Earnings Reports for Oct. 18
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AOL Surpasses Analyst Estimates
America Online Inc., theworld’s largest Internet services provider, said fiscal first quarter earnings doubled from a year earlier assubscriber, advertising and e-commerce revenues drove growth.
Dulles, Va.-based AOL said earnings, excluding items, rose to $340 million, or 14 cents ashare, compared to $182 million, or 7 cents a share, in the same period last year.
Revenue climbed 34 percent to $2 billion, up from $1.5 billion a year earlier. Advertisingand e-commerce revenue rose 80 percent to $649 million, withinanalysts’ estimates. The company added 1.4 million net newsubscribers in the quarter, for a total of 24.6 million membersworldwide.
Wall Street analysts had expected AOL to earn 13 cents ashare, according to First Call/Thomson Financial.
AOL’s merger with media giant Time Warner Inc. is stillawaiting U.S. regulatory approval.
Net income rose to $345 million, or 13 cents a dilutedshare, from $181 million, or 7 cents a diluted share theyear-earlier period.
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Apple Disappoints Wall Street
Apple Computer Inc. reported earnings that fell slightly short of theanalyst forecasts, which had been reduced last month after thecompany warned of a sales shortfall.
Apple said it earned $108 million or 30 cents per dilutedshare in the quarter, excluding certain unusual gains.
Most analysts had been forecasting fourth quarter earningsof 31 cents per share, according to First Call/ThomsonFinancial, which surveys results.
Including all the unusual items, Apple had a net profit of$170 million or 47 cents per diluted share, compared with $111million or 31 cents per diluted share in the year-ago quarter.
Apple said revenues rose to $1.87 billion, up 40 percentfrom the year-ago quarter. Analysts had been forecastingrevenues of $1.87 billion.
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Avon Narrowly Beats Street
Avon Products Inc., the direct seller of beautyproducts, reported a 5 percent rise in third-quarterearnings, narrowly beating Wall Street projections despite weaknessin Europe. Avon also said it will be able to achieve earnings per shareincreases in the range of low -to mid-teens for the year.
The company reported earnings of $93 million, or 39 cents ashare, in the three months, ended Sept. 30, up from $88.2 million,or 34 cents per share, in 1999.
Revenues during the quarter increased 7 percent to $1.34 billionfrom $1.25 billion in the year-ago period.
The results beat Wall Street earnings expectations of 38 cents.
Avon said that sales and profit gains in the U.S., Latin Americaand in the Asia-Pacific region more than offset a 3 percent salesdecline in Europe due to currency weakness.
Avon’s U.S. operations posted a 5 percent sales increase, butstepped up spending on advertising, its e-commerce site and otherbrand-building initiatives. Total beauty sales were up 9 percent,fueled by the successful launch of Retroactive, a skin care productunder the Anew brand. Avon expects Anew to be the best-selling skincare product in the company’s history.
Andrea Jung, Avon’s chief executive, said the company’s launchof a new Internet Web site for its sales representatives, and thedevelopment of a new beauty brand called Becoming to be sold atretail starting mid-2001, should represent “significant growthvectors over the long term.”
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Boeing Soars Above Expectations
Boeing said todayoperating earnings rose 27 percent in the third quarter,beating Wall Street forecasts, as the aerospace giant squeezedmore cash out of its businesses even as revenues shrank.
The world’s biggest plane-maker said it earned $650million, or 74 cents per share, excluding extraordinary items,in the three months ended Sept. 30. In the year-earlier periodBoeing earned $512 million, or 55 cents, excludingextraordinary items.
Revenues at the Seattle company fell to $11.88 billion from$13.28 billion.
Analysts on average had expected a strong quarter fromBoeing amid a string of recent positive news on commercial jetorders and rising cash flow expectations. The consensusearnings forecast among analysts surveyed by First Call/ThomsonFinancial was 67 cents per share.
Boeing also forecast 2001 revenues would reach $57 billion,an increase from the recent 2000 projection of $51 billion butstill below the $58 billion revenues of 1999.
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Profits Slump at Chase Manhattan
Chase Manhattan Corp., said profitsslumped 26 percent in the third quarter, sharply below WallStreet estimates, after losses on investments, sluggish tradingrevenues and higher costs.
The New York-based bank, which recently announced plans tobuy rival J.P. Morgan &Co., earned $884 million, or 66 cents per diluted share,in the third quarter, down from $1.19 billion, or 92 cents ashare, in the year-ago period. The figures for the latestquarter include special items. Without these items, earningswere $905 million, or 68 cents a share.
