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Amazon Loss Less Than Expected
Online retailer Amazon.com Inc. posted quarterly financial results that blewaway estimates, surprising Wall Street with a smaller loss thanit did a year ago, as sales ballooned almost 80 percent.
The Seattle-based company said that on a pro forma basisits operating loss was $68 million, or 25 cents per share forthe three months ended Sept. 30, compared with a loss of $79million, or 26 cents a share a year earlier.
Amazon was expected to lose 33 cents a share, according toconsensus analyst estimates compiled by First Call/ThomsonFinancial.
Revenues were $638 million, a 79 percent jump over the $356million from a year earlier. Analysts had expected the companyto bring in between $590 million and $605 million in thequarter.
Amazon also said its customer base grew by more than 2.8million to more than 25 million. It said operating cash usagein the quarter, a recent concern among investors and analysts,fell to $4 million from $76 million a year earlier.
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Xerox Reports $167M Loss
Struggling business machines maker Xerox reported today a $167 million third-quarter loss and said it planned layoffs and asset sales to get back in the black.
Not counting a 6 cents per share charge related to accountingproblems in its Mexican operations, the loss equaled 20 cents pershare. Analysts surveyed by First Call/Thomson Financial hadexpected a loss of about 19 cents per share.
The company said it planned a $1 billion cost-cutting program,including layoffs, and the sale of some $2 billion to $4 billion inassets.
“It is clear that just fixing our operational issues, althoughcritical, is not sufficient,” Xerox Chairman Paul Allaire said in anews release.
Xerox said it was looking at selling its China operations, partof its ownership in a joint venture with Fuji, and its interest inspin-offs such as ContentGuard and Inxight.
The company also said it was looking for a noncompetitivepartner for its Palo Alto, Calif., research laboratory and forinvestors in Xerox’s inkjet printer business.
“Our actions are centered on improved cash flow andprofitability — and at the same time strengthening our strategiccore,” Xerox President Anne M. Mulcahy said. “These actions will be implemented in a disciplined and controlled manner, but we aremoving forward with a sense of urgency.”
Xerox has struggled over the past year with stiff competitionand the fallout from a disastrous reshuffling of its sales force.The company also is under investigation for alleged accountingirregularities in its Mexico business.
Earlier this month shares of Xerox plummeted nearly 26 percentin one day after the company warned that it would post athird-quarter loss of between 15 cents and 20 cents per share.Analysts had been expecting earnings of about 12 cents per share.
A few days later the company slashed its quarterly dividend by75 percent, to 5 cents per share.
A rumor in European markets that Xerox might be consideringseeking bankruptcy court protection drove the stock even lower,although it rebounded slightly in the days before today’sannouncement.
The company said today it plans to “reallocate resources”from its Stamford headquarters to the field, but did not elaborate.There had been speculation the company would move its headquarters— where about 500 people work — to its offices in Rochester, N.Y.
Kara Choquette, a company spokeswoman, said the company wouldmaintain some presence in Stamford.
“Closing our Stamford headquarters, moving it to Rochester inits entirety, is unlikely,” she said.
The company also said it would be “substantially increasing thenumber of positions removed from the company.” Choquette would notsay how many jobs the company plans to eliminate.BACK TO TOP
Pfizer’s Operating Income Rises 30%
Pfizer, the world’slargest drug maker, reported today a 30 percent gain inthird-quarter operating earnings, beating Wall Streetexpectations, helped by sales of Lipitor, its anti-cholesteroldrug, and Celebrex for arthritis.
The New York firm, also known for its anti-impotence pillViagra, reported operating income of $1.71 billion, or 27 centsper diluted share, excluding the impact of special items andmerger-related costs. Before these items, the company earned 21cents per share from continuing operations, compared with 18cents per share in the 1999 quarter.
The company said on a reported basis, its third-quarterrevenues rose 7 percent to $7.21 billion. Reported global salesof prescription drugs rose 12 percent in the quarter to $5.5billion, but rose 17 percent excluding the impact of foreignexchange and the company’s withdrawal last year of its diabetesdrug Rezulin following safety concerns.
Analysts, on average, predicted that the drug maker, whichacquired Warner-Lambert Co. earlier this year, would earn 25cents a share. Shares of Pfizer closed at $45-3/8 on Monday onthe New York Stock Exchange, below a 52-week high of $49-1/4and above a 52-week low of $30.
