Earnings Reports for Jan. 17

— -- AMD Misses Forecasts

Advanced Micro Devices reported fourth-quarter net income thatnarrowly trailed forecasts. The company joined its larger rival IntelCorp by saying the slowdown in PC sales would hurt first-quarter results.

AMD said net income more than doubledpercent to $177.9 million, or 53 cents a share, from $65.1million, or 21 cents, a year ago. Sales rose 21 percent to to$1.18 billion.

The Sunnyvale, Calif., company was expectedto earn 55 cents a share, the consensus forecast as compiled byFirst Call/Thomson Financial.

In light of weak demand for personal computers and slowingworldwide economies, the chipmaker said it expects that normalseasonal weakness in first-quarter demand for PC processorscoupled with the effects of excess PC inventories indistribution channels will hurt PC processor sales in the firstquarter of 2001.BACK TO TOP

American Airlines' Parent Reports Drop in Profits

The Fort Worth, Texas-based AMR earned $47 million, or 29 centsper share, down from $209 million, or $1.37 per share, a yearearlier.

Excluding one-time items in both quarters, the nation's No. 2airline earned $56 million, or 34 cents a share, down from $87million, or 57 cents per share a year earlier.

Analysts surveyed by First Call/Thomson Financial had expectedAMR to earn 30 cents per share.

Revenue rose 8 percent, to $4.86 billion, from $4.49 billion ayear ago.

"We had a challenging fourth quarter," chairman and chiefexecutive Donald J. Carty said in a statement. "While demand forair travel was strong, severe weather across much of our systemresulted in lost traffic and higher operating costs. And of course,fuel prices remained very high."

AMR said its average price per gallon for jet fuel rose 49percent in the fourth quarter compared to a year earlier; for thefull year, the airline spent 47 percent more on fuel than theprevious period.

Still, Carty said, the company enjoyed strong revenue for all of2000 — up 11 percent over 1999 — as airplane occupancy rose.

Carty said AMR — which announced agreements this month to buythe bulk of Trans World Airlines and parts of US Airways — is"cautiously optimistic" about the coming year's results despitesigns of a slowing economy and uncertain fuel prices.

AMR took a $35 million charge on money the company spent to helpemployees buy home computers and a $26 million gain from recoveringstart-up costs in a venture with Canadian Airlines.

For the full year, AMR said its net earnings were $813 million,or $5.03 per share, on revenue of $19.70 billion. In 1999, AMRearned $985 million, or $6.26 per share, on revenue of $17.73billion.BACK TO TOP

Softer Demand Takes Bite Out of Apple

Struggling Apple Computer Corp. posted a first-quarter loss significantly greater than Wall Street had expected.

For the three months ended Dec. 30, the company posted a loss of$247 million, or 73 cents a share.

Wall Street analysts surveyed by First Call/Thomson Financialwere projecting a loss of 65 cents a share.

Taking into account one-time investment gains, Apple's loss was$195 million, or 58 cents a share.

Revenues for the quarter were $1 billion, down 57 percent fromthe $2.34 billion of the year-ago period. The Cupertino-based company has been suffering from sluggishsales, increased competition, and a glut of inventory — problemswhich some industry analysts predict will not improve in thecurrent quarter.

Apple has slashed prices of its products in recent weeks andannounced a new lineup of products at MacWorld Expo last week,including faster, more powerful models of its Power Mac G4 and anew titanium PowerBook laptop. It also said its new Mac OS Xoperating system will be bundled with new computers starting inJuly.

That lag time between the announcements and the new OS Xsystems, however, "could potentially stall the market for Appleproducts until that time," said Rob Enderle, an industry analystwith Giga Information Group.

Apple officials, however, said they expect to return toprofitability starting this quarter.

"Consumers like the current OS, too, and I don't think there'llbe a delay," said Fred Anderson, Apple's chief financial officer.Anderson also said Apple was able to successfully cut the channelinventory from 11 weeks to 5½ weeks.

"Our cash position remains very strong at over $4 billion, andwe are planning a return to sustained profitability beginning thisquarter," Anderson said. "We now expect revenues for FY01 to beabout $6 billion."

