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.
Ericsson, which has more than 103,000 employees in 140 countries, said its fastest growing markets were North America and Latin America.
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Merck Beats Estimates
Pharmaceutical giant Merck reported today a 19 percent rise in third-quarter profits, handily beating Wall Street expectations on sizzling sales of newer drugs, such as Vioxx for arthritis and cholesterol fighter Zocor.
The Whitehouse Station, N.J.-based company, which also makes asthma drug Singulair and osteoporosis treatment Fosamax, reported net income of $1.84 billion, or 78 cents per share, up from $1.54 billion, or 64 cents per share, in the year-ago period.
Analysts on average had predicted Merck, the No. 2 U.S. drug maker and one of the 30 stocks in the Dow Jones industrial average, would earn 73 cents per share, according to First Call/Thomson Financial.
The company reported a 29 percent jump in total sales, to $10.6 billion. Fosamax sales jumped 29 percent to $360 million and Singulair sales soared 81 percent to $235 million. Zocor chalked up global sales of almost $1.4 billion, up 18 percent.
Commenting on its outlook for the fourth quarter, Merck said it is comfortable with the range of earnings estimates — 73 to 76 cents per share — among analysts polled by First Call.
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Tribune’s Profits Dip, Will Sell Unit
Tribune, publisher of the Chicago Tribune and the Los Angeles 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, or 22 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. Tribune said 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 $475 million. 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 use to pay off debt and repurchase stock.
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Equifax said it sold the U.S. unit of Equifax Risk Management Services to Atlanta-based Risk Management Alternatives Parent Inc. IntelliRisk Management Corp., based in Columbus, Ohio, bought the Canadian and British operations, Equifax said. BACK TO TOP
First Union Tops Estimates
First Union, the No. 6 U.S. bank holding company, said today its third-quarter profits rose 6 percent, topping estimates, as it turns around its operations after prior unwieldy acquisitions.
The Charlotte, N.C.-based bank, which has about $260 billion in assets and more than 2,200 branches, earned $852 million, or 86 cents a diluted share in the quarter, compared with $802 million, or 84 cents a share, a year ago. Excluding gains and restructuring charges, the company earned $702 million, or 71 cents a share, in the quarter.
Wall Street had expected the bank to earn 69 cents a share in the quarter, according to First Call/Thomson Financial, which tracks analysts’ consensus earnings forecasts.
First Union is in the midst of a $3 billion restructuring plan, announced at the end of June, to revive revenue growth after troubles integrating a string of acquisitions. Its stock has tumbled about 40 percent from its 52-week high of $44-5/16 hit last November.
Many U.S. regional banks face slower revenue growth after a series of interest rate increases that have put pressure on lending profits. Higher rates make it more costly for banks to borrow to fund loans and sometimes make borrowers default.
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UAL Posts $64 Million Loss
UAL, parent of United Airlines, the world’s largest airline, said today it lost a greater-than-expected $64 million in the third quarter, before one-time items, as flight cancellations, delays and higher costs for jet fuel and wages hurt results.
Chicago-based UAL said the $64 million loss amounted to $1.29 a share, compared with a profit of $359 million, or $2.89 a share, a year earlier. The last time the company lost money was in 1993.
Analysts on average had forecast a loss of 54 cents, according to First Call/Thomson Financial, with estimates ranging from a loss of $1.15 to a loss of 20 cents.
Including a loss on warrants the company owns in Priceline.com, a charge for planned early retirement of four leased aircraft and a loss associated with the early retirement of debt, UAL lost $116 million, or $2.30 a share.
Revenues rose 1.2 percent to $4.91 billion from $4.85 billion a year earlier.
UAL, which has agreed to acquire US Airways Group Inc. for $4.3 billion, had warned twice during the third quarter that its results would fall short of analysts’ earnings forecasts for the second half of the year. Prior to the last warning in September, analysts had expected the company to earn 97 cents a share for the quarter.
UAL said reduced capacity levels to address operational problems will continue to hurt its fourth-quarter performance. Additional costs from its new pilot contract, expected to be ratified this month, and from other labor contracts being negotiated and higher fuel prices, will likely cause it to lose money in the fourth quarter, the company said. BACK TO TOP
E*Trade Profitable in Q4
E*Trade, the No. 2 U.S. Internet broker, posted today a quarterly profit compared to a loss in the year-ago period as it sold investment assets and kept a lid on advertising spending.