Pfizer, which merged earlier this year with Warner-LambertCo., said it felt confident its full-year earnings per sharewould reach $1.01, a trace higher than the company’s previousestimate of $1.00. The company reiturated it expects averageannual diluted earnings per share growth of at least 25 percentthrough 2002 and expects its merger-related cost savings thisyear to be about $400 million — twice its previousprojection.BACK TO TOP
Colgate-Palmolive’s Profits Rise
Consumer products giantColgate-Palmolive said today third-quarter net incomerose 15 percent, narrowly beating Wall Street estimates, ascost-cutting more than offset higher oil prices and the effectsof the weak euro.
Net income jumped to $275.3 million, or 44 cents perdiluted share, from $239.7 million, or 38 cents a share, a yearago. Revenue rose 2 percent to $2.37 billion. Excluding theeffect of the strength of the dollar against foreigncurrencies, revenues rose 7 percent.
New York-based Colgate, which makes Colgate toothpaste,Ajax dishwashing liquid, Hill’s Science pet foods and a host ofother household products, remains comfortable with earningsestimates for the fourth quarter and full year and for 2001,Chairman and Chief Executive Reuben Mark said in a statement.Mark said Colgate expects strong worldwide volume growth,increased gross profit margin and strong overhead control.
Analysts expect Colgate to post earnings of 46 cents pershare for the fourth quarter, $1.68 per share for 2000, and$1.90 per share for 2001, according to First Call/ThomsonFinancial.
Mark said Colgate expects gross profit margin to top 55percent in 2001, reaching its 2002 margin goal a full yearearly.
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Chevron Pumps Solid Earnings
The No. 2 U.S. oil company, said today its third-quarter profitsurpassed expectations, with earnings more than doubling on theback of surging oil and natural gas prices.
The San Francisco-based oil company, which earlier thismonth unveiled a takeover bid for rival Texaco,said third-quarter earnings excluding special items rose to$1.65 billion, or $2.53 a diluted share. In the correspondingperiod a year ago, it earned $702 million, or $1.07 per dilutedshare.
Revenues rose to $13.6 billion from $10.2 billion in aquarter in which the company posted sharply higher results thananalysts had expected.
On average analysts had forecast earnings of $1.99 a sharefor the company, according to First Call/Thomson Financial,which tracks estimates.
For the moment, like other energy companies, Chevron isgetting a lift from red-hot commodity prices, with crude oilhitting a 10-year high during the quarter.
Indeed, crude oil prices in the third-quarteraveraged $31.63 a barrel, about $10 a barrel higher than thesame period a year ago. U.S. natural gas prices were just asred hot, averaging $4.48 per million British thermal unitscompared to $2.55 a year ago.
“These companies have benefited significantly from higheroil and gas prices,” said Fadel Gheit, an analyst withFahnestock & Co.
“A lot of people are asking what they can do for anencore,” he added. “Believe it or not, the fourth quarter isshaping up stronger than the third for this industry.”
For Chevron, the rise in commodity prices pushed itsearnings from the U.S. exploration and production side of thebusiness to $572 million, up from $264 million a year ago. Itsinternational exploration and production business earned $713million, up from $322 million last year.
“Our oil and gas production results continue to reflect thefinancial benefit of not only higher commodity prices but alsoincreased production — the direct result of our continuedstrategic focus on growing the upstream side of the business,”Chairman and Chief Executive Dave O’Reilly said in a statement.
Chevron’s exploration and production business will getanother lift if the company complete its deal to buy Texaco, anacquisition which would make the combination the world’s fourthlargest oil company. It would have 11.2 billion barrels of oilequivalent reserves (boe) and daily production of 2.7 millionboe.
It will also bolster Chevron’s refining, marketing, andtransportation business, though most analysts expect anti-trustregulators to force Texaco to sell some of its so-calleddownstream assets on the U.S. west coast.
For the third-quarter, Chevron said its refining andmarketing business posted earnings of $311 million, up from$117 million last year alongside stronger profits margins onrefined fuels such as gasoline and heating oil.
In its chemicals business, where Chevron has created ajoint venture with Phillips Petroleum Co. (P.N), the companysaid operating earnings were $35 million, an increase of $4million from a year ago.
