Earnings Reports for Jan. 25

— -- JDS Uniphase Corp. Revenues Surge

JDS Uniphase Corp. the world's No. 1 supplier of fiberoptic components, said its second-quarter results edged above analyst expectations by 2 cents driven by ongoing strong demand.

JDS Uniphase reported pro forma net earnings excluding goodwill of $208 million, or 21 cents per share, compared with year-earlier earnings of $177 million, or 18 cents a share. The pro forma results include revenues from the E-Tek Dynamics Inc. acquisition in June 2000.

Revenues for the quarter surged 161 percent to $925 million over $354 million in the same period last year.

On average, 30 analysts polled by research firm First Call/Thomson Financial expected earnings of 19 cents per share, while the consensus revenue estimate from 12 analysts was $924 million.

The company also said it expects third-quarter pro forma earnings equal to or slightly better than the second quarter, with revenues between 7 percent and 10 percent above the second quarter.

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Lockheed Martin Beats Expectations

Lockheed Martin, theworld's largest defense contractor, reported todaysharply lower fourth-quarter profits but beat Wall Streetforecasts as sales from its systems integration, space systemsand aeronautics businesses increased.

Maryland-based Lockheed, maker of the F-16 fighter jet,also raised its growth estimate for 2001 earnings, targeting 25 percent to 30 percent improvement from 2000 levels, before unusualitems. That is up from earlier guidance of 20 percent growth.

For the fourth quarter, Lockheed posted net earnings of $89million, or 21 cents per share, down 70 percent from the $293million, or 76 cents per share, a year earlier.

Excluding unusual and one-time items, operating income was38 cents a share, vs. 59 cents in the same period of 1999.Analysts had expected operating earnings of 36 cents per share,according to First Call/Thomson Financial, which tracksestimates.

Net sales rose to $7.6 billion from $7.0 billion a yearearlier. Sales would have increased by 10 percent but for theeffects of acquisitions and divestitures, the company said.

Lockheed's fourth-quarter bottom line included the impactof the aerospace electronics systems divestiture, a debt tenderoffer and a charge associated with an investment.

"We are delighted with the accomplishments that LockheedMartin achieved in 2000," Vance Coffman, chairman and chiefexecutive, said in a prepared statement. "We exceeded allfinancial goals set for 2000, including achieving record ordersand backlog, record free cash flow generation, substantial debtreduction, and the receipt of fair value for ourdivestitures."

For the full year, Lockheed posted a net loss of $1.29 pershare vs. a profit of 99 cents in 1999. Excluding unusualitems, the company earned $1.07 per share for 2000, comparedwith $1.50 in 1999.

The company generated free cash flow of $265 million in thefourth quarter and a record $1.8 billion for the full year.Lockheed said it expects to generate at least $800 million offree cash flow in 2001, and $1.8 billion for 2001 and 2002combined.

Net debt fell by about $3.0 billion in 2000 and backlog atyear-end totaled $56.4 billion, up from $45.9 billion a yearearlier. Lockheed closed the year with $9.96 billion in totallong-term debt, down from $11.48 billion a year earlier.

Sales from Lockheed's systems integration, space systems,aeronautics and global telecommunications segments rose in thefourth quarter, while technology services showed a decline.

The systems integration business posted a 10 percentincrease in sales, with results from the naval electronic andsurveillance systems product line driven by higher volume onland surveillance systems contracts and increased activity onthe new attack submarine program.

Increases in the segment's missiles and air defense productline were due to higher volume on some tactical missileprograms, which helped offset declines in volume on somefire-control and sensor contracts.

The space systems segment saw a 12 percent gain in salesfor the quarter, primarily due to commercial space activities,which outweighed declines in military, civil and classifiedsatellite activities. Still, the group's sales results for thefull year fell 1 percent.

The United Arab Emirates (UAE) F-16 contract helped bolstersales for Lockheed's aeronautics segment in the fourth quarter,offsetting anticipated reductions in scheduled deliveries onother F-16 fighter aircraft programs. The segment's salesdecline for the year was attributed to those anticipateddelivery declines, the company said.