The Menlo Park, Calif.-based company, which has 3.3 million customers, reported a net profit of $47.7 million, or 15 cents per share, for the fiscal fourth quarter ended Sept 30. That compared with a net loss of $28.0 million, or a loss of 10 cents per share, in the same period last year. Net revenue rose 76 percent to $340 million.
Excluding merger costs and other items, E*Trade posted a profit of $7.2 million, or 2 cents per share. The operating results beat Wall Street’s lowered expectations calling for the brokerage to break even with zero cents per share. Analysts have cut their profit forecasts for Web brokers because of a decline in the Nasdaq stock market and an estimated 10 percent drop in share trading volumes during the quarter.
E*Trade opened 337,000 new brokerage and banking accounts in the period, similar to the 340,000 accounts it opened a year-ago and the 330,000 it opened in the fiscal third quarter. The company spent $91.8 million on advertising and marketing in the quarter, up a nominal 5 percent from $87.0 million last year, but sharply lower than the $115 million it spent in the fiscal third quarter.
The company said it processed an average of 150,000 trades per day during the period, up 84 percent from 81,000 in the year-ago period but down from 169,000 last quarter. Total customer assets more than doubled to $66 billion from $28 billion a year ago, helped by E*Trade’s purchase of the brokerage accounts of Wit Capital.
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McDonald’s In Line with Estimates
No. 1 restaurant company McDonald’s said today its third-quarter profit rose 1 percent, meeting expectations, as a weakened euro continued to hurt results.
The global fast-food restaurant chain said its net income rose to $548.5 million, or 41 cents a share, from $540.9 million, or 39 cents, in the year-earlier period.
On average, analysts polled by research firm First Call/Thomson Financial had expected earnings of 41 cents a share.
Sales at the company’s systemwide restaurants, which include company-operated and franchised units, rose to $10.512 billion from $9.998 billion in 1999.
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Sluggish Sales Cost Hasbro Hasbro, the No. 2 U.S. toy maker, reported today that its profits fell 84 percent due to sluggish sales and mounting losses in its interactive operations.
Hasbro said net income fell to $13.8 million, or 8 cents a diluted share, compared with $85.2 million, or 43 cents, for the same quarter a year ago.
Analysts lowered their expectations to 7 cents a share for the quarter, according to market research firm First Call/Thomson Financial. Hasbro warned last week that its performance would fall well short of previous estimates largely because of a sharp slowdown in sales of Pokemon and Star Wars products. It also said it was slashing its work force by about 5 percent.
Worldwide net revenues dropped to $1.07 billion from $1.10 billion in the year-ago period.
“Even with challenging comparisons against last year’s record results, I’m not pleased with our third-quarter performance,” Hasbro Chairman Alan Hassenfeld said in a statement.
Hasbro’s most recent outlook for full-year 2000 earnings per share was 40 cents to 50 cents, before $140 million to $170 million in pretax charges.
Hassenfeld said the company was evaluating the fourth quarter before providing a revenue and earnings outlook for 2001.
Earnings in the third-quarter included a pretax loss of $6 million from Internet games operation Games.com. Its interactive division did not live up to already-reduced expectations, and Hasbro said last week it was exploring strategic alternatives for the business.
Pokemon toy demand in the U.S. was soft, but strong internationally, the company said. Revenues from Star Wars toys are expected to be minimal in 2000.
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U.S. Bancorp Meets Estimates
Regional bank U.S. Bancorp said today its third-quarter operating earnings rose 0.5 percent, in line with expectations, as loan volume increased but expenses did too.
Minneapolis-based U.S. Bancorp, which this month announced it was being bought by rival Firstar Corp. in a stock deal worth almost $20 billion, earned $410.9 million, or 55 cents a diluted share, in the third quarter, excluding one-time merger charges and profits from securities sales. That compares with $409 million, or 56 cents a share, in the year-earlier period.
Results met Wall Street forecasts of 55 cents a share, according to market research firm First Call/Thomson Financial.
The bank’s net profits, including $9.6 million in merger charges and one-time securities transactions, rose to $401.3 million, or 54 cents per share, from $396.4 million, also 54 cents per share.
U.S. Bancorp’s provision for loan losses in the third quarter rose 22 percent to $173 million. Net interest income, which includes the profit the bank makes from loans, rose 4.5 percent to $883 million as loan volume continued to grow despite higher interest rates.
