Earnings Reports for Jan. 18

— -- Caterpillar Posts Increases in Q4, Year-end Earnings

Caterpillar reported a 10 percent boostin fourth-quarter profits today, citing slightly increased salesand better performance from its financial services that alsocontributed to increased year-end earnings.

The heavy equipment manufacturer reported fourth-quarterearnings of $264 million, up $25 million from the same quarter lastyear. Earnings per share were 76 cents, up nine cents fromfourth-quarter 1999 and easily beating Wall Street's expectations.

Analysts surveyed by First Call/Thomson Financial had expectedCaterpillar's earnings to be 64 cents per share.

Fourth-quarter sales were $5.11 billion, a $95 million increaseover fourth-quarter 1999. The company said sales volume increased 3percent. Revenues in the Financial Products division, whichincludes investments, a financing arm and an insurance operation,increased 11 percent.

For fiscal year 2000, Caterpillar reported earnings of $1.05billion, up $107 million from 1999. Profit per share was $3.02.Full-year revenues were $20.18 billion, up 2 percent from theprevious year.

However, Chairman and CEO Glen Barton forecast anotherchallenging year ahead. He said an expected decline in NorthAmerican sales should be offset by higher sales in other markets,but profits are expected to be 5 to 10 percent lower than 2000.

"In general, many of the markets we serve will continue to becyclically depressed with excess capacity and ongoing pricepressure," he said.

Peoria-based Caterpillar designs and makes mining, constructionand agricultural machinery as well as engines for earth-moving andconstruction machines. It is the world's No. 1 maker ofearth-moving machinery.

Caterpillar operates manufacturing plants in 22 countries.

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Delta’s Quarterly Earnings Fall 54 Percent

Delta Air Lines, which twoweeks ago reported a labor dispute with its pilots would reducerevenues, today said its quarterly earnings declined 54percent, falling below Wall Street analysts forecasts.

Atlanta-based Delta, the No. 3 U.S. airline, said netincome for the quarter ended in December was $79 million, or 60cents a share, compared with $171 million, or $1.22 a share, ayear earlier, excluding special items. Delta is in the processof switching to a calendar year from a fiscal year.

Analysts' consensus forecast was 62 cents a share, accordingto research firm First Call/Thomson Financial.

Revenues rose to $4.02 billion, from $3.68 billion in theyear-earlier period.

Last week, Delta asked a U.S. appeals court for aninjunction to stop an alleged work slowdown by a number of itsmore than 9,000 pilots.

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EBay Exceeds Analyst Estimates

Fourth-quarter profits at eBay Inc. beatWall Street expectations, as the mammoth Internet auctionsite said it had added a record 3.5 million users in the last threemonths of 2000.

In the quarter ended Dec. 31, eBay earned $23.9 million, or 9cents per share, compared with $3.8 million, or 1 cent per share inthe year-ago quarter.

Revenues rose 81 percent to $134 million.

Analysts surveyed by First Call/Thomson Financial were expecting7 cents a share.

"We are extremely pleased with the strength of our business andwith the tremendous momentum we have going into the new year,"said Meg Whitman, eBay's president and CEO.

EBay said it now has 22.5 million registered users, more thantwice the 10 million it counted at the end of 1999. In the fourthquarter alone, users traded $1.6 billion worth of goods.

EBay was bullish on its 2001 outlook, saying its recent $120million purchase of a majority stake in Internet Auction Co. Ltd.,a South Korean online bidding site, likely will help push revenuetoward $150 million in the current first quarter and $665 millionfor all of 2001.

In comparison, eBay's revenues for all of 2000 were $431.4million, a 92 percent increase over 1999. Excluding the effect ofone-time charges and stock-related expenses, the company earned$58.6 million, or 21 cents a share, in 2000, up from $18.3 million,or 7 cents a share, in 1999.

EBay also said this week it is increasing the fees sellers mustpay to auction goods on the site, a move aimed at increasingprofits and reducing some clutter.

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Recall, Lawsuits Hurt Ford

Ford Motor, theworld's second-largest automaker, reported today a 33percent drop in fourth-quarter operating earnings, largely dueto weaker results from its core North American automotiveoperations.

Ford — struggling to settle lawsuits in the wake of theBridgestone/Firestone tire recall — said it earned $1.2billion, or 64 cents per share, in the quarter.

