Earnings Reports for Jan. 30

— -- Amazon Announces Job Cuts, Narrower Q4 loss

Internet retail giant Amazon.com posted a reduced quarterly loss today, justbeating Wall Street estimates, but said it would cut 15 percent ofits workforce, 1,300 employees, and take a restructuring charge of more than $150million.

Amazon, which sells everything from books to electronics tohardware at its online store, said it would cut 1,300 jobs,closing a distribution center in McDonough, Georgia, and itscustomer service center in Seattle. It also said it would operateits Seattle distribution center only seasonally.

The company statement gave no immediate reason for therestructuring, but analysts had expected the move because ofcontinued losses by the company, which is under pressure frominvestors to turn a profit, and because of a disappointing holidaysales season.

For the three months ended Dec. 31, its pro forma net loss was$90.4 million, or 25 cents a share, compared with $184.9 million,or 55 cents, a year earlier. Wall Street analysts tracked by FirstCall/Thomson Financial had expected Amazon to lose 26 cents ashare.

Amazon shares closed at $18-15/16, down $1-3/16, or 5.9percent, on Nasdaq before the announcement.

Amazon said quarterly revenues of $972 million were up 44percent from $676 million a year earlier. That was more than thecompany's recent forecast of $960 million.

Earlier this month, Amazon said it had slashed its year-endinventory balance by 20 percent to less than $175 million.Analysts have said the 5-year-old company is relativelyinexperienced at stocking the right mix of goods.

Analysts viewed the holiday quarter as a crucial time forAmazon to prove its growth first, profits later strategy couldwork. The company has expanded beyond its core books businessinto music, software, hardware and even lawn furniture.

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Higher Medical Costs Hurt Aetna

Aetna, the largestU.S. health insurer, said today fourth-quarter earningsfrom continuing operations fell 65 percent percent, as highermedical costs cut into profits.

Hartford, Conn.-based Aetna, which has about 19 millionhealth-care members in the United States, said fourth-quarterearnings from continuing operations dropped to $28.7 million,or 20 cents a share, following the recent divestiture of itsfinancial services and international segments. That compareswith operating earnings of $81 million, or 55 cents a share, inthe same period a year ago.

The latest quarter's results beat analysts' consensusforecast of 16 cents, according to First Call/ThomsonFinancial. First Call said the forecast excluded Aetna'sfinancial services and international businesses, as well assecurities gains and losses.

Aetna's medical loss ratio — a crucial industrymeasurement that compares medical costs such as paying doctorsand hospitals against revenues — in its commercial healthmaintenance organization, or HMO, business rose to 87.2 percentin the quarter. The company's total revenues fell about onepercent to $6.6 billion.

Aetna's stock has underperformed the Standard &Poor's Health Care Managed Care index by more than 55 percentin the past year.

Including charges totaling $381.9 million, the companyposted a fourth-quarter operating loss of $353.2 million, or$2.49 per share. These charges relate to the write-off ofgoodwill mostly associated with Medicare market exits,restructuring plans announced in December and change-in-controlcosts related to the sale of its international and financialservices businesses to Dutch financial services giant ING GroepNV last month.

With the sale, Aetna, one of the oldest U.S. insurers,became purely a health insurer. Its business now consists ofhealth care, including dental, group insurance and relatedbenefits, as well as a large case pensions unit.

Including discontinued operations, which comprise thosebusinesses sold to ING, Aetna reported a net loss of $406.3million, or $2.87 per common share, for the fourth quarter.This reflects a loss of $372.0 million, or $2.63 per commonshare, from continuing operations as a result of previouslymentioned charges and the loss of $34.3 million fromdiscontinued operations. The net loss compares with net incomeof $134.4 million, or 92 cents a common share, for the fourthquarter 1999.

Since the sale, Aetna has taken aggressive steps to tackleproblems in its health insurance business, including plans tocut 5,000 jobs, or 13 percent of its work force.

Aetna, which has posted sluggish financial growth recentlyeven as its managed care peers have enjoyed robust profits amidpremium price increases, said the medical loss ratio in itsMedicare HMO business was 97.5 percent in the quarter,significantly higher than in the prior-year period.

Aetna's total health membership stood at 19.3 million as ofDec. 31, a 6 percent decline during the year, the company said.Membership increased by 81,000 from the third quarter of 2000,but is expected to decrease overall in 2001 due to largelyplanned attrition at the company's Prudential Health Carebusiness and Medicare HMO and commercial HMO product marketexits.BACK TO TOP

Hershey Foods Posts Sweet Earnings On Strong Holiday Sales

Hershey Foods, thelargest U.S. chocolate maker, said today itsfourth-quarter earnings per share rose 20 percent, beating WallStreet's estimates, on increased sales.

The Hershey, Pa., maker of Hershey bars, Hershey Kisses andReese's candies, said net income for the period rose to $116million, or 84 cents per diluted share, from $98 million, or 70cents a share, in the year-ago period.