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Boeing Fourth-quarter Profits Rise 36 Percent

Boeing, the world's largestaircraft maker, said today profits rose 36 percent inthe fourth quarter, beating Wall Street forecasts, as it pumpedmore cash out of its sprawling aerospace businesses even withrevenues shrinking.

Boeing said it earned $877 million, or $1.01 per dilutedshare, before extraordinary items, in the quarter, up from $662million, or 74 cents, in the same period a year earlier.Analysts polled by First Call/Thomson Financial had predictedearnings of 91 cents per share, on average.

Revenues fell 3 percent to $14.7 billion from $15.2 billionin the quarter and were down 12 percent to $51 billion for thefull year compared to $58 billion.

Boeing estimated revenues would rebound to $57 billion in2001 and $62 billion in 2002, with free cash flow of $3 billionto $4 billion in 2001 and more than $4 billion in 2002.BACK TO TOP

Kodak Earnings Fall on Photography Slowdown

Photography giant Eastman Kodak reported today lower fourth-quarter earningsamid a slowdown in the photography market and saidfirst-quarter results would meet previous estimates.

The Rochester, N.Y.-based company said fourth-quarter netearnings were $194 million, or 66 cents a share, down sharplyfrom $475 million, or $1.50 a share, a year earlier.

Excluding one-time items, Kodak's earnings were 68 cents ashare, down from $1.27 a year earlier. Analysts on average hadexpected 68 cents a share excluding unusual items.

In December Kodak cut its fourth-quarter earnings outlookfor the second time in three months due to a sharp drop inconsumer demand. Film sales showed no growth in the quarter,compared with growth of 7 percent to 8 percent in the first half of theyear, the company said at the time.

Kodak said its fourth-quarter sales fell 6 percent, to$3.56 billion.

Sales at its consumer imaging division, its largestbusiness segment, fell 7 percent to $1.84 billion, while salesat the health imaging business rose 2 percent to $581 million.Sales at its struggling professional business were down 15percent to $431 million.

Kodak has been trying to redefine itself in a digital age,making major investments in digital photography. It has beenlocked in a fight for market share with Japan's Fuji Photo FilmCo. Ltd. and has had to grapple with slower film sales as theeconomy has slowed. Rival film maker Polaroid Corp. in Decemberslashed its fourth-quarter forecasts in the wake of lowerinstant film and camera shipments.

Looking ahead to the rest of 2001, Kodak said it remainscomfortable with its first quarter earnings estimate of 50 to60 cents a share and its full-year forecast of $4.50 to $4.90 ashare. For all of 2000 it earned $4.59 a share.

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GE Fourth-quarter Earnings Rise 16 Percent

General Electric,the conglomerate whose businesses include power generation,financial services and broadcasting, said today itsfourth-quarter earnings rose 16 percent, in line withexpectations and reflecting a continued emphasis onglobalization and product services.

Fairfield, Conn.-based GE, the world's biggest company interms of stock market capitalization, said earnings rose to$3.585 billion, or 36 cents per share, from $3.09 billion, or31 cents per share, in the year-earlier quarter.

Analysts were on average forecasting 36 cents per share,according to First Call/Thomson Financial, which tracksanalysts' forecasts.

Fourth-quarter revenues rose 6 percent to $34.981 billionfrom $32.86 billion in the 1999 quarter.

For 2000, GE said it had income of $12.735 billion, or$1.27 per share, on record revenues of $129.9 billion. In 1999,the company reported earnings of $10.72 billion, or $1.07 pershare, on revenues of $111.63 billion.

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General Motors Tops Estimates

General Motors, theworld's largest automaker, reported today a sharp dropin fourth-quarter profits, hurt by continuing losses in Europeand the slowdown in its core North American market.

Detroit-based GM said earnings dropped to $609 million, or$1.15 a share, in the fourth quarter, down from $1.3 billion,or $1.95 per share, in the previous fourth quarter.

Those earnings were before a fourth-quarter charge of $520million to cover costs associated with the phase-out ofOldsmobile and job cuts in North America and Europe.

The results beat Wall Street forecasts of $1.12 per share,according to market research firm First Call/ThomsonFinancial.

