

Third quarter sales were down slightly at $5.96 billion comparedto $6.16 billion in the year-ago period.

“We are pleased with accomplishments in the third quarter,”said Lance Coffman, Lockheed chairman and chief executive officer.“Going forward, we will continue to emphasize customersatisfaction, improved performance, margin expansion andshareholder value creation as our top priorities.”

For the first nine months of the year, Lockheed reportedearnings of $275 million, or 70 cents a share, down from $350million, or 91 cents a share, for the first nine months of 1999.

Net sales through Sept. 30 were $17.7 billion, down 4 percentfrom the $18.55 billion reported for the same period last year.

Lockheed reiterated its projected earnings for the year at $1.05per share and said 2001 earnings would be slightly higher at $1.25per share. The company also projected earnings growth of 15 to 25percent in the years to come.

Lockheed announced last fall that it was selling eight of itsbusinesses to cut costs and bolster its flagging stock. Fourbusiness units have since been sold to the British defense firm,BAE Systems.

The company announced a further belt-tightening in January,slashing 2,800 jobs from its payroll.

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Nextel’s Loss Shrinks

Wireless telephone companyNextel posted asmaller-than-expected third-quarter loss today on a 59 percentincrease in revenues, but it added fewer new subscribers in theUnited States than originally expected during the period.

The Reston, Va.-based company posted a net loss of $236million, or 31 cents a share, including an unusual one-timegain. That compared with a loss of $361 million, or 55 cents ashare, a year ago.

Wall Street analysts on average had predicted Nextel tolose 37 cents per share, according to research firm FirstCall/Thomson Financial.

Third-quarter revenues rose 59 percent to $1.4 billion.Average revenue per domestic subscriber increased to anindustry-leading $75 a month, slightly stronger than the secondquarter’s $74. Customer turnover, or churn, was 2 percent.

Nextel, which serves mostly high-spending corporatecustomers rather than consumers, said it added 540,400 domesticsubscribers in the third quarter.

Earlier this month Nextel warned that its U.S. subscribergrowth would fall short of Wall Street estimates of550,000-575,000. Nextel had averaged 550,000 net subscriberadditions in the first two quarter of the year.

Nextel’s slow subscriber growth follows similar warnings byother wireless carriers. Sprint PCS Group said its subscribergrowth would be slower-than-expected due to increasedcompetition and its decision to cancel some unprofitablecustomers. Dobson Communications, meanwhile warned thathigher-than-expected customer turnover would dampen itsgrowth.

Internationally, Nextel’s subscriber growth remainedstrong. The company added 141,000 new subscribersinternationally during the third quarter, bringing its totalsubscriber base to 6.9 million.