Net income for the company rose to $1.53 billion from $582million during the period a year ago. The current quarter’scharges included those for environmental remediation, a taxadjustment, and impairments of U.S. producing properties andpipelines. Gains included the sale of marketable securities andaccounting effects of common stock transactions.
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Compaq Surpasses Estimates
Compaq Computer Corp, the world’s No. 1 personal computer maker, reportedthat its third-quarter profit jumped sharply on strong salesthroughout its product lines.
The Houston-based company reported third-quarter net incomeof $550 million, or 31 cents per share, including a netinvestment gain of $25 million, compared with $140 million, or8 cents, in the third quarter a year ago.
Excluding the investment gain, Compaq earned 30 cents pershare, beating the Wall Street estimate of 29 cents, asreported by First Call/Thomson Financial, which compilesbrokerage estimates.
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ExxonMobil’s Profits Nearly Double
ExxonMobil, the No. 1U.S. oil company, said today third-quarter earnings nearlydoubled, beating expectations, alongside some of the strongestcrude oil and natural gas prices in a decade.
Third-quarter profit, excluding special charges and mergerexpenses, rose to a record $4.29 billion, or $1.22 a share, from$2.21 billion, or 62 cents a share, in the same period last yearon a pro forma basis, the oil company said. Revenue climbed to$58.9 billion from $49 billion in the year earlier period.
Analysts surveyed by First Call/Thomson Financial wereforecasting on average earnings of $1.16 a share for the company,which completed its acquisition of Mobil last year and helped setoff a rash of takeovers in the industry. ExxonMobil said recentlythat the deal will eventually result in annual savings of $4.6billion.
ExxonMobil, as well as the rest of the oil industry, has beenhelped by crude oil prices that averaged $31.63 a barrel in thequarter, compared with $21.72 a year ago, and natural gas pricesthat rose to an average of $4.48 per million British thermal unitsfrom $2.55. Its exploration and production business postedearnings of $3.1 billion as a result, more than twice the $1.5billion it recorded in the third-quarter of last year.
It also said that with higher commodity prices, its capitaland exploration spending of $2.6 billion in the third-quarter wasup about 10 percent from the second-quarter. Spending should beeven higher in the fourth-quarter, the company said. Shares ofExxonMobil closed at $89-1/16 on Monday on the New York StockExchange.
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Texaco Posts Record Rise
Texaco, the No.3 U.S. oil company, said today its third-quarter profitsjumped 80 percent, beating Wall Street expectations, thanks tosome of the strongest oil and gas prices in a decade.
Texaco, which agreed earlier this month to be acquired byrival Chevron, said income before special items rose to arecord $815 million, or $1.49 a share. In the correspondingperiod a year ago, the company posted income of $453 million,or 83 cents a share. Revenues rose 38 percent to $13.4billion.
The oil company’s earnings were well ahead of averageestimates of $1.37 a share, according to data from trackingfirm First Call/Thomson Financial.
Texaco shares closed at $59-1/8 on the New York StockExchange on Monday, below the Chevron bid of $63.14 a share,based on Chevron’s closing stock price the day the deal wasannounced. Texaco Chairman and Chief Executive Peter Bijur called the two companies “natural partners” and saidthe merger “will create a U.S.-based global enterprise that ishighly competitive across all energy sectors.”
Texaco received a shot in the arm from oil prices thatroared to 10-year highs during the third quarter. That helpedthe company’s U.S. exploration and production income rise to$487 million from $258 million a year earlier, whileinternational income from the business rose to $299 millionfrom $129 million.BACK TO TOP
Sunoco’s Earnings Shine
Sunoco, a leading U.S.independent oil refiner, reported today third-quarterprofits eight times higher than last year, helped by low stocksof petroleum products and scorching U.S. oil refining profitmargins.
Sunoco posted third-quarter operating income of $104million, or $1.20 per share, far surpassing the 91 cents pershare consensus estimate of analysts polled by FirstCall/Thomson Financial.
In the third quarter of 1999, Sunoco reported an operatingincome of $13 million, or 14 cents per share.
Crude oil prices hit 10-year highs in the quarter andaveraged $31.63 a barrel in the the third quarter, up about $10a barrel from last year.
And U.S. refining margins, or the amount a refiner makesfor every barrel of crude it processes, soared to $6.22 abarrel in the third quarter of 2000, compared to $3.96 a barrelin the corresponding quarter last year, according to Paul Ting,analyst at Salomon Smith Barney.