The results exclude one-time charges and the Visteon partsunit that was spun off last summer. Ford took a charge of $133million, or 7 cents a share, in the quarter for a write-down ofassets associated with the Nemak casting joint venture.

The earnings matched Wall Street forecasts of 64 cents ashare, according to First Call/Thomson Financial. However, thatwas after Ford warned last month that weather-related losses inNorth America and parts shortages in Europe would cut about 10cents from what was then an earnings estimate of 74 cents ashare.

The company earned $1.8 billion, or 83 cents a share, inthe fourth quarter of 1999, excluding a charge of $80 million,or 4 cents per share, for a lump sum payment associated withits union contract ratification.

Both the 2000 and the 1999 results were adjusted for Ford's$5.7 billion stockholder stock-cash swap.

Ford said its revenues fell 3 percent in the fourthquarter, to $42.6 billion from $43.9 billion a year earlier.

Ford Chief Executive Officer Jacques Nasser said theautomaker will contend with difficult conditions in NorthAmerica this year. "We will face softening U.S. marketconditions in 2001," he said in a statement. "We are focused onimproving our cost structure, bringing production in line withdemand, generating positive cash flow, and delivering anotheryear of strong financial results."

Despite the difficulties associated with Bridgestone/Firestone's recall of 6.5 milliontires, most of which were fitted as standard equipment on Fordvehicles, Ford shares have outperformed those of rival GeneralMotors, the world's No. 1 automaker, by about 32 percentin the past year.

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Microsoft Meets Lowered Expectations

Second-quarter profits at Microsoft Corp. rose 7percent, meeting analysts' lowered expectations, though thesoftware giant said it will fall short of third-quarter forecasts.

Shares of the company jumped 5 percent in after-hours trading.

Microsoft, which makes the Windows operating system foundon most personal computers, said net profits for its fiscal secondquarter, which ended Dec. 31, were $2.62 billion, or 47 cents ashare, up slightly from the $2.44 billion, or 47 cents a share, ayear earlier.

Estimates had been lowered after the Redmond,Wash.-based company warned in December that it expected earnings tobe down 5 or 6 percent from earlier expectations.

"Revenue came in a little higher than we had anticipated, so wewere pleased with the performance to close the quarter," saidMicrosoft chief financial officer John Connors.

Microsoft, however, is retaining a cautious outlook on the nearfuture, Connors said. The company reduced third-quarterexpectations to 42 or 43 cents per share; analysts had beenexpecting 44 cents per share.

"The largest uncertainty is just the general state of theUnited States, and therefore the world economy and what that meansfor PC demand and technology spending in general," he said.

A steep fall-off in consumer PC buying has hampered industry giants like top chip maker IntelCorp. and PC giant Compaq Computer Corp., forcing them to cut their revenue and profit estimates.

For the six months ended Dec. 31, Microsoft had profits of $4.83billion or 87 cents per share on revenues of $12.39 billion. In theyear-ago period, it earned $4.63 billion or 84 cents per share onrevenues of $11.50 billion.

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Nortel Meets Expectations, Turns Cautious in Forecast

Nortel Networks met expectations with a 34percent gain in fourth-quarter revenues, weathering a broadslowdown in spending on network equipment, but turned a shade morecautious in its robust forecasts for 2001.

The world's top supplier of fiber-optic equipment posted a netloss of $1.41 billion, or 46 cents per share, comparedwith $172 million, or 6 cents a share, in the year-ago quarter.

Excluding $2.23 billion in costs from Nortel's steadyacquisition spree and other one-time factors, Nortel's operatingprofits came to $825 million, or 26 cents a share, for the finalthree months of 2000.

Revenues totaled $8.82 billion in the just-ended quarter, upfrom $6.57 billion in the same period in 1999.

The results matched most Wall Street forecasts, according to asurvey by First Call/Thomson Financial, allowing a hefty sigh ofrelief from investors.

However, much like top rival Cisco Systems did last week, Norteltempered its enthusiasm about the ability of customers to buyexpensive equipment for building and upgrading computer networks,Internet backbones and wireless systems.

The Canadian company said it now expects growth in revenues andoperating earnings per share of 30 percent in 2001 — hardly anemic,but at the lower end of the 30-to-35 percent forecast Nortel hadreiterated as recently as last month.