Hershey, which has been expanding its product offeringswith different sizes and flavors of old favorites, was expectedto earn 82 cents a share, based on a recent poll of analysts byFirst Call/Thomson Financial.

Sales rose to $1.19 billion from $1.11 billion, boosted bystrong sales around the Halloween and Christmas holidays.

The stock has outperformed the Standard &Poor's 500 Index by nearly 50 percent in the past 12 months.BACK TO TOP

Procter & Gamble's Core Profit Rises

Household products makerProcter & Gamble said today second-quarter profit rose4 percent before unusual charges, beating Wall Streetforecasts, as price increases, tax gains and the divestiture ofits Clearasil business offset higher raw material costs.

The Cincinnati, Ohio-based maker of Tide laundry detergent, Cresttoothpaste and a host of other products also said it wascomfortable with the high end of analysts' earnings estimatesfor the full fiscal year.

"I think the stock should do fairly well because obviouslyfolks were concerned that they (P&G) were going to guide down[earnings estimates] for the back half of the year and maybeeven miss this quarter," said Jim Gingrich, consumer productsanalyst at Sanford Bernstein.

P&G said earnings for the second quarter, ended Dec. 31,were $1.31 billion, or 93 cents per diluted share, up from$1.26 billion, or 88 cents a share, a year earlier. The resultsfor both years exclude restructuring charges.

Analysts on average had expected the company to earn 92cents a share, according to First Call/Thomson Financial, whichtracks such estimates.

"We delivered the earnings per share results we said wewould — for the second quarter in a row," P&G Chief ExecutiveOfficer Alan Lafley said. Lafley succeeded Durk Jager as chiefexecutive last June, after the company's stock was rocked by aseries of missed profit forecasts. "Still, we can and must dobetter. Our goal is to get back to consistent annualdouble-digit earnings per share growth."

Second-quarter revenue fell 4 percent, to $10.18 billionfrom $10.59 billion a year earlier, as the weak euro cut intosales. Unit volume fell 2 percent compared with record levels ayear ago.

P&G said it expects third-quarter earnings of 72 to 74cents a share before unusual items. Analysts' consensusforecast is 73 cents, according to First Call. In the year-agothird quarter P&G earned 64 cents a share.

Unit volume is expected to be flat to down 2 percent in thethird quarter, with sales up in the low single digits,excluding the impact of foreign exchange, P&G said.

Analysts have forecast core earnings per share for P&G of$3.10 to $3.17 for the full fiscal year, up from $2.95 in theprevious year. The company reiterated that it was comfortablewith the high end of this range of estimates.

Based on current trends and expectations, the company saidit now expects unit volume to be about flat for the year, andsales, excluding foreign exchange effects, to be up 2 to 4percent.

In the past year the stock, a component of the Dow Jonesindustrial average, has underperformed that index by about 30percent.

In recent months P&G has raised prices on its products totry to cope with rising costs. Most of those price boosts havebeen matched by competitors, but in some instances theincreases were not matched, causing P&G to lose market share.BACK TO TOP

UPS Cuts 2001 Outlook, Misses Expectations

United Parcel Service, theworld's No. 1 package delivery company, reported today aprofit slightly above lowered Wall Street expectations and cutits earnings forecast for 2001 because of a slowing economy.

Atlanta-based UPS, which reported last month the slowingU.S. economy was cutting into its domestic package deliveryvolumes, said it expected earnings per share to grow 9 percent to 11percent this year, down from a previous estimate in the"mid-teens."

The company also said revenue growth would likely fallwithin a range of 8 percent to 10 percent this year. Last month, itsaid it expected to post revenue growth of 10 percent barringfurther slowing in the economy.

"Our rate of growth this year will not be at the same paceas we've seen in the last few years domestically," UPS ChiefFinancial Officer Scott Davis said in a statement accompanyingfourth-quarter financial results. "But we do expect to grow,and at a rate faster than the domestic package market."

For the three months ended Dec. 31, UPS earned $724million, or 63 cents a share, compared to $661 million, or 56cents a share, in the year-earlier period.

Analysts on average expected UPS to earn 61 cents,according to research firm First Call/Thomson Financial, whichtracks consensus data.

That estimate was lowered from 64 cents last month afterUPS announced that a slowdown in the U.S. economy appeared tobe cutting into its holiday package volumes.

UPS' global volume — a key measure of financial health inthe package delivery industry — averaged 14.7 million pieces aday in the quarter, up 3.6 percent from the same period lastyear.

UPS averaged volume of about 1.3 million pieces a day forits entire international service, a 13.3 percent gain from lastyear. Volumes for the company's U.S. domestic package businessaveraged about 13.5 million pieces a day, a 2.8 percent riseover the year-earlier period.

UPS, which was recently awarded a new China route, said it"remained bullish" on its international markets.BACK TO TOP

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.

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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.

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