Sunoco’s Chairman and Chief Executive Officer John GDrosdick said, “Refining margins continued to be much higherthan 1999 depressed levels and the recent quarter saw someimprovement in retail gasoline margins as well. As a result,our Northeast Refining, Northeast Marketing and MidAmericabusinesses all recorded much higher earnings than last year’scomparable quarter.”
“Northeast Refining, despite some operational setbacks,earned $62 million, an excellent result when compared tobenchmark industry margins for the quarter,” added Drosdick ina statement.
Sunoco, headquartered in Philadelphia, has about 730,000barrels per day of refining capacity.
Drosdick said low inventory levels, particularly fordistillates in the U.S. Northeast, are well below normallevels, a fact that should keep profit margins strong into thefourth quarter.BACK TO TOP
Goodyear Tire Loses $6.6 Million
Goodyear Tire & Rubber said todayit took a loss of $6.6 million, or 4 cents per share, in the thirdquarter, as costlier materials and energy became a drag on earningsdespite improved sales. Analysts surveyed by First Call/Thomson Financial had projecteda loss of 2 cents per share.
“High raw material costs, especially those for oil-derivedproducts, remain a major factor in our results,” said Samir G.Gibara, chairman and chief executive officer.
Goodyear’s third quarter sales were $3.5 billion, versus $3.3billion in 1999.
The company earned $109.1 million, or 69 cents per share, in thethird quarter of 1999. But special items then included an after-taxgain of $143.7 million, 90 cents per share, resulting from thecompletion of the company’s Dunlop joint ventures.
Special items influencing the quarterly results this year werecharges of $1.2 million, 1 cent per share, for closing a factory inItaly and a gain of $3.2 million, 2 cents per share, resulting froma property sale in Mexico.
Net income for the first nine months totaled $116.7 million, or74 cents per share. The 1999 net income through nine months was$200.3 million, $1.26 per share.
Sales for the first nine months of 2000 were $10.5 billioncompared with $9.3 billion in the same period of 1999.
Gibara said Goodyear’s earnings in the quarter wereapproximately 40 cents per share lower than the result would havebeen if production costs had remained at 1999 levels.
Besides the higher costs for materials and energy, the resultsalso were hurt by costs associated with ongoing manufacturingrestructuring in Europe, the further deterioration of the euro’svalue versus the U.S. dollar, competitive market conditions andreduced original equipment tire shipments in North America, thecompany said.
Goodyear also felt the effect of production cutbacks byautomobile and commercial truck manufacturers.
Gibara noted Goodyear has reduced some production, cut back onsome spending and started several initiatives to increase sales. Hesaid the company is trying to take advantage of theBridgestone/Firestone recall.
“It is too early to measure the full impact theBridgestone/Firestone tire recall will have on Goodyear or theindustry, both in the original equipment and replacement markets,”Gibara said. “However, consumers are showing more interest insafety and brand quality than price.
“We have a unique opportunity to achieve market share gainsthat can be sustainable and profitable.”
Goodyear’s North American Tire business has shipped more than2.5 million tires of the size and type being used to replace the6.5 million recalled Firestone tires. Goodyear is producing morethan 28,000 tires a day to serve as replacements.BACK TO TOP
14% Rise for Schering-Plough
Drug maker Schering-Plough reported today a 14 percent rise in third- quarterprofits, matching Wall Street estimates, on strong sales of itsblockbuster allergy drug Claritin and the hepatitis Cmedication Rebetron.
The Madison, N.J.-based company posted net earnings of $591million, or 40 cents per share, compared with $518 million, or35 cents per share in the year-ago period. Analysts polled byFirst Call/Thomson Financial predicted Schering-Plough, whichalso markets Intron A for cancer, to earn 40 cents per share.
The company reported a 7 percent jump in total worldwidesales to $2.4 billion as Claritin sales rose 10 percent to $787million. Claritin accounts for nearly a third ofSchering-Plough’s sales. The company is aiming to gain bothEuropean and U.S. approval for a related allergy drug beforeits patent over the key chemical in Claritin expires in late2002.
Combined sales of Rebetron and Intron A, an anti-viralcomponent of Rebetron that also treats other diseases, rose 24percent to $338 million in the third quarter.
