Earnings Reports for Jan. 17

AMD Misses Forecasts

Advanced Micro Devices reported fourth-quarter net income that narrowly trailed forecasts. The company joined its larger rival Intel Corp by saying the slowdown in PC sales would hurt first-quarter results.

AMD said net income more than doubled percent to $177.9 million, or 53 cents a share, from $65.1 million, or 21 cents, a year ago. Sales rose 21 percent to to $1.18 billion.

The Sunnyvale, Calif., company was expected to earn 55 cents a share, the consensus forecast as compiled by First Call/Thomson Financial.

In light of weak demand for personal computers and slowing worldwide economies, the chipmaker said it expects that normal seasonal weakness in first-quarter demand for PC processors coupled with the effects of excess PC inventories in distribution channels will hurt PC processor sales in the first quarter of 2001. BACK TO TOP

American Airlines' Parent Reports Drop in Profits

The Fort Worth, Texas-based AMR earned $47 million, or 29 cents per share, down from $209 million, or $1.37 per share, a year earlier.

Excluding one-time items in both quarters, the nation's No. 2 airline earned $56 million, or 34 cents a share, down from $87 million, or 57 cents per share a year earlier.

Analysts surveyed by First Call/Thomson Financial had expected AMR to earn 30 cents per share.

Revenue rose 8 percent, to $4.86 billion, from $4.49 billion a year ago.

"We had a challenging fourth quarter," chairman and chief executive Donald J. Carty said in a statement. "While demand for air travel was strong, severe weather across much of our system resulted in lost traffic and higher operating costs. And of course, fuel prices remained very high."

AMR said its average price per gallon for jet fuel rose 49 percent in the fourth quarter compared to a year earlier; for the full year, the airline spent 47 percent more on fuel than the previous period.

Still, Carty said, the company enjoyed strong revenue for all of 2000 — up 11 percent over 1999 — as airplane occupancy rose.

Carty said AMR — which announced agreements this month to buy the bulk of Trans World Airlines and parts of US Airways — is "cautiously optimistic" about the coming year's results despite signs of a slowing economy and uncertain fuel prices.

AMR took a $35 million charge on money the company spent to help employees buy home computers and a $26 million gain from recovering start-up costs in a venture with Canadian Airlines.

For the full year, AMR said its net earnings were $813 million, or $5.03 per share, on revenue of $19.70 billion. In 1999, AMR earned $985 million, or $6.26 per share, on revenue of $17.73 billion. BACK TO TOP

Softer Demand Takes Bite Out of Apple

Struggling Apple Computer Corp. posted a first-quarter loss significantly greater than Wall Street had expected.

For the three months ended Dec. 30, the company posted a loss of $247 million, or 73 cents a share.

Wall Street analysts surveyed by First Call/Thomson Financial were projecting a loss of 65 cents a share.

Taking into account one-time investment gains, Apple's loss was $195 million, or 58 cents a share.

Revenues for the quarter were $1 billion, down 57 percent from the $2.34 billion of the year-ago period. The Cupertino-based company has been suffering from sluggish sales, increased competition, and a glut of inventory — problems which some industry analysts predict will not improve in the current quarter.

Apple has slashed prices of its products in recent weeks and announced a new lineup of products at MacWorld Expo last week, including faster, more powerful models of its Power Mac G4 and a new titanium PowerBook laptop. It also said its new Mac OS X operating system will be bundled with new computers starting in July.

That lag time between the announcements and the new OS X systems, however, "could potentially stall the market for Apple products until that time," said Rob Enderle, an industry analyst with Giga Information Group.

Apple officials, however, said they expect to return to profitability starting this quarter.

"Consumers like the current OS, too, and I don't think there'll be a delay," said Fred Anderson, Apple's chief financial officer. Anderson also said Apple was able to successfully cut the channel inventory from 11 weeks to 5½ weeks.

"Our cash position remains very strong at over $4 billion, and we are planning a return to sustained profitability beginning this quarter," Anderson said. "We now expect revenues for FY01 to be about $6 billion."


Boeing Fourth-quarter Profits Rise 36 Percent

Boeing, the world's largest aircraft maker, said today profits rose 36 percent in the fourth quarter, beating Wall Street forecasts, as it pumped more cash out of its sprawling aerospace businesses even with revenues shrinking.

Boeing said it earned $877 million, or $1.01 per diluted share, before extraordinary items, in the quarter, up from $662 million, or 74 cents, in the same period a year earlier. Analysts polled by First Call/Thomson Financial had predicted earnings of 91 cents per share, on average.

Revenues fell 3 percent to $14.7 billion from $15.2 billion in the quarter and were down 12 percent to $51 billion for the full year compared to $58 billion.

Boeing estimated revenues would rebound to $57 billion in 2001 and $62 billion in 2002, with free cash flow of $3 billion to $4 billion in 2001 and more than $4 billion in 2002. BACK TO TOP

Kodak Earnings Fall on Photography Slowdown

Photography giant Eastman Kodak reported today lower fourth-quarter earnings amid a slowdown in the photography market and said first-quarter results would meet previous estimates.