Lockheed said it expects earnings to grow 25 percent to 30 percentfor 2001, up from previous guidance of 20 percent.

The increase reflects lower interest expense, a lowereffective tax rate of 40 percent, and an assumed smallerdecline in retirement plan income than projected previously,the company said.

Lockheed's stock has outperformed the broader market bymore than 50 percent over the last year, as have the stocks ofmany of its defense industry peers. Relative to rivals,Lockheed shares have more closely tracked the Standard & Poor'saerospace and defense index, outperforming by about 10percent.BACK TO TOP

Profits Still Smoking at R.J. Reynolds

Cashing in on another round ofcigarette price increases and expanded shipments, R.J. Reynolds reported improved fourth-quarter results.

The nation's second largest cigarette maker earned $100 million,or 99 cents per share, for the quarter, beating Wall Streetexpectations. In the same time period a year ago, the companyposted 79 cents per share.

In a survey by First Call, analysts estimated that RJR'sfourth-quarter earnings per share would be 96 cents.

Fourth quarter sales rose 3.3 percent to $2.04 billion from$1.98 billion and annual sales were up 8 percent to $8.17 billion.For the year, per share profit was up 17 percent to $3.97 and netincome was up 9 percent at $404 million.

R.J. Reynolds Tobacco Holdings chairman Andrew J. Schindler saidthe company's quarterly earnings were helped by sales growth in thecompany's cigarette brands.

Last month, both RJR and market leader Philip Morris Cos Inc.raised the wholesale price of a pack of cigarettes by 14 cents perpack, a move that will cost smokers even more at the cashregisters. It was the third increase in cigarette prices todistributors in a year.

RJR forecast shipments this year will fall 3 percent to 5percent as cigarette consumption continues to decline.

Despite the wholesale price increases, shipments of thecompany's premium cigarettes rose 2.5 percent and by 2.6 percentfor its discount brands.

RJR's Camel, Winston and Doral brands benefited from advertisingspending to gain market share, Schindler said, its Salem brand lostmarket share.BACK TO TOP

SBC's Profits Rise 5.6 Percent

SBC Communications, theNo. 2 U.S. local telephone company, said today itsfourth-quarter profits rose 5.6 percent as sales of wirelesstelephone and data services surged.

San Antonio, Texas-based SBC said profits, excludingone-time items, rose to $2.0 billion, or 57 cents a share, from$1.9 billion, or 54 cents a share, a year earlier. The resultsmatched Wall Street forecasts compiled by research firm FirstCall/Thomson Financial.

"Consistency is part of the regional Bells. And inuncertain times, consistency is well-received," said TimGhriskey, portfolio manager of the $4 billion Dreyfus Fund.

Including one-time items and accounting changes, SBC'sfourth-quarter net income sank 58 percent to $1.3 billion, or38 cents a share, compared with $3.1 billion, or 90 cents ashare, a year ago. Those results reflect its investments tobuild its data and wireless operations, costs from an employeeearly-retirement program and other items.

"In 2000, we made the investments and strategic decisionsnecessary to put SBC in the best position to pursue data andwireless growth opportunities," SBC Chairman Edward Whitacresaid in a statement.

Revenues, including its share of sales from its CingularWireless joint venture, rose 9.1 percent to $14.1 billion. Datasales surged 44.3 percent to $2.2 billion, while pro-formawireless service revenues jumped 17 percent to $3.0 billion.

SBC warned in December that its 2001 profits and revenueswould fall short of Wall Street expectations. It blamed serviceproblems in its Ameritech unit, the slowing national economy,and its slow entry into the long-distance telephone market.

SBC had said it expects its 2001 earnings per share to growin the range of 11 percent to 14 percent on revenue growth ofbetween 8 percent and 9 percent. Analysts said SBCreaffirmed those tempered forecasts.

"They were strong in all the areas you'd expect them to bestrong — data and wireless. And they appear to be gettingstrong [long-distance] sales from Texas," Ghriskey said.

SBC added 251,000 high-speed DSL (digital subscriber line)Internet customers in the quarter, bringing its totalsubscriber base to 767,000 and firming SBC's status as thelargest DSL provider among the Baby Bells.