"The U.S. market is obviously a lot of concern, as to howquickly the stock market will rebound" and whether the FederalReserve can cushion the economy's slide with lower interest rates,said John Roth, chief executive of Nortel. But, he added, "Intighter markets, some of the weaker guys usually fall away … . Ourcustomers are paying a a lot more attention to making sure to buyfrom companies that will be around a while."

For all of 2000, Nortel had an operating profit of $2.31billion, or 74 cents per share, but suffered a net loss of $3.47billion, or $1.17 per share. In 1999, Nortel reported an operatingprofit of $1.43 billion, or 52 cents per share, and a net loss of$351 million, or 13 cents a share.

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Schlumberger Earnings Jump, Meet Expectations

Schlumberger, the world'sNo. 2 oilfield services company, said today itsfourth-quarter earnings more than quadrupled due to high oiland natural gas prices, which drove a gradual increase in oilcompanies' spending on exploration and production.

Net income from continuing operations rose to $237.9million or 41 cents per share from $58.5 million or 10 centsper share in the fourth quarter of 1999. Revenues rose 26.7percent to $2.86 billion. Reported earnings per share were inline with analysts' expectations, according to FirstCall/Thomson Financial.

After stripping out a one-time charge in the fourth quarterof 1999, earnings per share showed an increase of 78 percent to41 cents from 23 cents, the company said.

Schlumberger said despite the strong rise in oil andnatural gas prices last year, oil companies had been relativelyslow to increase their drilling efforts, because they werepreoccupied with implementing a wave of mergers that swept theindustry and were concerned that the higher prices would proveunsustainable.

Chairman and CEO Euan Baird said Schlumberger expected oilcompanies to continue to raise their exploration and productionspending in 2001 unless a sharp global economic slowdown led toreduced demand for oil and gas.

Higher oil company spending translates into increasedrevenues for oilfield service companies.

"Total activity in 2001 is expected to be well above 2000levels as oil companies move more aggressively to explore forand develop new fields and to optimize older fields to improvetheir productivity and lower their producing costs," Baird saidin a statement.

Schlumberger's stock rose some 42 percent last year, moreor less in line with the Philadelphia Stock Exchange's oilfieldservices index which posted a gain of 45 percent.

Although benchmark U.S. oil prices have recently retreatedfrom their September high of over $37 per barrel, recent levelsaround $30 are still lofty by historical standards and arealmost three times the lows reached in late 1998.

Similarly, benchmark U.S. natural gas prices have slippedto just below $7 per thousand cubic feet from a December highof around $10, but this time last year they were below $3.

Analysts expect the world's biggest oil companies to rampup their international exploration and production spending in2001 after a period of two to three years in which they havebeen largely focused on mergers and internal reorganizations.

Up to now the recovery in demand for oilfield services hasbeen largely driven by a surge in drilling for natural gas bysmaller independent companies in North America.

In recently published reports, analysts at Salomon SmithBarney and Leman Brothers predicted that oil and gas companies'exploration and production spending would rise by about 20percent this year, compared with 2000.

Schlumberger ranks second in the oilfield services industrybehind Halliburton Co., measured by revenues. Its offerings tothe oil industry range from drill bits and pumps to wirelinelogging and seismic analysis.BACK TO TOP

Sears Tops Estimates

Retailer Sears, Roebuck reported today a 14 percent decrease infourth-quarter operating earnings, topping Wall Streetforecasts, as results were pinched by a slowing economy andhigher costs.

Sears, the second-largest retailer behind Wal-Mart StoresInc., reported net income in the quarter ended Dec. 30, 2000,fell to $639 million, or $1.91 cents a diluted share, comparedwith $740 million, or $1.98 cents a diluted share.

Fourth-quarter 2000 earnings exclude charges to cover costsassociated with the closing of 89 stores and the elimination of2,400 jobs. With the items, net income was $442 million, or$1.32 per share.

Analysts polled by First Call/Thomson Financial hadexpected the retailer to report a fourth quarter profit of$1.86 a share.

Total revenues rose to $12.4 billion from $12.1 billion ayear-ago. In the last year Sears shares have outperformed theS&P index of general merchandisers that includesrivals Wal-Mart and Target Corp. by about 25 percent.