The Rochester, N.Y.-based company said fourth-quarter net earnings were $194 million, or 66 cents a share, down sharply from $475 million, or $1.50 a share, a year earlier.

Excluding one-time items, Kodak's earnings were 68 cents a share, down from $1.27 a year earlier. Analysts on average had expected 68 cents a share excluding unusual items.

In December Kodak cut its fourth-quarter earnings outlook for the second time in three months due to a sharp drop in consumer demand. Film sales showed no growth in the quarter, compared with growth of 7 percent to 8 percent in the first half of the year, the company said at the time.

Kodak said its fourth-quarter sales fell 6 percent, to $3.56 billion.

Sales at its consumer imaging division, its largest business segment, fell 7 percent to $1.84 billion, while sales at the health imaging business rose 2 percent to $581 million. Sales at its struggling professional business were down 15 percent to $431 million.

Kodak has been trying to redefine itself in a digital age, making major investments in digital photography. It has been locked in a fight for market share with Japan's Fuji Photo Film Co. Ltd. and has had to grapple with slower film sales as the economy has slowed. Rival film maker Polaroid Corp. in December slashed its fourth-quarter forecasts in the wake of lower instant film and camera shipments.

Looking ahead to the rest of 2001, Kodak said it remains comfortable with its first quarter earnings estimate of 50 to 60 cents a share and its full-year forecast of $4.50 to $4.90 a share. For all of 2000 it earned $4.59 a share.


GE Fourth-quarter Earnings Rise 16 Percent

General Electric, the conglomerate whose businesses include power generation, financial services and broadcasting, said today its fourth-quarter earnings rose 16 percent, in line with expectations and reflecting a continued emphasis on globalization and product services.

Fairfield, Conn.-based GE, the world's biggest company in terms of stock market capitalization, said earnings rose to $3.585 billion, or 36 cents per share, from $3.09 billion, or 31 cents per share, in the year-earlier quarter.

Analysts were on average forecasting 36 cents per share, according to First Call/Thomson Financial, which tracks analysts' forecasts.

Fourth-quarter revenues rose 6 percent to $34.981 billion from $32.86 billion in the 1999 quarter.

For 2000, GE said it had income of $12.735 billion, or $1.27 per share, on record revenues of $129.9 billion. In 1999, the company reported earnings of $10.72 billion, or $1.07 per share, on revenues of $111.63 billion.


General Motors Tops Estimates

General Motors, the world's largest automaker, reported today a sharp drop in fourth-quarter profits, hurt by continuing losses in Europe and the slowdown in its core North American market.

Detroit-based GM said earnings dropped to $609 million, or $1.15 a share, in the fourth quarter, down from $1.3 billion, or $1.95 per share, in the previous fourth quarter.

Those earnings were before a fourth-quarter charge of $520 million to cover costs associated with the phase-out of Oldsmobile and job cuts in North America and Europe.

The results beat Wall Street forecasts of $1.12 per share, according to market research firm First Call/Thomson Financial.

GM's revenues fell to $45 billion on an adjusted basis compared with $46.3 billion in the same quarter a year ago. GM shares have underperformed the Dow Jones Industrial Average by around 20 percent in the past year. BACK TO TOP

IBM Beats Expectations

International Business Machines Corp., the world's largest computer maker, said its fourth-quarter profit rose 28 percent, slightly exceeding analyst expectations.

The Armonk, N.Y.-based company reported fourth-quarter net income of $2.7 billion, or $1.48 per share, compared with net income of $2.1 billion, or $1.12 per share, a year earlier.

Analysts on average had estimated earnings of $1.46 per share, according to First Call/Thomson Financial, which tracks such forecasts.

Sales of $25.6 billion, an increase of 6 percent from sales of $24.2 billion in the fourth quarter a year ago, roughly in line with the analysts' consensus estimate for sales of $25.5 billion.

IBM said sales would have risen 12 percent were it not for foreign currency effects.

In the fourth quarter, IBM began to ship the seventh generation of its mainframe computer. Analysts had expected those sales to help the company offset weak personal computer demand and slow corporate spending that hurt some of its rivals.


J.P. Morgan Chase Posts Lower Profits

Newly merged U.S. bank holding company J.P. Morgan Chase said today its operating profits dropped 65 percent in the fourth quarter, hurt by losses on investments and a slump in trading revenues.

The bank, formed after Chase Manhattan bought J.P. Morgan & Co. Inc. in a deal that closed Dec. 31, posted operating profits of $763 million, or 37 cents a share, in the quarter, compared with pro forma $2.18 billion, or $1.09 a share, in the year-ago quarter.

Including $1.25 billion in merger-related charges and $1.23 billion in one-time gains, J.P. Morgan Chase earned $708 million, or 34 cents a share, compared with pro forma $2.20 billion, or $1.10, in the year-ago quarter.

Wall Street expected the bank to earn 45 cents a share in the quarter, according to First Call/Thomson Financial, which tracks analysts' consensus estimates.

J.P. Morgan Chase, which ranks among the top U.S. banks with more than $705 billion in assets, warned last month its fourth-quarter profits would be substantially below Wall Street estimates because of weak trading revenues, higher costs and losses on investments.

