Earnings Reports for Jan. 10

Motorola’s Meets Diminished Expectations

Struggling cell-phone maker Motorola Inc. reported a 41 percent drop in quarterly profits despite growing sales, and pledged more cost-cutting measures in 2001 to revive earnings.

Excluding special items, earnings for the last three months of 2000 were $335 million, or 15 cents a share, down from $564 million, or 25 cents a share, a year earlier. That was in line with the estimate of a consensus of securities analysts surveyed by First Call/Thomson Financial.

Today’s report confirmed the downward trend outlined by the company in early December when its second warning in two months sent the stock tumbling to a two-year low.

Motorola’s stock has been in a tailspin as the Schaumburg, Ill.-based company — the world's No. 1 cell-phone manufacturer as recently as 1999 — slipped further behind Finland’s Nokia despite rapid growth in the world market.

Sales for the quarter climbed 11 percent to $10.06 billion from $9.09 billion.

But the company said cell-phone orders fell 20 percent, to $2.9 billion.


Yahoo! Meets Analysts’ Expectations

Yahoo! Inc., the leading Internet media site, reported fourth quarter earnings rose 44 percent, in line with Wall Street expectations. But the company issued earnings and revenue guidance for 2001 below current expectations.

The warning about future growth caused investors to send shares of Yahoo lower in after-hours trading.

The company said it earned $80.2 million, or 13 cents per diluted share, in the latest quarter, compared with $55.7 million, or 9 cents per share a year earlier.

Analysts who follow the company, on average, had expected the company to post earnings of 13 cents per share, according to First Call/Thomson Financial, which tracks forecasts.

Yahoo posted a net loss of $97.8 million, or 17 cents per share, for the three months ended Dec. 31, compared with $37.8 million, or 6 cents per share, in the year ago period.

“By almost any measure Yahoo continued to outperform the industry, and took market share despite a challenging environment,&3148; said CEO Tim Koogle. “Yahoo has become increasingly essential to consumers and businesses.”

Koogle warned, however that &3147;over the next year, we expect to see some short-term effects from the apparent softening economy and the continued realignment of our client base.”

After starting as a search engine in the mid-1990s, Yahoo grew into a full-service information and shopping portal whose Web pages are visited more than 900 million times a day.

In hopes of remaining a rare Internet success story in this weakening economy and beyond, Santa Clara-based Yahoo has been coming up with new ways to make money beyond charging for advertising, which is estimated to account for 90 percent of the company’s revenue.

Yahoo said it has 3,700 advertisers, up from 3,450 in the third quarter, and is getting more ads from traditional companies, including 55 of the Fortune 100 businesses.

Dependence on online advertising has become increasingly risky as dot-coms and other high-tech companies have slammed the brakes on their spending, and Yahoo&3146;s outlook seems to indicate worries about this.

Many analysts have applauded Yahoo’s recent moves to new revenue sources, such as licensing branded corporate intranet sites.

Yahoo said this week it has lined up 18 customers for the high-margin sites, including McDonald’s Corp. and the German pharmaceutical giant Bayer AG.

Yahoo also began charging fees today to people who use the site to auction things. The fees range from 20 cents to $1.50 — lower than the 25 cents to $2 charged by rival eBay Inc. Yahoo still will not charge commissions on successful auctions, which eBay and Amazon.com do.


In the year-ago third quarter, Wal-Mart’s profits grew 29 percent, but this year the once red-hot U.S. economy has cooled somewhat and fuel prices are higher, resulting in fewer dollars spent on retail purchases.

“We are pleased that in a difficult quarter we were able to achieve record sales and earnings,” Lee Scott, Wal-Mart’s president and chief executive, said in a statement. “We gained market share and generated good earnings growth in a challenging retail environment.”

Sales in the quarter rose to $45.68 billion from $40.9 billion a year ago. Total sales at stores open at least a year, or same-store sales, increased 4.9 percent. Same-store sales at the Wal-Mart discount stores rose 4.5 percent while same-store sales at Sam’s Clubs rose 6.6 percent.

For the third quarter the Wal-Mart Stores segment, including Supercenters, had operating profit of $2.249 billion compared to $1.993 billion in the same period last year, a 12.8 percent increase. Sam’s Club stores had an operating profit for the quarter of $219 million versus $194 million a year-ago.

The company’s International unit reported an operating profit of $241 million for the quarter, a 25.5 percent increase from a year ago.

Wal-Mart shares closed at $45-5/16 on Monday, not far from their 52-week low of $41-1/2. The stock’s 52-week high is $70-1/4.

As of Oct. 31, Wal-Mart had 1,723 Wal-Mart stores, 866 Supercenters, 469 Sam’s Clubs, and 15 Neighborhood Markets in the U.S. The retailer also has stores in South America, Europe, Korea and Mexico.


Sluggish Sales Continue to Hurt Gap

The Gap, hurt by sluggish sales in its Gap, Old Navy and Banana Republic divisions, reported a 41 percent drop in third-quarter profits, but still met Wall Street expectations.

The San Francisco-based company said today it earned $186.3 million, or 21 cents per share, in the three months ended Oct. 28. That was down from $315.0 million, or 35 cents per share, during the year-ago quarter.

The results were in line with estimates from analysts surveyed by First Call/Thomson Financial.

Revenue increased 12 percent to $3.41 billion in the third quarter, from $3.05 billion from the year-ago period.

Sales at stores open at least a year were down 8 percent, compared to a 5 percent increase a year ago.

“Third quarter was very challenging,” said Millard Drexler, Gap’s president and chief executive officer. “We’re moving quickly to fix our problems and make sure we execute more consistently.”

For the nine months ended Oct. 28, Gap earned $605.7 million, or 69 cents per share, on revenue of $9.09 billion. In the year-ago period, Gap earned $713.2 million, or 79 cents per share, on revenue of $7.78 billion. BACK TO TOP

Kmart Disappoints the Street

Kmart, the No. 3 U.S. retailer, reported today a third-quarter loss that was worse than Wall Street forecasts, as results were hurt by inventory liquidation, which cut into regular sales.

Kmart said it had a loss of $67 million, or 14 cents a diluted share, compared with a profit of $27 million, or 5 cents a diluted share in the same quarter a year-ago.

Analysts polled by First Call/Thomson Financial had expected the discount retailer to report a loss of 10 cents a share.

Sales in the quarter rose 3 percent to $8.20 billion, compared to a year ago.

Kmart, battling fierce competition from other discounters like Wal-Mart Stores Inc., said in July it would close 72 stores and take a $740 million pretax charge to cover the closures and make inventory adjustments. At that time, the company warned earnings for the year would fall below expectations. BACK TO TOP


The Associated Press and Reuters contributed to this report.