Earnings Reports for March 21

ABC News

January 6, 2006, 1:27 AM ET

30 min read

— -- 3Com Losses Are Worse Than Expected

Carnival Profits Cruise Down 25 Percent

FedEx Q3 Net Income Down 4 Percent

Lehman Brothers' Quarterly Profit Falls 29 Percent

Morgan Stanley Quarterly Profit Falls 30 Percent

Outside the U.S., pharmaceutical sales jumped 20 percent to$2.3 billion in the quarter on the same basis.

Shares of Pfizer have flourished in 2000 along with thoseof the rest of the pharmaceutical industry, as investors tookmoney out of slumping technology stocks in favor of defensiveareas like the drugs sector — an area seen as safe havenbecause the economy does not affect how many pills peopletake.

The stock has outperformed its peers on the American StockExchange Pharmaceutical Index by nearly 5 percent over the last52 weeks, and out-paced the benchmark Standard & Poor's 500index by about 20 percent over that period.

Pfizer said its so-called "alliance" revenues from combinedsales of two drugs it co-markets with other companies — Pharmacia Corp.'s Celebrex and Eisai Inc.'s Alzheimer's diseasetreatment Aricept — soared 63 percent to $348 million in thequarter.

Global sales of Lipitor jumped 26 percent to $1.43 billionand grew 33 percent in the year to $5 billion — reaching thecompany's previously stated goal.

Global Viagra sales in the period rose 37 percent to $380million in the fourth quarter.

Regarding its acquisition of Warner-Lambert, Pfizer said itachieved $430 million in savings in 2000 and sees mergersavings in 2001 of $1.2 billion, growing to at least $1.6billion in 2002.BACK TO TOP

International Paper's Earnings Fall 36 Percent

International Paper, the world's largest paper and forest products company, said today its fourth-quarter earnings fell 36 percentdue to rising energy costs and the slowing U.S. economy.

The company said net earnings for the quarter, beforespecial items, were $145 million, or 28 cents per share,compared with $227 million, or 55 cents per share in the 1999quarter.

After special items, including pre-tax, one-time chargesfor Union Camp and Champion merger-related costs, IP posted aloss of 85 cents for the fourth quarter.

After IP warned a month ago of an earnings shortfall, theaverage consensus of analysts polled by First Call/ThomsonFinancial was lowered from 44 cents to 30 cents per share.

Fourth-quarter net sales were $7.2 billion, compared with$6.3 billion for the same period in 1999.

John Dillon, chairman and chief executive officer, said theslowing economy and rising energy costs occurred when theweather turns colder and demand drops for lumber and other woodproducts.

"As demand fell, we maintained our commitment to keep ourproduction in line with customer orders, which negativelyimpacted overall sales," he said. "While many of these factorsare continuing into the opening months of 2001, the steps weare taking will lead to a stronger International Paper for thelong term."

International Paper said it has nearly completed itspreviously announced plan to adjust capacity as the woodproducts industry continues to battle lower demand and higherenergy costs.

The company has closed its Mobile, Ala. and Camden, Ark.mills, and completed the downsizing of the Courtland, Ala.mill. The closure of the Lockhaven, Pa. mill is proceeding onschedule, IP said.

It also said asset sales are progressing rapidly asInternational Paper focuses on its three core businesses —paper, packaging and forest products. The company has increasedits asset sales target to $5 billion, including timberlands, tobe completed by the end of 2001.

It said it aims to reduce capital spending to $1.2 billionin the year 2001, which is about 60 percent of depreciation andamortization. The capital expenditure program in 2001 is 20percent below the $1.4 billion spent in the year 2000, itsaid.

International Paper makes paper, packaging and wood andbuilding products, as well as being the largest private forestlandowner in the world. It has operations in nearly 50countries, employs more than 117,000 people and exports itsproducts to more than 130 nations.BACK TO TOP

Mad Cow Takes a Bite out of McDonald's

Fast food giant McDonald's said today its fourth-quarter earnings fell 7percent as an outbreak of mad cow disease in Europe pushed theregion's sales down 10 percent and threatened to weaken thecompany's first quarter results.