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Sun Microsystems Bucks Trend With Solid Quarter

Sun Microsystems Inc. reported second-quartersales that rose 44 percent and profits that met Wall Streetexpectations.

Sun, which resisted an industrywide trend to lower forecastsfor this quarter in the face of economic weakness, said operatingearnings, excluding one-time items, were $552 million, or 16cents per share, after $354 million, or 10 cents per share, ayear ago.

Sales at the Palo Alto, Calif.-based firm rose to $5.12billion from $3.55 billion in the quarter a year ago.

Analysts on average had expected Sun to turn in operatingprofits of 16 cents per share on sales of $5.29 billion, FirstCall/Thomson Financial research reported.

The company's high-end computers, which run the networks ofso called bricks-and-mortar companies and dot-coms alike, haveseen continued demand even as retail consumer personal computersales flagged.

But investors are watching Sun and its competitors thisearnings period for indications of how cautious major companieswill be building out new technology infrastructure in the face ofan economic slowdown.

"Going forward, we have not changed our message regarding ourintention to invest aggressively for market share while, at thesame time, delivering on our commitment to generating competitiveearnings for our shareholders," Sun's Chief Financial OfficerMichael Lehman said in a statement.

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UAL Posts Narrower than Expected Loss

UAL, parent of UnitedAirlines, the world's largest airline, said today it lost$124 million in the fourth quarter as sharply higher fuel andlabor costs reversed its year-ago profit, and it forecast aloss for the current quarter.

The loss was somewhat less than analysts had expected.Chicago-based UAL, whose bid to buy No. 6 U.S. airline USAirways Group Inc. is pending regulatory approval, lost $2.41 ashare. It reported a profit of $100 million, or 59 cents ashare, in the fourth quarter a year earlier. The figuresexclude special items.

Analysts had on average expected the company to lose $3.84a share in the quarter, according to First Call/ThomsonFinancial.

Revenue rose 6.9 percent, to $4.79 billion, from $4.48billion a year earlier.

Bookings for the first quarter of 2001 "appear favorable"in comparison with the quarter a year earlier, but higher fueland labor costs are likely to result in a loss for the period,UAL said. For the full year, UAL expects to post "a modestprofit."BACK TO TOP

United Tech's Fourth-quarter Eearnings Rise 18 Percent

United Technologies reported today an 18 percent increase in fourth-quarter earnings, boosted by strong revenue improvementsin its world-leading Otis elevator and Carrier air-conditionerbusinesses.

The Hartford, Conn.-based industrial and technologycompany, a component of the blue-chip Dow Jones industrialaverage, said net income rose to $426 million or 84 cents pershare, from $362 million or 70 cents a share in theyear-earlier quarter.

Analysts on average had forecast earnings of 83 cents pershare, according to estimates compiled by First Call/ThomsonFinancial.

"We turned in another solid quarter, with earnings pershare up 20 percent even after a 4-cent adverseforeign-exchange impact," said George David, UnitedTechnologies' chairman and chief executive officer.

"Our outlook remains more of the same in 2001, withearnings per share growth anticipated at 15 percent, andavailable cash flow in the range of net income," David said.

"While the U.S. economy is slowing, UTC's global andproduct diversity and our continuing and successful efforts toimprove performance throughout our operations sustain theseexpectations," he said.

For all of 2000, diluted earnings per share rose 18 percentto $3.55 on net income of $1.81 billion, from $3.01 and $1.53billion, respectively, in 1999. The 2000 earnings per sharematched Wall Street expectations, according to FirstCall/Thomson Financial.

Fourth-quarter revenues rose 4 percent to $6.8 billion,from $6.5 billion a year ago.

In addition to Otis and Carrier, United Technologies ownsaircraft-engine maker Pratt & Whitney, helicopter makerSikorsky Aircraft, and aerospace-components firm HamiltonSundstrand, maker of the NASA space suit.

Operating profit at Otis grew by 14 percent in the quarteron revenue growth of 4 percent. Before the adverse impact offoreign currency translation, however, operating profit rose by26 percent on revenue growth of 13 percent.

Pratt & Whitney's operating profit rose by 21 percent to$333 million, helped by lower costs in its commercial businessand strong performance in its military business.BACK TO TOP