SBC's DSL growth fell below CS First Boston's forecast of300,000 new subscribers, which the firm said may be due to thedelayed roll-out of service in midwestern states of itsAmeritech unit. Still, the year-end tally of 767,000 DSLcustomers exceeded ABN AMRO's forecast of 750,000 subscribers.

Cingular, SBC's wireless joint venture with sister BabyBell BellSouth Corp., added 814,000 wireless customers,bringing the company's total to 19.7 million. SBC has a 60percent stake in Cingular, the No. 2 U.S. wireless serviceprovider.

Cingular, through its Salmon PCS LLC affiliate, has bid$2.3 billion in the ongoing federal auction for U.S. wirelesslicenses. It currently has the highest bid of $409 million forone license in Los Angeles.

SBC said added 547,000 new long-distance customers in Texasduring the quarter. It has gained more than 1.4 millionlong-distance telephone customers in Texas since it launchedservice in mid-July. SBC on Monday won federal approval tooffer long-distance in Kansas and Oklahoma, becoming the firstBaby Bell to offer long-distance in multiple states.

"Wireless, DSL and LD [long distance] are all the growthdrivers and they all looked strong," said Kevin Roe, atelecommunications analyst at ABN AMRO.

SBC said it expects to file applications with the FederalCommunications Commission to enter the long-distance markets inMississippi and Arkansas this quarter. Applications forCalifornia and Nevada will follow in the second quarter.

Under the 1996 Telecommunications Act SBC, and the otherBaby Bells created from the 1984 breakup of AT&T Corp., cannotenter the long-distance market in their home markets until theyopen their local telephone networks to competitors.BACK TO TOP

Schering-Plough Reports Healthy Earnings

Drug maker Schering-Plough said today that fourth-quarter profits rose 13 percent, in line with estimates, on strong sales of its allergydrug Claritin and its Rebetron therapy for Hepatitis C.

The Kenilworth, N.J.-headquartered firm said it earned $571million, or 39 cents per share in the quarter, compared with$506 million, or 34 cents per share, in the year-ago period.

Schering-Plough was expected to earn 39 cents a shareduring the quarter, said First Call/Thomson Financial, whichcompiles securities analysts' profit expectations.

Fourth-quarter sales rose 6 percent to $2.4 billion from$2.3 billion a year ago.

U.S. pharmaceutical sales rose 11 percent to $1.3 billion.

The company said Claritin sales rose 15 percent in thequarter to $662 million, while Rebetron sales grew 9 percent to$324 million.

Global fourth-quarter sales of the company's nasal-inhaledasthma drugs, led by Nasonex, jumped 12 percent to $151million. Its anti-clotting drug Integrilin saw sales of $50million, up from $20 million in the 1999 quarter.

Sales of Remicade for rheumatoid arthritis and Crohn'sDisease were $21 million in the quarter, compared with $6million in the year-ago period.

Claritin is scheduled to lose its U.S. marketingexclusivity next year — an event which would usher incompetition from cheaper generics. It is awaiting U.S.marketing approval for a closely related compound,desloratadine, that the company claims is superior toClaritin.

Schering-Plough received approval on Monday, Jan. 22, for alonger-acting version of its Intron-A treatment for hepatitisC.

From the start of the year to Jan. 24, Schering-Ploughshares have underperformed the S&P 500 by roughly 12 percent.The company, however, has outperformed the American StockExchange Pharmaceutical Index by 3.5 percent.

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Starbucks Beats Wall Street Forecasts

Starbucks Corp. reported its profits rose 41 percent in its fiscal first quarter, beating Wall Street forecasts, as the company continued its rapid global expansion, and raised its profit goal for 2001.

The Seattle-based coffee-shop giant said net earnings for the quarter ending Dec. 31 totaled $49 million, or 25 cents per diluted share, up from $34.7 million, or 18 cents, a year earlier.

Analysts on average had expected Starbucks to earn 23 cents per share, according to First Call/Thomson Financial. As previously reported, Starbucks's consolidated net revenues rose 26 percent to a record $667 million in the first quarter, from $529 million in the same period a year earlier.

Starbucks operates more than 3,800 coffee shops, including 3,200 in North America.

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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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