Net income at the Oak Brook, Ill.-based hamburger maker,the largest restaurant company in the world, fell to $452 million,or 34 cents a share, from $486.2 million, or 35 cents a share, ayear earlier. McDonald's was expected to earn 35 cents a share,according to a recent poll of analysts by First Call/ThomsonFinancial.

McDonald's, which operates nearly 5,500 restaurants in Europe,its second-largest market behind the United States, has sinceNovember seen sales erode amid an outbreak of mad cow disease, orbovine spongiform encephalopathy, on the continent.

BSE is a chronic degenerative disease affecting the centralnervous system of cattle and is believed to be contracted throughfeed containing animal by-products. It has been linked to asimilar brain-wasting disease in humans.

CEO Jack Greenberg said in a statement that he expects adifficult first quarter of 2001 due to continued mad cow concerns,tough comparisons from last year, and an extra trading day in2000.

"We expect the first quarter to be very challenging, due tooutstanding results and an extra trading day in 2000, andcontinuing consumer confidence issues about European beef," hesaid.

The company has been battling public fears with stepped upadvertising and greater promotion of non-beef products.

Sales to Europe, the company's second-largest market behindthe U.S., fell 10 percent in the quarter to $2.21 billion from$2.45 billion one year ago. Operating income fell 17 percent to$267.3 million from $322.2 million.

"Europe got hit pretty hard," said Bear Stearns analyst JoeBuckley, who in June lowered his rating on McDonald's shares toneutral due to broader international concerns, includingfluctuations in the euro. "The problem with mad cow is that it isan unknown. No one knows how long these concerns last."

Systemwide sales, which include sales from restaurants ownedby franchises and those owned by the company, rose to $9.92billion from $9.75 billion a year ago.

Sales in the United States, McDonald's largest market, rose 3 percentto $4.82 billion, from $4.68 billion one year ago. Operatingincome rose 14 percent to $385.3 million from $338.9 million.Sales in Asia Pacific, McDonald's third-largest market, rose 3percent to $1.75 billion from $1.70 billion a year ago.

"Despite a number of operating challenges, our worldwidecomparable sales were positive and systemwide sales increasedseven percent in constant currencies for the year," Greenbergsaid.

The company plans to add about 1,700 restaurants in 2001, hesaid. The company said that 2001 per share earnings were expectedto grow between 10 percent to 13 percent, excluding the impact of foreigncurrency translation.

In the year, it plans to buy back about $1.2 billion in stock,the remainder of a three-year $4.5 billion plan. In 2000, itpurchased $2.0 billion worth.BACK TO TOP

Qwest Tops Wall Street

Telephone and data servicesprovider Qwest Communications todayposted a better-than-expected 44 percent jump in fourth-quarterprofits, propelled by robust growth in Internet, data andwireless telephone revenues.

Qwest, which acquired regional phone company U S West Inc.last year in a $36 billion deal, said in a statement it was ontrack to meet its targets for 2001 revenues and earnings beforeinterest, taxes, depreciation and amortization, or EBITDA, akey measure of a company's performance.

Andrew Hamerling, an analyst with Banc of America, calledthe results "terrific."

"Everything is as expected," he said. "Overall I'd say it'sa great quarter."

The Denver-based company said pro forma profits excludingone-time items rose to $270 million, or 16 cents a dilutedshare, compared with $188 million, or 11 cents a share, a yearago.

The results beat Wall Street expectations of 14 cents ashare, according to research firm First Call/ThomsonFinancial.

"With the initial integration of the [U S West] mergersuccessfully completed, we are on track to meet our expectedgrowth rates," Chairman and Chief Executive Joseph Nacchio saidin a statement.

Qwest said revenues rose 9.9 percent to $5.02 billion. Theincrease was driven by growth of almost 40 percent in Internetand data services.

