Earnings Reports for July 31

Union Carbide Profits More than Double

Union Carbide, which is being acquired by Dow Chemical, said today its second-quarter profits more than doubled, surpassing Wall Street estimates, despite rising costs for raw materials and energy.

The company said net income jumped to $130 million, or 94 cents per diluted share, from $63 million, or 46 cents, in the second quarter of 1999, including one-time gains in both quarters.

The 2000 second quarter profits included a gain of $11 million, or 8 cents per diluted share, from the demutualization of Metropolitan Life Insurance, which provides some of the company’s employee benefit programs. The 1999 profits included a gain of $9 million, or 6 cents per diluted share, from a licensing-related litigation settlement.

Revenues rose to $1.67 billion from $1.42 billion in the year-earlier period.

Profits came in above analysts’ consensus forecast of 85 cents a share, according to First Call/Thomson Financial.

Union Carbide said that while it was hurt by rising prices for crude oil and natural gas, key raw materials in the chemicals industry, it benefited from continued strong performance at its equity companies and improved performance at its basic chemicals and polymers segment. BACK TO TOP

Including the one-time items, EarthLink lost $63.7 million, or 52 cents a share, compared with a loss of $39.7 million, or 35 cents a share, in the same quarter last year.

The quarter’s primary expense was EarthLink’s $300 million purchase last month of OneMain.com, a Virginia ISP with 762,000 subscribers. EarthLink estimates it will have 5 million subscribers by the end of the year.

“Frankly, the investment community would like to see more growth,” said Fred Moran, head of Internet research at Jefferies and Co. “The 5 million subscribers is what we would consider a conservative number, very achievable.

“We still like EarthLink long term, but we’re cautious short term given the volatility of Internet stocks,” he said.

EarthLink said it had 3.69 million subscribers at the end of the quarter, a 47 percent increase in its membership from a year ago. Of those, about 80,000 were customers of its high-speed Internet services, a 78 percent jump from the first three months of 2000.

Atlanta-based MindSpring Enterprises bought Earthlink, formerly based in Pasadena, Calif., last year. The company still has some operations in Southern California.


Ralston Purina Posts Modest Gain

Pet food maker Ralston Purina Co. said profitability improved and international sales grew in its fiscal third quarter. The company’s earnings fell shy of Wall Street estimates. The St. Louis-based maker of Puppy Chow and Cat Chow reported earnings of $64.3 million, or 22 cents per diluted share. Analysts on average had expected earnings of 23 cents a share, according to First Call/Thomson Financial.

In the 1999 third quarter Ralston Purina had pro forma earnings from continuing operations, before unusual items, of $63.2 million, or 20 cents a share. The company said pro forma comparisons were necessary because Ralston Purina spun off its battery products business in April.

Ralston Purina shares were near their 52-week low on Wall Street.

Sales in the quarter rose 28 percent to $668.3 million from $650.1 million a year ago.

The company said sales in the North American pet foods division were flat in the third quarter, while profitability rose 7 percent on lower ingredient costs.

International pet food sales increased 11 percent, while profitability jumped 36 percent.

The company said higher profitability in the quarter was largely offset by lower equity earnings from its investment in Interstate Bakeries Corp.

One Wall Street analyst cited by Reuters characterized the results as solid and said it appeared as if Ralston-Purina fared well despite the introduction into supermarkets of Procter & Gamble Co.’s premium pet food brand, Iams.


Sales, Profits Up at Starbucks

Starbucks Corp. reported a 31 percent gain in sales and a 42 percent increase in profits in the third quarter. Starbucks’ net profits in the quarter increased to $34.9 million, or 18 cents per share, compared with $24.6 million, or 13 cents per share, in 1999. The results matched estimates of analysts surveyed by First Call/Thomson Financial.

Revenues jumped to $556 million, up from $424 million in the same period a year ago.

Starbucks also announced that it has raised the number of new stores it plans to open this year from 750 to 900 worldwide. The chain now has 3,100 stores.

