Earnings Reports for July 19

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Boeing Bests Street Estimates

Second-quarter profits at The Boeing Co. fell11.6 percent, in part because of a one-time charge associated withits rocket program, but the aerospace giant still beat Wall Streetexpectations comfortably. For the three months ending June 30, Boeing made $620 million, or71 cents per share on sales of $14.8 billion, the company said. A year ago, the company made $701 million, or 75 centsper share, on sales of $15.1 billion. Sales were off 2 percent from1999.

Excluding the one-time charge, Boeing earned 75 cents per sharein the second quarter, ahead of analysts’ estimates of 67 cents,according to a survey by First Call/Thomson Financial.

The one-time charge of $34 million is due to the planneddemonstration launch of the Delta III rocket in August. The companyannounced earlier in the quarter that it would launch nothing but adummy payload on the Delta III to ease concerns over the rocket’ssafety after the first two launches failed.

One bright spot for Boeing was in its commercial aircraftdivision. While revenues fell slightly, to $9.9 billion from $10.1billion in 1999, operating earnings rose 97 percent to $882 millionfrom $448 million a year ago.

Boeing received 200 orders for new aircraft in the secondquarter and a total of 328 orders for the year to date. Afterfirst-quarter deliveries were curtailed by a strike by Boeing’sengineering and technical workers, Boeing delivered 167 aircraft inthe second quarter.

With 242 aircraft delivered so far this year, Boeing officialssaid they were on target for their pre-strike estimate of 490aircraft deliveries by the end of the year.

Sales in Boeing’s military aircraft and missiles divisionremained level, but profits fell from $368 million in 1999 to $250million this quarter, a drop of 32 percent.

Boeing saw operating losses in its space and communicationsdivision, losing $38 million on $1.8 billion in sales, comparedwith profits of $94 million on $1.7 billion in sales a year ago.

For the six months ended June 30, Boeing earned $1.04 billion onrevenue of $24.75 billion, compared with $1.17 billion on revenueof $29.51 billion in the year-ago period. Both figures includeone-time items.

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Sales Overseas Boost Coca-Cola

A stronger global economy and savings from a recent restructuring were credited by Coca-Cola Co. for second-quarter operating earnings that surpassed Wall Street expectations. Atlanta-based Coca-Cola, the world’s largest soft drinkscompany, earned 44 cents a share, excluding nonrecurring items,in the quarter. Analysts had expected 41 cents a share.

Including charges related to the company’s recentrealignment and planned inventory reduction, earnings were $926million, or 37 cents per share, down from $942 million, or 38cents a share, a year earlier.

Second-quarter revenue jumped 5 percent, to $5.62 billionfrom $5.33 billion in the 1999 period.

“The results are very, very encouraging, but consistencywill be critical to Coca-Cola’s relative stock priceperformance,” said Lehman Brothers analyst Michael Branca.

Coca-Cola reported worldwide unit case volume, a key measureof financial health in the soft drinks industry, increased inthe second quarter by 7 percent on a reported basis and morethan 5 percent on a comparable basis.

Volumes in Coca-Cola’s North American market, whichanalysts have cited as a key barometer of the company’sfortunes, increased little more than 1 percent in the secondquarter.

“The only place that looks weaker than expected is NorthAmerica, but Europe looks terrific,” said Caroline Levy, ananalyst with UBS Warburg in New York.

Coca-Cola said soft North American sales volumes in“future-consumption channels,” primarily in supermarkets,continued to reflect the impact of a decision to raise theprices it charged its bottlers for the concentrate used to makesoft drinks.

Higher concentrate prices generally translate into highersoft drink prices for many consumers.

Coca-Cola’s results, especially in Europe, appeared toindicate that the company was well on its way to rebounding fromits performance in 1999, which was marred by a disastrouscontamination scare and product recall in Belgium and France.

During the second quarter, Coca-Cola completed a massiverestructuring of operations, marked by about 5,000 layoffs, in amove to decentralize the company and make it more responsive todevelopments in its roughly 200 markets around the world.

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Record Earnings, Net Loss at Ford

Ford Motor Co., theworld’s No. 2 automaker, reported record operatingearnings of $2.7 billion for the second quarter, up 10 percentfrom a year earlier and surpassing Wall Street expectations. Butone-time charges resulted in the company’s first net loss since1992. Operating earnings of $2.20 per share, including results ofthe Visteon Corp. parts unit, exceeded analysts’ consensusestimate of $2.01. In the 1999 second quarter Ford had operating earnings of $2.48billion, or $2 per share.

Ford took one-time charges of $3.3 billion in the secondquarter related to its June spin-off of Visteon and a Europeanrestructuring, which including ending vehicle production at itsDagenham plant in England, eliminating a net 1,400 jobs.

Including the charges, Ford lost $577 million, or 47 centsper share, in the second quarter, compared with a year-earlierprofit of $2.34 billion, or $1.89 per share, also includingone-time charges.

Analysts applauded Ford’s results. “Great numbers,” saidDavid Bradley, an analyst with J.P. Morgan.

Ford’s second-quarter revenues rose 6 percent to a record$44.5 billion. Worldwide vehicle unit sales were also a record,rising to 1,991,000 from 1,928,000 a year earlier.

The automaker’s worldwide automotive operating earnings rose15 percent to $2.1 billion, almost entirely due to strong salesof pickups, minivans, sport utility vehicles and luxury cars inits core U.S. market.

Ford’s North American automotive division had recordoperating earnings of $1.84 billion in the second quarter, up7.4 percent from the same period a year ago, boosted by popularnew products such as the Explorer Sport Trac crossover sportutility/pickup truck and the Jaguar S-Type.

Earnings for Ford Credit, the world’s largest automotivefinance company, rose 16 percent to $388 million in the secondquarter due to higher volumes and improved net financingmargins.

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IBM Beats Estimates on Revenue Slide

International Business Machines Corp. reported a 1 percent revenue decline and earningsthat beat estimates, as the world’s No. 1 computer makercontinued to be hurt by problems in its hard disk drive andpersonal computer businesses. The Armonk, N.Y.-based company said net income rose to $1.9billion, or $1.06 a share, from $1.7 billion, or 91 cents,excluding special items, in the second quarter of 1999. Revenuefell 1 percent to $21.7 billion from $21.9 billion in the sameperiod a year ago.

That topped the consensus estimate of $1, according toanalysts surveyed by First Call/Thomson Financial.

IBM, which has shown slack sales for much of the past year,had posted a 5 percent drop in revenues for the first quarter,in stark contrast to rivals such as Sun Microsystems Inc., whose revenues have accelerated by 35 percent or more.

IBM said the 1999 second-quarter earnings, including thebenefit of 37 cents per diluted share from the sale of itsGlobal Network unit and other 1999 actions, totaled $1.28 pershare.

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McGraw-Hill Earnings Jump 20%

The McGraw-Hill Cos., corporate parent of theStandard & Poor’s stock indexes, reported a 20 percent jump inearnings on stronger results from Business Week magazineand textbook sales. McGraw-Hill earned $107.9 million compared to $90 million in thesame quarter a year ago as revenues rose 11 percent to $1.02billion from $922.7 million. Per-share earnings rose to 55 centsfrom 45 cents, beating analysts’ expectations of 52 cents.