Chase’s earnings were far below Wall Street’s consensusforecast of 93 cents a share as compiled by First Call/ThomsonFinancial, which tracks analysts’ estimates.
A steep drop in the value of Chase’s investments instart-up companies at its Capital Partners arm, which havebolstered prior quarterly results, hurt the bank’s results inthe third-quarter.
Chase increasingly has looked to securities-typebusinesses, such as investing and advising on mergers, forprofits, rather than to the traditional lending businesses.
Its trading revenues and corporate finance fees were downfrom the second quarter amid lower market volatility andtrading volumes as well as a slowdown in leveraged finance.
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EMC Profits Rise 55 Percent
EMC Corp., the No. 1data-storage company, said third-quarter earningsrose 55 percent, beating estimates, but a components shortagecaused its high-margin software sales to decline from theprevious quarter.
EMC said it earned $458.2million, or 20 cents a diluted share, compared with $295.8million, or 13 cents a share, in the year-ago period. Totalthird-quarter revenues rose 34 percent to $2.28 billion,compared with $1.7 billion in the year-ago period. EMC saidits fastest growing market was the Asia Pacific region, wherestorage revenue grew 130 percent in the third quarter.
In the vital storage sector, total storage revenue in thequarter increased 47 percent to $2.14 billion, the highest rateof growth for EMC in more than five years, the company said.
Analysts surveyed by First Call/Thomson Financial werelooking, on average, for EMC to earn 19 cents a share. EMC President Joe Tucci said the components shortageprevented the company from meeting customer demand for some ofits high-end storage devices that are sold with companysoftware. He said the problem has since been fixed.
“We could not ship all the big boxes that we had demandfor,” Tucci said. “We tweaked our sales force to go after moreupgrades. … In doing that, we don’t sell much software withupgrades.”
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Ford Falls on Recall
Ford Motors’ third-quarter earningsdeclined 7 percent to $888 million, a drop the company blamed oncosts from the recall of 6.5 million Firestone tires, many of whichwere on its Ford Explorers.
“Getting our customers onto good tires has been, and continuesto be, more important than short-term profits,” Ford president andCEO Jacques Nasser said in a statement. “This was a difficult quarterfor our customers, our employees, our dealers and our shareholdersand we are committed to quickly completing the Firestone tirerecall.”
Ford did not give an estimate for the cost of the recall. Nassersaid during an interview with 60 Minutes earlier this monththat the recall would cost in the “neighborhood” of $500 million.
The world’s No. 2 automaker earned 53 cents a share for thethree months ending in September, compared with $989 million, or 78cents a share for the same period of 1999. Last year’s results donot include earnings from Visteon Corp., the parts arm Ford spunoff this year.
The results met Wall Street expectations after adjusting for acomplicated stock swap that changed the number of shares in thecompany during the quarter. Wall Street analysts had expectedearnings of 50 cents a share, according to a survey by FirstCall/Thomson Financial.
Earnings in Ford’s automotive operations totaled $391 million, adrop of 27 percent from $535 million over last year.
North American automotive earnings were down 11 percent, from$880 million to $769 million, despite a 4 percent increase inrevenues. While vehicle sales were up 5 percent, so were U.S.incentives, such as rebates and low-interest rate loans.
The costs to Ford for the tire recall include the temporaryshutdown of three factories to divert tires to consumers, which cutproduction of the Ford Explorer and Mercury Mountaineer by 15,000vehicles. Ford has also said it would share some costs of therecall with Bridgestone/Firestone Inc.
The picture was no better overseas, where Ford’s lossesincreased 38 percent, to $285 million, excluding one-time charges.Losses in Europe increased 42 percent, from $156 million to $221million, while losses in South America decreased 25 percent, from$86 million last year to $64 million this year. Ford broke even inAsia and the rest of the world, compared to a $35 million profitlast year.
Ford Credit earned $386 million in the third quarter, up 22percent from a year ago. Rental car company Hertz Corp. earned $143million in the quarter, up 3 percent over last year; Ford’s shareof Hertz’s earnings was $116 million.
Total revenues were up 7 percent, from $37.2 billion to $40billion.
For the first nine months of 2000 Ford earned $4.3 billion, down9.5 percent from a year ago, excluding Visteon.
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International Paper to Close PlantsInternational Paper Co. reported that earnings for the third quarter rose to $260 million, or 53 cents per share before special items, compared with $193 million, or 46 cents, before special items, a year earlier. Analysts on
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