Worldwide sales of the company’s inhaled allergy drugsincreased 29 percent to $126 million in the quarter, led byNasonex, a once-daily nasal spray for allergies, whose saleswere up 44 percent at $98 million.
U.S. pharmaceutical sales in the period totalled $1.3billion, a 5 percent increase. Third-quarter 2000 U.S. sales ofthe Claritin line were $700 million, up 12 percent.
Global sales of animal health products totalled $176 millionin the third quarter, up 9 percent due to the June 2000acquisition of a majority interest in a joint venture withTakeda Chemical Industries Ltd. in Japan.
Looking ahead, Schering-Plough said it expects earnings pershare for 2000 to be in line with the current analyst outlookof $1.64 per share, which would give the drug firm its 15thconsecutive year of double digit earnings growth.
Shares of Schering-Plough, the nation’s No. 8 drug maker,closed at $53 on Monday on the New York Stock Exchange, below ayear high of $57-3/8 and above a 52-week low of $30-1/2.BACK TO TOP
Qwest Beats the Street
Telephone and data servicescompany Qwest Communications said todayits third-quarter operating profits rose a 18.5 percent,beating Wall Street expectations, amid strong growth in salesof data and Internet services.
Qwest, the No. 4 U.S. long-distance telephone company, saidprofits excluding one-time items rose to $231 million, or 14cents a share, from $195 million, or 12 cents, a year ago.
The results topped the average Wall Street estimate of 9cents a share, according to research firm First Call/ThomsonFinancial.
Including charges related to its recent acquisition oflocal telephone company U S West and other one-time items,Qwest posted a third-quarter loss of 15 cents a share.
Revenues rose 12.4 percent to $4.77 billion, driven byInternet and data services growth of more than 50 percent.
Earnings before interest, taxes, depreciation andamortization rose 14.3 percent to $1.86 billion. Its profitmargin rose to 39.1 percent from 38.5 percent in the year-agoquarter.
The Denver-based company said it remains on track to hitits 2000 revenue target of $18.8 billion to $19.1 billion, andearnings of $7.4 billion before interest, taxes, depreciationand amortization.
Qwest added 38,000 wireless customers during the quarterand said it was on track to meet its year-end target of 800,000subscribers.
It also met its year-end goal to offer digital subscriberline (DSL) high-speed Internet access service in 72 marketsahead of schedule. Qwest added 38,000 subscribers during thequarter and now has 213,000 DSL subscribers. It expects to have250,000 DSL subscribers by year-end.
In an effort to cut expenses and streamline its operationsfollowing the purchase of U S West, Qwest plans to cut 11,000jobs, or 16 percent of its work force. About 4,500 jobs werecut by the end of the quarter.
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Halloween Sweetens Hershey
Hershey Foods, theNo. 1 U.S. producer of chocolates, said today itsthird-quarter earnings rose 23 percent, beating the averageanalyst forecast, boosted by strong back-to-school and Halloweendemand for candy.
The maker of Hershey’s bars, Reese’s Peanut Butter Cups andJolly Rancher candies said net income reached $107.4 million, or78 cents a diluted share, in the quarter ended Oct. 1, comparedwith $87.6 million, or 62 cents, in the same period a year ago.
Analysts on average had expected Hershey, based in Hershey,Pa., to earn 76 cents a share, according to a poll bymarket researchers First Call/Thomson Financial.
Net sales climbed to $1.20 billion from $1.07 billion.
Hershey in September forecast strong sales for the secondhalf of 2000, citing solid demand, a lineup of new products andlogistical improvements that better prepared the company for theHalloween season, an important time of the year for sales.Operating problems led to product shortages the previous year.
“Admittedly we were in the depths of our shippingdifficulties during last year’s third quarter, but this year ournew information system and revamped Eastern distributionfacilities were much improved during this period of high demandfor our domestic confectionery business,” Kenneth Wolfe,Hershey’s chairman and chief executive, said in a statement.
The company said everyday business was also healthy duringthe period, on top of the strong back-to-school and Halloweenshipments.
Greater sales volumes and favourable commodity costs,primarily for cocoa and milk, boosted operating income despitehigher logistics, marketing and administrative costs, Hersheysaid.
“We expect a good finish for the year, although ourchallenge, as always, will be to strive for continuousimprovement in customer service, while controlling costs andexecuting effective marketing programs,” Wolfe said.