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Quaker Oats Q3 Profit Up 16%
Quaker Oats, maker of hot and cold cereals, said today its third-quarter earnings rose 16 percent, beating the average analyst forecast, on continued robust demand for its Gatorade sports drink.
The company also said it expects full-year 2000 earnings per share growth before items in the range of 20 percent or slightly better.
The Chicago-based food company, whose stable of products includes breakfast bars, Rice-A-Roni side dishes and Aunt Jemima pancake mixes and syrup, said earnings rose to $159.2 million, or $1.15 per diluted share, in the quarter. That compares with $137.3 million, or $1.01 a diluted share, excluding unusual items in the same period a year ago.
Analysts on average had expected the company to earn $1.11 a share, according to First Call/Thomson Financial, which tracks earnings data.
Third-quarter net sales rose to $1.48 billion from $1.38 billion a year ago.
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Gillette’s Profits Fall; Names New CEO
Gillette today reported its third-quarter earnings fell 1 percent, meeting Wall Street’s estimates, as currency problems plagued the consumer products giant.
The Boston-based maker of razors and blades, Oral B toothbrushes and Duracell batteries, also said Chairman and Chief Executive Michael Hawley was retiring immediately. Edward Degraan was named acting chief executive and Richard Pivirotto was named non-executive chairman of the board.
Gillette posted third-quarter earnings of $350 million, or 33 cents a share, from continuing operations, compared with earnings of $355 million, or 32 cents per diluted share for the same period in 1999.
Analysts surveyed by First Call/Thomson Financial had estimated Gillette would earn 33 cents a share in the third quarter.
The company has had a string of disappointing earnings reports dating back to 1999, blaming a combination of foreign exchange rates and proper inventory stocking.
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AHP’s Profits Rise 18% Before Charge
American Home Products posted today a steep rise in quarterly operating profits, matching analyst expectations, but the No. 5 U.S. drug maker said it would have to set aside additional funds for its diet drug settlement for which it has already paid billions in the “fen-phen” case.
The Madison, N.J.-based maker of Advil, Robitussin and the oestrogen replacement drug Premarin reported net income of $762 million, or 58 cents per share, in the third quarter vs. a net loss of $2.87 billion, or $2.20 cents, in the year-ago period.
The year-ago loss mainly reflected a $4.75 billion litigation charge for a settlement related to the diet drugs Redux and Pondimin. Excluding this charge from the 1999 third-quarter results, income from continuing operations in the latest quarter increased 18 percent to $762 million from $645 million.
Analysts on average had estimated that the company, whose Wyeth-Ayerst unit will pay the U.S. government $30 million for violations at two plants, would post earnings of 58 cents per share, according to research firm First Call/Thomson Financial.
Looking forward, AHP said it expects additional reserves will be required in the diet drug settlement. It said that though it is still unclear how much that will amount to, AHP expects it to be lower than the $4.75 billion recorded in the 1999 third quarter.
A spokesman for the company declined to specify a range of the amount of reserves that would be used.
Patients typically combined either Pondimin or Redux with another diet suppressant called phentermine to make the “fen-phen” diet cocktail. AHP recalled Pondimin and Redux in 1997 after some of the 6 million Americans who had taken fen-phen developed heart problems, including leaky valves.
Overall net sales increased 13 percent from the same quarter last year.
Worldwide pharmaceutical sales increased 14 percent for the quarter, sparked by higher revenues from recently approved pneumococcal vaccine Prevnar, meningitis treatment Meningitic, arthritis treatment Enbrel and ulcer medicine Protonix. Sales of Effexor XR, for which American Home Products received an expanded indication, also showed strong growth.
Excluding the negative impact of foreign exchange rates, worldwide pharmaceutical sales increased 17 percent for the 2000 third quarter.
Global consumer health care sales increased 7 percent for the quarter, as sales of the Centrum family of vitamin products rose. However, the company experienced a sales slowdown for cold, cough and allergy products, as well as for pain reliever Anacin.
Excluding the effect of weak foreign currencies, worldwide consumer health care sales increased 8 percent for the quarter.