For the nine months ended July 2, the company earned $93 million, or 48 cents per share, on sales of $1.6 billion. That compares with profits of $69 million, or 37 cents per share, on sales of $1.2 billion for the first nine months of 1999. BACK TO TOP

Texaco Profits Double

Texaco Inc. said second-quarter income more than doubled thanks to sharply higher crude oil and natural gas prices. The White Plains, N.Y-based oil company said income before special items rose to $641 million, or $1.17 a share, from $286 million, or 52 cents, in the same period a year a year ago. Revenues rose to $12 billion from $8.3 billion.

Analysts on average were forecasting $1.18 a share. Texaco earned $614 million in its exploration and production business, which is closely tied to commodity prices. That was up from $226 million posted in the same period last year.

Rivals Exxon Mobil Corp. and Chevron Corp. posted similarly rosy profits in their exploration and production business thanks to high energy prices. Crude oil prices averaged about $28.75 a barrel in the quarter, up more than $10 from a year ago, as members of the Organization of Petroleum Exporting Countries cartel largely honored an agreement to restrict supplies.

Natural gas prices were also red-hot during the quarter, averaging about $3.65 compared to $2.25 per million British thermal units in the same period a year ago.

But Texaco was largely unable to pass along the soaring costs of crude oil in its sales of gasoline and other fuels, which cut into profits in the company’s refining, marketing and transportation business.

While Exxon Mobil said earlier this week that its capital spending would continue to rise over the remainder of the year, taking advantage of the higher cash flow which has accompanied strong crude prices, Texaco gave little indication of future spending plans.


Unocal Beats Street Estimates

Independent oil and natural gas company Unocal Corp. said sharply higher oil and gas prices lifted its second-quarter profits more than 10 times, easily beating Wall Street estimates. Unocal, based in El Segundo, Calif., said operating earnings rose to $170 million, or 69 cents per diluted share, from $16 million, or 6 cents, in last year’s second quarter.

The earnings topped Wall Street analysts’ expectations of 63 cents per share, as reported by First Call/Thomson Financial.

The company said total revenues hit $2.248 billion for the quarter compared with last year’s $1.441 billion, thanks in part to soaring oil and natural gas prices, which have helped companies perform better industrywide.

Roger C. Beach, Unocal’s chairman and chief executive officer, said he expects strong oil and natural gas prices will mean continued profit growth in the remainder of the year. BACK TO TOP

WorldCom Earns $1.33 Billion

WorldCom said second-quarter earnings rose 47 percent to 1.33 billion, from $865 million in the same period a year ago. The nation’s No. 2 provider of long-distance telephone service also said it may may create separate companies or tracking stocks for its voice telephone operations. Separating parts of the voice telephone business would allow WorldCom to focus on providing more lucrative data, Internet and international services to corporate customers.

On a per-share basis, WorldCom’s profits, excluding one-time items, came in at 46 cents, up from 31 cents a year ago.

The results matched Wall Street expectations of 46 cents a share, according to analysts surveyed by research firm First Call/Thomson Financial.

Clinton, Miss.-based WorldCom said net income, including one-time items, rose to $1.28 billion, or 44 cents share in the second quarter, ended June 30, 2000.

The company said revenues rose to $10.19 billion, from $9.07 billion a year ago. Data, Internet and international revenues grew 30 percent to $4.9 billion and now account for 48 percent of WorldCom’s total revenues.

International revenues increased 31 percent to $1.4 billion, driven by strong sales in Europe, as well as increasing revenues in the Asia-Pacific and Latin America regions. Voice revenues grew 4 percent to $2.75 billion.

WorldCom president and CEO Bernie Ebbers said he was disappointed that a proposed $129 billion merger with Sprint was blocked by federal and European regulators, but said the company is looking to the future. He said WorldCom would continue to expand its global network by sharpening its focus on “higher-margin, value-added services in the commercial data, Internet and international markets.” The collapse of the Sprint deal left WorldCom without a wireless segment of its own. That segment of telecommunications is the fastest growing in the United States, said David Burks, an analyst with J.J.B. Hilliard W.L. Lyons in Louisville, Ky.

Burks said the spin-off possibility raised by Ebbers wasn’t surprising given the company’s interest in the Internet.

The company has been shifting away from slower-growing businesses such as the consumer long-distance and wholesale markets due to increased competition and pricing pressure.


The Associated Press and Reuters contributed to this report.