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Tyco’s Q4 Operating Net Up 40%
Diversified manufacturer Tyco International said today that fourth-quarteroperating earnings rose 40 percent, beating Wall Streetestimates, on double-digit internal growth, surging electronicssales and the integration of big-ticket acquisitions.
Tyco, which also makes telecom, medical and fire protectionproducts, earned $1.1 billion, or 64 cents a diluted share,before special items, compared with $782.7 million, or 46 centsa diluted share, in the year-ago quarter.
Analysts, on average, were looking for Tyco to earn 63cents a share, according to First Call/Thomson Financial. Netincome rose to $1.9 billion or $1.12 per diluted share from$780.5 million or 46 cents per share in last year’s fourthquarter.
Fourth-quarter sales at Tyco — based in Bermuda, but withheadquarters in Exeter, N.H. — rose 25 percent to $7.81billion, up from $6.22 billion in the year-ago quarter.
Tyco’s electronic operations posted a 66 percent increasein sales from the introduction of new products such ashigh-speed connectors and wireless components and theintegration of three acquisitions, the company said.
Fourth-quarter operating profits from electronics increased69 percent to $746.8 million on sales of $2.88 billion, thecompany said.
“Tyco continues to show no signs of slowing down,” TycoChairman Dennis Kozlowski said in a statement.
During the quarter, Tyco generated $2.1 billion in net cashfrom the initial public offering of its majority-owned underseafiber-optic cable operation TyCom Ltd. Tyco also completed thesale of ADT Automotive for $1 billion in cash. Last week, Tyco completed its $4.2 billion acquisition ofSt. Louis, Mo.-based Mallinckrodt Inc., a leading maker ofdisposable medical products.
For the fiscal 2000 year ended Sept. 30, Tyco’s earningsbefore special charges rose 42 percent to $3.73 billion, or$2.18 per diluted share. Revenues for the year rose 29 percentto $28.93 billion.
Kozlowski said the company’s cash flow of $3.3 billiongenerated from organic growth and new acquisitions has put Tycoon course for “another solid year in 2001.
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Dial’s Profits Pluge
Consumer products and cannedmeats maker Dial said today that third-quarterearnings, hurt by lower sales and higher raw material costs,plunged 86 percent even before a restructuring charge.
Profit before the charge was $4.4 million, or 5 cents ashare, down from $30.8 million, or 31 cents, a year ago, themaker of Dial soap, Armour canned meats and other productssaid. Sales fell 6 percent to $411.1 million.
Analysts on average had expected Scottsdale, Ariz.-basedDial, whose management is trying to decide whether to put thecompany up for sale, to post earnings of 3 cents a share in thequarter. Dial had previously warned that earnings would drop to3 to 5 cents a share before one-time items, down from earlieranalysts’ consensus estimates of 14 cents a share.
Including a $48.7 million charge in the third quarter forseverance and restructuring of its speciality personal carebusiness and a joint venture with Germany’s Henkel KGaA, thecompany reported a loss of $26.2 million, or 29 cents a dilutedshare. A $4.6 million pretax gain in the third quarter fromchanges to certain benefit plans partially offset the charge.
The report offered little in the way of new information forinvestors, as a new management team, lead by chief executiveofficer Herbert Baum, had already forecast the earnings and thecharge.
“I think the jury’s still out,” John Hughes, brandedconsumer products analyst at Dain Rauscher Wessels, said aboutinvestor reaction to the earnings report. “We want to measurethis management team.”
Dial announced the charge related to those areas and forseverance payments for previous management last week. It alsosaid it cut its dividend in half to strengthen its balancesheet and repay debt. Additional charges are expected in thefourth quarter, with the total expected to reach $60 million to$70 million.
Baum took the helm in August, after the company had issuedits third earnings warning for the year. The company has beenplagued by acquisitions that have not performed well and by thepractice of previous management to sell products at discountsto retailers at the end of quarters to meet sales goals, aprocess known as trade loading. Under Baum, the company hasended that practice.
Baum has also said that management will decide by themiddle of 2001 whether to keep the company independent, sellit, sell parts of it, or form new business alliances.
Gross margin in the third quarter fell to 47.8 percent,before the charge, from 49.7 percent in a year ago. Margin washit by higher petroleum costs, lower sales and costs resultingfrom the consolidation of speciality personal care distributionand warehouse facilities.
