Earnings Reports for July 26

Amazon Beats Estimates by 2 Cents

Amazon.com Inc. beat Wall Street’s estimates for second-quarter earnings. The Seattle Internet retailer said sales grew 84 percent from the same period a year ago. The company also had an 32 percent increase in losses. The company lost $89 million, or 33 cents per share, on sales of $578 million.

The earnings report was released after the close of trading on Wall Street. Shares of Amazon.com closed at $36.06¼, down $1.56¼, on the Nasdaq Stock Market.

The company said that its U.S. book, music and video divisions were all profitable in the quarter, posting just over $10 million in gross profits. Amazon.com’s electronics division also saw growth, though the company did not immediately quantify it.

“While we continue to see improvements in all our businesses, we are especially pleased with the profitability in our U.S. Books, Music and Video group and the unusual growth in our Electronics store,” said Amazon.com chairman Jeff Bezos, who said the company was on target for its year 2000 objectives. Answering critics who say the e-commerce giant will run out of money before the end of the year, Amazon.com Chief Financial Officer Warren Jensen said the company had $908 million on hand at the end of the quarter and should have more than $1 billion by year’s end.

“I don’t see anything here that falls under the heading of bad news,” said J.P. Morgan analyst Tom Wyman. “

The company, which gained nearly 3 million new customers in the quarter, experienced only a modest gain in sales compared to the first quarter. The second quarter is, however, considered the slowest time of year for most retailers.

And losses were down from the first quarter of this year, when the company lost 35 cents per share. Analysts had hoped to see such a decrease, looking for a sign that the company would eventually become profitable.

Bezos and other company officials said Amazon.com would not be profitable before 2002 at the earliest.


Drug Sales Give Amgen a Boost

Amgen Inc.’s second quarter earnings rose 13 percent on improving sales of its mainstay kidney dialysis and chemotherapy drug Epogen, the biotechnology company said. Amgen earned $303 million, or 28 cents per share, up from $268 million, or 25 cents per share in the same period a year ago. The results were a penny better than Wall Street forecasts, according to analysts surveyed by First Call/Thompson Financial.

Sales rose 11 percent to $914 million.

For the six-month period Amgen earned $568.8 million, or 52 cents per share, up from $514.8 million, or 48 cents per share, a year earlier.

The second-quarter increase came despite spending on the launch of several new drugs over the next two or three years, said Kevin Sharer, Amgen’s president and chief executive officer.

Sales of Epogen increased 15 percent to $493 million. Epogen stimulates red blood cell production in chemotherapy and kidney dialysis patients.

Sales of Neupogen, another longtime moneymaker for Amgen, rose only 2 percent during the quarter. Sales were hurt by low wholesaler inventories and unfavorable foreign exchange rates, the company said. Neupogen boosts the production of white blood cells.

Amgen plans to launch four new drugs, including NESP, a new, more powerful red cell stimulator that the company will be able to sell in Europe in competition with a version of Epogen sold by Johnson & Johnson. Amgen shares European marketing rights for Epogen with Johnson & Johnson under a 14-year-old licensing agreement.


Daimler Chrysler Profit Up 18%

Second-quarter profits rose 18 percent at DaimlerChrysler AG, topping expectations, but the automaker warned that earnings for the rest of the year would be hurt by larger U.S. sales incentives and the cost of launching new Chrysler cars and minivans.

The U.S.-German company reported that profits totaled $1.67 billion, or $1.66 a share, from April to June as a strong showing for Mercedes-Benz and other units offset lower earnings from the Chrysler division.

In the second quarter of 1999, the automaker posted a net profit of $1.41 billion, or $1.41 a share. Wall Street analysts had expected a per-share profit of $1.52 a share for the just ended quarter, according to a survey by First Call/Thomson Financial.

Second-quarter revenues rose 17 percent to $41.7 billion compared with a year-ago tally of $35.6 billion.

Once again, the Chrysler division accounted for well over half of the company’s profits, earning $1.1 billion in the quarter, but that was 12 percent lower the unit earned in the same period last year — even though revenues rose 11 percent to $17.2 billion.

The company said the division was hurt by the cost of launching new versions of its minivans, mid-size sedans, coupes and the popular Chrysler PT Cruiser. Profits also took a hit in June when Chrysler increased sales incentives as business began to sag.

Profits also declined at DaimlerChrysler Services, the company’s finance arm, falling 18 percent to $210 million despite a 50 percent increase in revenues. The company said profits were hurt by weak prices for used cars, higher refinancing costs and more competition for leasing.

DaimlerChrysler warned that its operating profits will decline in the second half of 2000, especially the final three months of the year, due to the Chrysler incentives and launch costs.

But on a more positive note, Chairman Juergen Schrempp said in a statement, the company’s stakes in European aerospace and telecommunications ventures are expected to boost net earnings

Other parts of the company reported improved second-quarter results.

The Mercedes-Benz and Smart division increased earnings 22 percent to $719 million, as revenues rose 18 percent to $10.9 billion on stronger sales of Mercedes luxury cars in the United States and Europe and improved sales of the Smart minicar.