A string of interest rate increases by the Federal Reserve last year hurt demand for new bond offerings in the quarter and contributed to a stock market slump that ate into revenues at banks' investment and trading operations.

J.P. Morgan Chase's stock closed at $53-3/16 on Tuesday on the New York Stock Exchange.

J.P. Morgan Chase said trading revenues fell to $1.27 billion in the fourth quarter, compared with $1.48 billion a year ago, mostly due to the impact of widening credit spreads on bond markets, while operating revenues at its investment bank rose 20 percent to $3.67 billion, helped by acquisitions.

J.P. Morgan Partners, the bank's investments arm, posted losses of $92 million, compared with a gain of $1.62 billion a year ago. The losses came as the technology-laden Nasdaq composite index last year posted the poorest performance in its history.

The bank also said in a statement it has set long-term goals of 10 percent - 12 percent annual revenue growth, cash earnings per share growth of 15 percent a year, and an average cash return on equity of 20 percent - 25 percent.


3M Plans Cost Cutting After Disappointing Q4

Diversified manufacturing giant Minnesota Mining & Manufacturing said today it plans to boost profits by aggressively controlling costs but its stock tumbled following news of disappointing fourth-quarter earnings. Analysts said the earnings shortfall may mean the honeymoon is over for Chief Executive Officer James McNerney Jr. The long-term General Electric executive moved into the top spot on Jan. 1.

"It's a tough position for him, but by the same token, provides him with a clean slate," said Jonathan Rosenzweig, an analyst with Salomon Smith Barney.

The St. Paul-based company said late Tuesday that its fourth-quarter net income was little changed at $447 million, or $1.12 a fully diluted share, below the $1.20 that had been expected in a First Call/Thomson Financial survey of analysts. It blamed the U.S. economy, which slowed in December, plus the strength of the U.S. dollar.

"There [is] a significant slowdown in the U.S. economy," McNerney said in a conference call with analysts. "The magnitude was greater than we anticipated. The adjustments were not fast enough to achieve earnings expectations for the quarter."

The maker of Post-It Notes, Scotch tape, adhesives and abrasives said it still plans to increase 2001 earnings 10 percent by cutting costs, including headcount. No restructuring charge is planned, it said.

Analysts said few specifics were provided about how 3M plans to cut costs. 3M officials were not available to comment further.

On a telephone conference call with analysts this morning, 3M officials said they expect to achieve "significant" attrition in the company's employment levels.

"In terms of planning going forward, what we've got is significant attrition in our forecast over years, clamping down on head count additions," a 3M official said on the conference call. "Overall, headcount will be up slightly because of acquisitions."

The company, which had 74,440 employees as of Sept. 30, generally loses about 2,000 workers, or 2.7 percent, through attrition each year.

Some analysts said they were slightly skeptical about how 3M will achieve its earnings goals.

"It seems like it's going to take quite a bit of cost improvement to get 10 percent earnings improvement with the kind of weak top line they're talking about in the U.S.," said Peter Enderlin, a Ryan, Beck analyst. He noted that overseas volumes, however, so far have been strong.

Others said they are worried that the U.S. slowdown might eventually affect 3M's overseas operations as well.

"The concern going forward from here is what happens to the international revenue. What's the risk that they slowdown?" said Salomon Smith Barney's Rosenzweig.

He said the strength of the U.S. dollar shouldn't have as much of an impact on 2001 earnings as it did last year.

"Obviously the yen works against them, but the euro is working more in their favor than it was," he said.

The translation of foreign profits into U.S. dollars trimmed 5 cents a share from fourth-quarter earnings.

3M's stock, a component of the Dow 30, has outperformed the Dow Jones industrial average by more than 20 percent since about a year ago. Most of those gains came on speculation and the eventual news that 3M would name McNerney, the first outsider to run the company in its nearly 100-year history.

3M said it will issue a more detailed financial statement next week but will not hold another analyst conference call. BACK TO TOP

US Airways Losses Exceed Expectations

US Airways lost $101 million in the fourth quarter, hurt by rising fuel costs and increased competition within the industry.

The airline, which is seeking federal approval of its acquisition by the parent company of United Airlines, reported a loss Wednesday of $1.50 per share for the last three months of 2000.

That was far greater than analysts' expectations of a $1.10 loss per share, based on a survey of analysts by First Call/Thomson Financial. It was also worse than the fourth quarter of 1999, when the company lost $81 million, or $1.16 a share.

Quarterly revenue rose 10 percent, from $2.14 billion to $2.36 billion.

US Airways chairman Stephen Wolf said in a statement that the pending deal with UAL Corp.'s United Airlines will restore the company's financial health. "The economic impact of the truly national and international network that will result from our merger with United bodes well for both the traveling public and the communities we serve," he said.

The Justice Department is expected to complete its review of the merger by April.

For the year, the Arlington-based airline lost $269 million, or $4.02 per share, including charges, on revenue of $9.27 billion. Last year, the company turned a profit of $197 million, or $2.64 a share, on revenue of $8.60 billion. BACK TO TOP

The Associated Press and Reuters contributed to this report.