Total debt at the end of the third quarter was $636.5million, down $20.5 million from the balance at the end of thesecond quarter, the company said.
Baum also reiterated Tuesday that the company wascomfortable with analysts’ estimates predicting on averageearnings of 50 cents a share in 2000, before one-time items.
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Blockbuster’s Winning Quarter
Leading video store chainBlockbuster said today third-quarter cash earnings rose3 percent, well above Wall Street expectations, on growth in videorentals and international operations.
The Dallas-based company reported cash earnings of $22.6million, or 13 cents a share, excluding intangible amortization.That compares with $22.0 million, or 14 cents, a year earlier.
Wall Street on average expected 10 cents per share, accordingto research firm First Call/Thomson Financial.
“It’s a very, very good profitable and growing business,” saidDavid Riedel of Salomon Smith Barney after earnings wereannounced. He said the company’s position in its core business,video rentals, was virtually unmatched.
Video segment cash earnings, which excludes Blockbuster’s newmedia area, grew to $33.3 million, or 19 cents a share, for thethird quarter, which compares with $22.9 million, or 14 cents ashare during the same period last year.
Blockbuster rents videos, DVDs and video games, and operatesthe world’s largest video rental chain. It also has partnershipswith America Online and DIRECTV. Entertainment giant Viacom Inc.took Blockbuster public in August 1999 and owns more than 80percent of the company.
Including amortization and other items, Blockbuster reported anet loss of $19.3 million, or 11 cents a share, versus $19.1million, or 12 cents.
Looking ahead, the company also said its New Media unit lossesin the fourth quarter would be consistent with prior quarters, andsame-store revenues in the period would be in the high singledigits in percentage terms.BACK TO TOP
PG&E Reports 38% Rise in Revenue
With $2.9 billion in unrecognized losseslooming in the background, PG&E reported today a 38 percentincrease in third-quarter earnings that beat expectations.
The San Francisco-based holding company of Pacific Gas andElectric Co. reported net income of $225 million, or 62 cents pershare, up from $185 million, or 50 cents per share in the prioryear. PG&E’s continuing operations earned $248 million, or 68 centsper share, in the third quarter.
Analysts polled by First Call/Thomson Financial projectedearnings of 60 cents per share.
PG&E’s bottom line took a back seat to concerns about whetherthe company will be able to recoup its losses from California’ssoaring electricity prices while a government-mandated rate freezeprevents the utility from passing the costs along to customers.
PG&E said its losses from the electricity price shocksrose from $2.2 billion at the end of August to $2.9 billion at theend of September.
The mounting losses stem from a deregulated market where theenergy demands of California’s expanding population and economyhave outstripped supply, allowing electricity suppliers to tripleand quadruple their prices from 1999. Regulators are alsoinvestigating allegations of illegal price manipulation in themarket.
PG&E will have to write off those losses unless state regulatorsreverse their previous rulings and allow PG&E to retroactively billmillions of Northern California customers for the costs. If thecompany has to absorb the electricity losses, PG&E’s stock probablywould be ravaged.
The California Public Utilities Commission last week providedPG&E with a reprieve by agreeing to reconsider the issue. PG&E andanother major utility, Southern California Edison Co., are expectedto provide further details about their proposed solution indocuments scheduled to be filed with the PUC on Wednesday.
Consumer activists argue that PG&E should have to foot theentire bill for the higher electricity prices because the companyhas made billions of dollars by selling off assets as part ofCalifornia’s energy deregulation. PG&E said consumer groups aremisinterpreting the company’s finances.
In a conference call today, PG&E executives sought to strike aconciliatory tone to reassure both anxious customers and investors.
On the one hand, the company said, it would continue toessentially finance its customers’ bills. PG&E said it has borrowedbetween $700 million and $800 million to buy electricity fromwholesalers so far and has applied for approval to raise its creditlimit by an additional $2 billion.
On the other hand, PG&E executives stressed they are workingfuriously with state and federal regulators to devise a plan thatwill ease the company’s financial burden. In the conference call,the executives indicated they hoped some sort of action might betaken before the end of the year.
“We believe the immediate and long-term solutions are cominginto focus,” PG&E Chairman Robert Glynn said. “In summary, theright people are working on the right solutions.”
Through the first nine months of the year, PG&E earned $753million, or $2.09 per share, up from $538 million, or $1.46 pershare, in the comparable 1999 period.
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