Profits in DaimlerChrysler’s commercial vehicle division totaled $362 million, a 19 percent increase, as revenues rose 13 percent. The company said sales in North America weakened slightly from last year, while South American sales improved.

The aerospace division saw profits increase 30 percent to $234 million, as revenues increased 6 percent to $2.3 billion.


DuPont Beats Estimates

DuPont Co., the nation’s biggest chemical company, posted better-than-expected profits for the second-quarter, but warned that high energy and raw material costs would hurt its earnings over the remainder of the year.

Wilmington, Del-based DuPont said profits in the second half of the year could drop 20 to 25 cents a share compared to a year ago because of soaring prices for crude oil and natural gas, the chief raw materials used by chemical companies.

Nonetheless, the company said earnings for the full year should still grow by 17 to 20 percent on the back of stronger prices for its chemicals and plastics and strong markets outside of the United States.

And over the past several months, DuPont has managed to overcome some of the higher costs of raw materials with solid sales, which rose to $7.9 billion in the second quarter, up 13 percent from the $7 billion it reported a year ago.

Its second quarter profits also squeezed past analysts’ expectations, rising 7 percent to $949 million, or 90 cents a share, before special items. In the same period a year ago, DuPont earned $886 million, or 78 cents.

Analysts surveyed by First Call/Thomson Financial had expected the company on average to earn 88 cents a share for the quarter.

“Overall these were solid results,” said Frank Mitsch, an analyst with Chase H&Q. “If you consider the head winds they faced with respect to the weak Euro and high raw material costs, to show results is indicative of the strong portfolio they have.”

Charles O. Holliday, Jr., DuPont chairman and chief executive officer, said more than half of the company’s key businesses delivered double-digit earnings growth in the second quarter.

DuPont’s strongest growth came from its performance coatings, speciality polymers, and pigments and chemicals business. It also benefited from taking full ownership of Pioneer Hi-Bred, its seed company..


3M Beats 2Q Earnings Estimates

A strong flow of new products and productivity gains helped boost 3M Co. earnings nearly 12 percent in the second quarter to $470 million, up from $421 a year earlier. The earnings of $1.18 a share for the quarter ended June 30 compared with $1.03 a share in the same period a year ago, excluding a one-time, after-tax gain of $55 million in the earlier period.

Sales for the quarter totaled $4.22 billion, up 9 percent from $3.86 billion in the second quarter of 1999.

The results beat by 2 cents the consensus estimate of analysts surveyed by First Call/Thomson Financial.

“We continue to deliver solid growth,” said L.D. DeSimone, chairman and chief executive. “Our electro communications businesses continued to register strong growth. We also saw solid gains in our consumer and office and our transportation, graphics and safety segments.”

Minnesota Mining and Manufacturing Co. produces a wide range of products, including Scotch tape, Post-it Notes and products for the electronics, telecommunications, automotive, industrial, consumer and office, health care and safety markets.

Productivity gains also contributed to 3M’s performance, he said.

For the first six months, earnings totaled $957 million, or $2.39 a share, compared with $860 million, or $2.12 a share, a year earlier.

The 2000 figure includes a one-time gain of $31 million, or 8 cents a share, related to the termination of a health care marketing agreement. The 1999 figure includes a one-time gain of $55 million, or 14 cents a share. Excluding the nonrecurring items, first-half earnings totaled $926 million, compared with $805 million a year earlier.


Xerox Warns on Second Half

Xerox Corp. reported a drop in second-quarter earnings, citing a charge for accounting irregularities in its Mexico subsidiary and a decline in revenues for certain products.

The company reported net income of $145 million, or 19 cents per share, compared with $448 million, or 62 cents per share in the same period a year ago. That includes a charge of $78 million, or 11 cents per share, to cover problems associated with its Mexican operation.

Without the special charge, Xerox had earnings of 30 cents per share, which matched the estimate by a consensus of analysts surveyed by First Call/Thomson Financial.

Xerox had warned last month that it expected a charge of about 6 cents per share for the Mexican problems.

Chief Executive Paul Allaire said the accounting irregularities, which are being investigated by the Securities & Exchange Commission, appear to have been caused by several senior managers in Mexico who collaborated to circumvent Xerox accounting policies and administrative procedures. Allaire said their actions resulted in the charge, which is primarily for bad debt and unrecorded liabilities.

“We have no reason to believe that the special circumstances that existed in Mexico are replicated in any other country,” Allaire said.

Second-quarter revenue was $4.69 billion, 4 percent lower than the same period a year ago. Pre-currency revenue declined 1 percent. Currency adversely impacted earnings by approximately 4 cents during the quarter.

The company said a revenue decline in high-speed black-and-white production printing and publishing products created the most significant effect on income.

Xerox said a realignment of its sales force also continued to adversely affect revenues.

The company said there were some improvements during the quarter, including Brazil’s continued strong recovery and a 50 percent increase in Fuji Xerox’s net income.


The Associated Press and Reuters contributed to this report.