“The double-digit sales and earnings growth through the first three quarters of 2000 have been driven by increased demand for franchise products and enhanced by an impressive number of new products introduced into the marketplace,” said Chairman and Chief Executive Officer John Stafford in a statement. BACK TO TOP
Raytheon Meets Expectations
Raytheon’s third-quarter earnings met Wall Street’s expectations, reversing a loss from the year-ago period, helped by an increase in aircraft deliveries.
For the three months ended Sept. 30, Raytheon earned $105 million, or 31 cents per share, up from a loss of $163 million, or 48 cents per share in the year-ago period.
Earnings from continuing operations were $133 million, or 39 cents per share, in line with a consensus estimate from analysts surveyed by First Call/Thomson Financial.
The Lexington, Mass.-based aerospace and defense company lost $89 million, or 26 cents per share, from continuing operations in the year-ago period, in part due to charges of $464 million, or 84 cents per share.
Revenue rose to $4.16 billion, up from $4.12 billion a year ago.
Sales in most divisions were similar to a year ago. The Electronic Systems division reported sales of $1.9 billion, down from $2.0 billion.
Raytheon Aircraft Company, a division the company is reportedly trying to sell to reduce its debt burden, recorded sales of $749 million, up 6 percent from a year ago due to higher aircraft deliveries.
For the nine months ending Oct. 1, Raytheon recorded net sales of $12.56 billion, down 4 percent from $13.02 billion over the same period last year. Raytheon has a net loss for the first nine months of the year of $23 million, compared with earnings of $332 million in the year-ago period.
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Mattel’s Profits Fall
Mattel, in the midst of a restructuring and under new leadership, said its profit fell 22 percent in the third quarter because of declining sales.
The company said today it earned $174.3 million, or 41 cents per share, from continuing operations in the quarter ended Sept. 30 as compared with profits of $222.2 million, or 52 cents per share in the same period last year.
The results were in line with estimates of analysts surveyed by First Call/Thomson Financial.
Sales increased by 2 percent in the United States, but fell 5 percent in international markets, the company reported. Sales of the company’s two largest brands — Barbie and Fisher-Price — increased during the quarter.
Mattel reported its earnings the day after the sale of its money-losing interactive toy division, The Learning Co.
Mattel took a one-time charge of $441 million as the result of the sale, but said the sale would save it $1 million a day in operating losses.
The company’s disastrous experience with The Learning Co. cost former chief executive Jill Barad her job. Barad was replaced in May by chief executive Robert A. Eckert.
The company also took a restructuring charge of $74 million, or 18 cents per share. Including one-time charges, the company lost $336.8 million, or 79 cents per share, in the quarter.
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U.S. Airways Loses $30 Million in Q3
U.S. Airways, the No. 6 U.S. airline, said today it lost $30 million in the third quarter, more than expected, amid tough competition and fuel costs 75 percent higher than a year earlier.
Arlington, Va.-based US Airways, which has agreed to be bought by United Airlines parent UAL for $4.3 billion, said it lost 45 cents a share, compared with a loss of $85 million, or $1.19 a share, in the period a year earlier, when the carrier suffered from a high degree of cancellations because of bad weather and a slowdown by mechanics.
Analysts had on average forecast that US Airways would lose 19 cents a share in the recent quarter, according to First Call/Thomson Financial.
Revenues rose 13 percent, to $2.38 billion from $2.10 billion a year earlier.
US Airways shares closed at $32-1/4 on Tuesday, down 9/16, despite the $60 a share offer price in the UAL deal, amid widespread doubts that regulators will allow the deal to close as envisioned.
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Wachovia Will Cut Jobs Southeast U.S. regional bank Wachovia reported today a 20 percent drop in third-quarter net income because of merger costs and charges related to a sweeping restructuring plan, but operating results met Wall Street expectations.
Excluding merger costs and restructuring charges, the Winston-Salem, N.C.-based bank’s earnings were up about 4 percent to $270.2 million, or $1.32 a share. Including the charges, Wachovia earned $205.3 million, or $1.00 a diluted share, in the third quarter. That compares with reported net income of $257.5 million, or $1.25 a share, a year ago.
Wall Street was expecting the company to post operating earnings of $1.32 a share, according to market research firm First Call/Thomson Financial. Wachovia, which is the process of cutting 1,800 jobs as it revamps its operations, said pre-tax restructuring charges and merger-related costs totalled $99.8 million in the third quarter. The bank said the rest of the restructuring charges, about $30 million, will be taken in the next two quarters.
