Earnings Reports for Oct. 20
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Coke’s Profits Pop
Coca-Cola reported today a 36 percent jump in quarterly profit, narrowly beatingWall Street expectations despite flat volume growth in thebeverage giant’s key North American market.
Atlanta-based Coca-Cola, the world’s largest soft drinkscompany, earned $1.07 billion, or 43 cents a share, afternonrecurring items in the third quarter of 2000, compared to aprofit of $787 million, or 32 cents a share, in the same periodlast year.
Excluding the nonrecurring items, Coca-Cola earned 42cents a share in the period. Analysts on average had forecastthe beverage giant would make 41 cents a share, according toFirst Call/Thomson Financial, which tracks consensus data.
Coca-Cola said worldwide unit case volume, a key measure offinancial health in the soft drinks industry, increased in thethird quarter by 4 percent, but there was zero growth in NorthAmerica.
The company also said it was comfortable with itspreviously established objective of growing worldwide volumesby 5 percent in 2000, and with its previous range of earningsper share estimates for this year and 2001.
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Ericsson: Increase and a Warning
Ericsson posted a 67 percentincrease in third-quarter profit today but said its losseswidened in its cellular phone unit, causing it to lower itsexpectations for full year results in that area.
Shares of the world’s third biggest wireless equipment makerplunged 21 percent in heavy trading on the Stockholm stock exchange.
The mixed report came a day after Finnish rival Nokia reported a40 percent jump in profits for the latest quarter, a 50 percentgain in sales and a bullish outlook. The surprisingly strongshowing by the world’s largest mobile phone producer came in sharpcontrast to last week’s dismal report from U.S.-based No. 2Motorola and contributed to a powerful rebound by the entiretechnology sector on Thursday.
Ericsson earned $450 million in the threemonths 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 anoperating loss of $422.8 million despite a 43percent sales increase. The operating loss was wider than its lossin 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 restructuringcharges. It announced that it was transferring the production ofhandset units from Sweden and the United States to “low-costunits” in Asia, Latin America and Eastern Europe to try to restoreprofitability.
The company continued to perform strongly in the infrastructurearea and was optimistic about strong demand for so-calledthird-generation technology that allows handsets to rapidly accessthe 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 profitabilityin the company’s key infrastructure area. The network operatorsunit 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-monthrevenue rose to $19.7 billion.
Ericsson, which has more than 103,000 employees in 140countries, said its fastest growing markets were North America andLatin America.
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Merck Beats Estimates
Pharmaceutical giant Merck reported today a 19 percent rise in third-quarterprofits, handily beating Wall Street expectations on sizzlingsales of newer drugs, such as Vioxx for arthritis andcholesterol fighter Zocor.
The Whitehouse Station, N.J.-based company, which alsomakes asthma drug Singulair and osteoporosis treatment Fosamax,reported net income of $1.84 billion, or 78 cents per share, upfrom $1.54 billion, or 64 cents per share, in the year-agoperiod.
Analysts on average had predicted Merck, the No. 2 U.S.drug maker and one of the 30 stocks in the Dow Jones industrialaverage, would earn 73 cents per share, according to FirstCall/Thomson Financial.
The company reported a 29 percent jump in total sales, to$10.6 billion. Fosamax sales jumped 29 percent to $360 millionand Singulair sales soared 81 percent to $235 million. Zocorchalked up global sales of almost $1.4 billion, up 18 percent.
Commenting on its outlook for the fourth quarter, Mercksaid it is comfortable with the range of earnings estimates —73 to 76 cents per share — among analysts polled by FirstCall.
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Tribune’s Profits Dip, Will Sell Unit
Tribune, publisher of the Chicago Tribune and the LosAngeles Times, reported today lower third-quarter earnings, but the results topped analysts’ lowered expectations thanks to strong results from its broadcasting and interactive media businesses.
Chicago-based Tribune, which became the third-largest U.S. newspaper group after buying Times-Mirror Co. in June, said it earned $73.6 million, or22 cents per share, in the third quarter, down from $113.9 million, or 32 cents per share, a year earlier.
Analysts on average had expected the company to post earnings of 21 cents a share, according to research firm First Call/Thomson Financial. Tribunesaid earlier this year that its full-year financial performance would fall short of earlier expectations after its $8 billion purchase of Times Mirror.
The company said it remains comfortable with its fourth-quarter earnings estimate of 35 to 40 cents a share before special items.
Also today, Tribune said it would sell its Times Mirror Magazines operation to Time Warner’s Time unit for $475million. Together with other divestitures it has pursued this year, Tribune said it expects to realize after-tax proceeds of about $2 billion, which it will useto pay off debt and repurchase stock.
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