Coke’s Profits Pop
Coca-Cola reported today a 36 percent jump in quarterly profit, narrowly beating Wall Street expectations despite flat volume growth in the beverage giant’s key North American market.
Atlanta-based Coca-Cola, the world’s largest soft drinks company, earned $1.07 billion, or 43 cents a share, after nonrecurring items in the third quarter of 2000, compared to a profit of $787 million, or 32 cents a share, in the same period last year.
Excluding the nonrecurring items, Coca-Cola earned 42 cents a share in the period. Analysts on average had forecast the beverage giant would make 41 cents a share, according to First Call/Thomson Financial, which tracks consensus data.
Coca-Cola said worldwide unit case volume, a key measure of financial health in the soft drinks industry, increased in the third quarter by 4 percent, but there was zero growth in North America.
The company also said it was comfortable with its previously established objective of growing worldwide volumes by 5 percent in 2000, and with its previous range of earnings per share estimates for this year and 2001.
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Ericsson: Increase and a Warning
Ericsson posted a 67 percent increase in third-quarter profit today but said its losses widened in its cellular phone unit, causing it to lower its expectations for full year results in that area.
Shares of the world’s third biggest wireless equipment maker plunged 21 percent in heavy trading on the Stockholm stock exchange.
The mixed report came a day after Finnish rival Nokia reported a 40 percent jump in profits for the latest quarter, a 50 percent gain in sales and a bullish outlook. The surprisingly strong showing by the world’s largest mobile phone producer came in sharp contrast to last week’s dismal report from U.S.-based No. 2 Motorola and contributed to a powerful rebound by the entire technology sector on Thursday.
Ericsson earned $450 million in the three months ended Sept. 30, or 9 cents per share. Net sales for the quarter were $6.9 billion.
Its consumer products unit, which produces the handsets, had an operating loss of $422.8 million despite a 43 percent sales increase. The operating loss was wider than its loss in the preceding quarter.
Ericsson said it expects a loss of around $1.6 billion for the full year in its mobile phone unit.
The company blamed component shortages from a key supplier, anticipated price competition in the next quarter and restructuring charges. It announced that it was transferring the production of handset units from Sweden and the United States to “low-cost units” in Asia, Latin America and Eastern Europe to try to restore profitability.
The company continued to perform strongly in the infrastructure area and was optimistic about strong demand for so-called third-generation technology that allows handsets to rapidly access the Internet and download electronic mail, music and pictures.
“We are going to get out of this situation that we’re in,” company President Kurt Hellstroem said in a conference call, acknowledging that there would be “no easy solution.”
The operating loss was offset by strong sales and profitability in the company’s key infrastructure area. The network operators unit increased sales 37 percent and had an operating profit of $834.6 million.
Net income for the first nine months was $1.9 billion. Nine-month revenue rose to $19.7 billion.