Wachovia’s provision for loan losses in the third quarter was $124 million, up from $76.8 million during the same period last year. Net interest income, after the provision for loan losses, fell 6 percent to $506.8 million.
The bank holding company in June warned investors that rising interest rates would hurt second-quarter and full-year profits. In September it said its president and chief operating officer, G. Joseph Prendergast, would retire after the end of this year.
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Visteon Earnings Fall
Third-quarter earnings at auto parts supplier Visteon Corp. fell 69 percent due to price and production cuts by its former parent, Ford Motor Co.
Visteon said its earnings totaled $48 million, or 37 cents a share, for the three months ended Sept. 30, compared with $155 million, or $1.19 a share, in the year-ago period.
The results equaled Wall Street expectations that Visteon had lowered in August, according to analysts surveyed by First Call/Thomson Financial.
Revenues fell 4 percent, from $4.6 billion to $4.4 billion.
Visteon attributed the earnings decline to a 5 percent price cut given to Ford before being spun off as a separately traded company. Ford accounted for 83 percent of Visteon’s business in the third quarter, Visteon’s first full quarter on its own since the spinoff in June.
Visteon also was hurt by the shutdown at three Ford factories to shift tires from new cars to replacing 6.5 million recalled Firestone tires. The parts maker also said the weakness of the euro against the dollar dragged on profits as well.
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Coca-Cola Enterprises, posted a third-quarter profit today that beat Wall Street targets despite weakness in the soft drink bottler’s North American and European markets.
Atlanta-based Coca-Cola Enterprises earned $130 million, or 30 cents a share, in the third quarter of 2000, which included a $20-million gain from an insurance recovery related to a product recall from the 1999 contamination scare in Europe.
Excluding the gain, Coca-Cola Enterprises earned 27 cents a share in the third quarter, compared to a profit of $103 million, or 24 cents a share, in the same period last year.
Analysts had on average expected Coca-Cola Enterprises to earn 26 cents a share in the third quarter, according to First Call/Thomson Financial, which tracks consensus data.
The bottler said unit consolidated physical case bottle and can volume, a key measure of health in the soft drink bottling industry, fell 1.5 percent on a comparable basis in the quarter. Volumes dipped 1.5 percent in the company’s North American and European markets.
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Philip Morris Meets Expectations
Tobacco and food giant Philip Morris reported today a 6.8 percent rise in underlying third-quarter earnings, meeting analysts’ expectations, despite the negative impact of overseas currencies, particularly the euro.
New York-based Philip Morris, the world’s largest cigarette maker with the top-selling Marlboro brand, said profits rose to $2.24 billion, or 99 cents per diluted share, from $2.10 billion, or 87 cents, a year ago.
“Philip Morris’ business outlook remains robust,” Chairman and Chief Executive Officer Geoffrey Bible said in a statement. “Despite the current adverse rates of foreign exchange, principally the euro, we project that underlying earnings per share for the full year 2000 will be $3.71, up 12.4 percent versus 1999.”
Underlying earnings exclude unusual items. Analysts on average expected the company, which also operates Kraft Foods Inc. and the Miller Brewing Co., to earn 99 cents per share, according to First Call/Thomson Financial. Analysts expect Philip Morris to earn $3.71 for the full year.
Third-quarter underlying operating revenues rose 1.1 percent to $20.03 billion from $19.81 billion a year earlier, despite a negative currency impact of $630 million, Philip Morris said. Its U.S. cigarette shipment volume in the second quarter slipped 1.3 percent to 54 billion cigarettes versus an industrywide decline of 3.5 percent to 107.2 billion cigarettes, Philip Morris said.
Schwab’s Net Earnings Down
Charles Schwab, the No. 1 U.S. discount and Internet broker, said today its third-quarter revenue jumped 30 percent but that profits fell slightly due to acquisition related charges and a seasonal slowdown in stock trading volumes.
San Francisco-based Schwab, which has 7.4 million brokerage accounts and more than $1 trillion in assets, reported a net income of $142.3 million, or 10 cents per share, in the third quarter compared with a proforma profit of $144.2 million, or 11 cents, in the same period last year. Revenue rose 30 percent to $1.32 billion.
Excluding $23 million in acquisition and other charges, Schwab’s quarterly profit rose 15 percent to $165.7 million, or 12 cents per diluted share.