Wireless revenues rose 90 percent to almost $150 million.The number of wireless customers increased to more than805,000, above the company's target of 800,000 for the end of2000.

Fourth-quarter EBITDA was up 19.7 percent, to $1.99billion.

Shares of Qwest have fallen about 10 percent amid sharpdeclines throughout the telecom sector over the past year. Itsstock has underperformed the Standard & Poor's 500 index byabout 4 percent.

The company also said it expected to double the number ofcustomers for its digital subscriber line (DSL) service, whichprovides high-speed Internet access over conventional phonelines, to 500,000 by the end of the year.

Qwest said it ended 2000 with more than 255,000 DSLcustomers, above its target of 250,000.

It also said it expected to file with the FederalCommunications Commission to enter long-distance service inseveral states by the end of 2001.

It expects to apply to reenter long-distance business inone of the states in its local service area by the summer.

Tavis McCourt, an analyst with Morgan Keegan & Co. Inc. inMemphis, Tenn., said entry into long-distance markets was vitalfor Qwest's growth.

"Certainly they are going to be as aggressive as possibleto make that a reality," he said.

Qwest reiterated that it expected 2001 revenues to be inthe range of $21.3 billion to $21.7 billion and EBITDA to be$8.5 billion to $8.7 billion.

Hamerling, the Banc of America analyst, said the biggestchallenge facing Qwest was to meet its target of 20 percentlong-term EBITDA growth.

Whirlpool Reiterates Job Cuts

Appliance maker Whirlpool metWall Street's lowered fourth-quarter earnings expectations andaffirmed its global restructuring plan will mean up to 6,000 jobscut in the coming year.

The company said today it expects to trim more than 2,000jobs worldwide as part of the restructuring's first phase, withmore details to be announced within two weeks.

All told, the company shake-up — which will pare 10 percent ofWhirlpool's 60,000-member work force — will result in pre-taxcharges of $300 million to $350 million, with annualized savings of$225 million to $250 million, the company said.

"This will be a year of challenge and opportunity," David R.Whitwam, Whirlpool's chairman and chief executive, said in astatement. "We believe that our strong brands, global platform,innovative products and consumer focus — combined with ourrestructuring efforts and the associated lower cost structure —will produce a strong operational performance and solid financialresults in 2001."

Whirlpool said its fourth-quarter net earnings were $67 million,or $1 per share, compared with $113 million, or $1.51 per share,during the year-ago period.

Analysts surveyed by First Call/Thomson Financial were expecting99 cents per share, having lowered their estimate from $1.42 ashare after Whirlpool issued an earnings warning last month. At thetime, Whirlpool blamed intensified price competition, risingmaterial costs, and slowing or declining demand.

The company said sales during the three months ended Dec. 31were $2.58 billion, down 4 percent from $2.69 billion in theyear-ago period.

It added that it expects its first-quarter performance,excluding charges, to be in line with fourth-quarter earnings of $1per share. Analysts surveyed by First Call/Thomson Financial hadbeen expecting $1.02 per share.

The North American appliance industry has been expected to bedown 7 percent to 8 percent in the fourth quarter versus the sameperiod in 1999, Whirlpool said last month. Earlier companyestimates forecast a fourth-quarter decline in industry shipmentsof 2 percent to 3 percent.

Whirlpool has said its restructuring involves a reduction andreconfiguration of global operations, including the closure of someplants.

For the year, Whirlpool earned $367 million, or $5.20 per share,on sales of $10.33 billion. In the previous year, the companyearned $347 million, or $4.56 per share, on sales of $10.51billion.

Whirlpool is the world's largest manufacturer and marketer ofmajor home appliances. It sells products under 11 brand names inmore than 170 countries. The Benton Harbor-based company has majoroperations in seven states — Arkansas, Indiana, Michigan,Mississippi, Ohio, Oklahoma and Tennessee — and 12 countries,including Canada and Mexico.