The operating results matched Wall Street’s lowered expectations calling for the company to earn 12 cents per share, according to data compiled by market research firm First Call/Thomson Financial.
Schwab added $41 billion in assets during the quarter, up from $25 billion last year, propelling the brokerage’s total client assets past the $1 trillion mark. The firm said it opened 281,000 new accounts during the quarter, about the same as the 282,000 it opened last year but down from 400,000 in the second quarter.
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Revenues at FleetBoston Up 59 Percent
FleetBoston Financial, the No. 8 U.S. bank holding company, posted today a 10 percent rise in third-quarter operating earnings, meeting Wall Street estimates, due to a rise in capital markets revenues.
Fleet, which has operations ranging from consumer banking to share dealing, has been buying banking and securities firms to expand its business offerings and keep up with a recent wave of consolidation in the financial services sector. Revenues from capital markets operations grew 59 percent to fuel its profit gain.
Fleet, which owns brokerage firm Quick & Reilly, reported operating earnings of $782 million, or 84 cents a diluted share. That compares with profits of $711 million, or 74 cents a share, a year ago.
Including the gains related to the sales of certain deposits, loans and merger-related expenses, the company posted net income of $841 million, or 90 cents a share. Operating earnings were in line with consensus analyst estimates of 84 cents a share, according to market research firm First Call/Thomson Financial.
“Our overall franchise is very well-positioned, given the growth nature of our underlying businesses, coupled with a strong balance sheet,” president Chad Gifford said in a statement.
Fleet’s noninterest income, excluding one-time gains, grew 17 percent to $2.0 billion, driven by the 59 percent growth in capital markets revenues. Revenues from capital markets activities increased to $749 million, while investment services revenue increased 10 percent to $399 million.
Noninterest revenues made up 55 percent of total revenues, up from 50 percent of total revenues a year ago. Fleet’s operations range from buying and selling shares on stock exchanges to its Robertson Stephens investment banking arm.
Net interest income, which include revenues from traditional banking practices like lending, slipped nearly 6 percent to $1.6 billion. Fleet blamed the decline on the loss of business stemming from the sales of deposits and loans. It sold about $5 billion of deposits and $2 billion of loans in the third quarter.
Nonperforming assets as of Sept. 30 were $1.0 billion, or 0.92 percent of total loans, compared with $950 million, or 0.84 percent of loans as of June 30. The provision for credit losses grew to $300 million, up from $228 million in the year-ago quarter.
Fleet on Oct. 2 agreed to buy regional bank Summit Bancorp in a deal that would create New Jersey’s largest bank and expand its reach in the U.S. Northeast. In July Fleet agreed to buy New York Stock Exchange specialist firm M.J. Meehan & Co. LLC, which would expand its market-making capabilities to the common stock of 433 companies.
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Caterpillar’s Flat Third-Quarter
Caterpillar, the world’s largest maker of earth-moving equipment, said today it expected slight rises in revenue in 2000 and 2001 and reported its third-quarter per share profit narrowly beat recently lowered estimates after softness in key markets, higher costs and unfavorable currency translations took their toll.
Peoria, Ill.-based Caterpillar, which warned analysts two weeks ago that it would not meet third-quarter profit forecasts at the time, said it earned $216 million, or 62 cents per share, on revenue of $4.78 billion in the latest quarter. That compares with $219 million, or 61 cents, on revenue of $4.72 billion in the year-ago period.
According to a First Call/Thomson Financial survey, the mean estimate was for a 58 cent profit per share. Analysts trimmed their estimates by 10 cents after the company issued its warning last month.
In addition to weakness in some of its key markets, Caterpillar said its performance also was undermined by unfavorable currency impact and costs related to selling, general and administrative, and research and development. The favorable impacts of a tax adjustment, improved price realization (excluding currency) and higher sales volume largely offset the unfavorable items.
In a statement, Caterpillar’s chairman and chief executive Glen Barton said, “In response to these conditions, we have redoubled efforts to reduce costs to ensure we deliver acceptable results for the full year.”
For 2000, analysts on average were forecasting a profit of $2.88 per share, up from $2.63 per share in 1999.
Barton added, “...Our geographic and product diversity is a major strength, and we continue to benefit from the unprecedented demand for electric power and energy development applications.”
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The Associated Press and Reuters contributed to this report.