GM's revenues fell to $45 billion on an adjusted basiscompared with $46.3 billion in the same quarter a year ago.GM shares have underperformed the Dow Jones Industrial Averageby around 20 percent in the past year.BACK TO TOP

IBM Beats Expectations

International Business Machines Corp., the world's largest computer maker, said its fourth-quarter profit rose 28 percent, slightly exceeding analystexpectations.

The Armonk, N.Y.-based company reported fourth-quarter netincome of $2.7 billion, or $1.48 per share, compared with netincome of $2.1 billion, or $1.12 per share, a year earlier.

Analysts on average had estimated earnings of $1.46 per share,according to First Call/Thomson Financial, which tracks suchforecasts.

Sales of $25.6 billion, an increase of 6 percent from sales of$24.2 billion in the fourth quarter a year ago, roughly in linewith the analysts' consensus estimate for sales of $25.5 billion.

IBM said sales would have risen 12 percent were it not forforeign currency effects.

In the fourth quarter, IBM began to ship the seventhgeneration of its mainframe computer. Analysts had expected thosesales to help the company offset weak personal computer demand andslow corporate spending that hurt some of its rivals.

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J.P. Morgan Chase Posts Lower Profits

Newly merged U.S. bank holdingcompany J.P. Morgan Chase said today itsoperating profits dropped 65 percent in the fourth quarter,hurt by losses on investments and a slump in trading revenues.

The bank, formed after Chase Manhattan bought J.P. Morgan &Co. Inc. in a deal that closed Dec. 31, posted operatingprofits of $763 million, or 37 cents a share, in the quarter,compared with pro forma $2.18 billion, or $1.09 a share, in theyear-ago quarter.

Including $1.25 billion in merger-related charges and $1.23billion in one-time gains, J.P. Morgan Chase earned $708million, or 34 cents a share, compared with pro forma $2.20billion, or $1.10, in the year-ago quarter.

Wall Street expected the bank to earn 45 cents a share inthe quarter, according to First Call/Thomson Financial, whichtracks analysts' consensus estimates.

J.P. Morgan Chase, which ranks among the top U.S. bankswith more than $705 billion in assets, warned last month itsfourth-quarter profits would be substantially below Wall Streetestimates because of weak trading revenues, higher costs andlosses on investments.

A string of interest rate increases by the Federal Reservelast year hurt demand for new bond offerings in the quarter andcontributed to a stock market slump that ate into revenues atbanks' investment and trading operations.

J.P. Morgan Chase's stock closed at $53-3/16 on Tuesday onthe New York Stock Exchange.

J.P. Morgan Chase said trading revenues fell to $1.27billion in the fourth quarter, compared with $1.48 billion ayear ago, mostly due to the impact of widening credit spreadson bond markets, while operating revenues at its investmentbank rose 20 percent to $3.67 billion, helped by acquisitions.

J.P. Morgan Partners, the bank's investments arm, postedlosses of $92 million, compared with a gain of $1.62 billion ayear ago. The losses came as the technology-laden Nasdaqcomposite index last year posted the poorest performance in itshistory.

The bank also said in a statement it has set long-termgoals of 10 percent - 12 percent annual revenue growth, cash earnings pershare growth of 15 percent a year, and an average cash returnon equity of 20 percent - 25 percent.

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3M Plans Cost Cutting After Disappointing Q4

Diversified manufacturing giantMinnesota Mining & Manufacturing said today it plansto boost profits by aggressively controlling costs but its stocktumbled following news of disappointing fourth-quarter earnings.Analysts said the earnings shortfall may mean the honeymoonis over for Chief Executive Officer James McNerney Jr. Thelong-term General Electric executive moved into the top spot onJan. 1.

"It's a tough position for him, but by the same token,provides him with a clean slate," said Jonathan Rosenzweig, ananalyst with Salomon Smith Barney.

The St. Paul-based company said late Tuesday that itsfourth-quarter net income was little changed at $447 million, or$1.12 a fully diluted share, below the $1.20 that had beenexpected in a First Call/Thomson Financial survey of analysts. Itblamed the U.S. economy, which slowed in December, plus thestrength of the U.S. dollar.

"There [is] a significant slowdown in the U.S. economy,"McNerney said in a conference call with analysts. "The magnitudewas greater than we anticipated. The adjustments were not fastenough to achieve earnings expectations for the quarter."

The maker of Post-It Notes, Scotch tape, adhesives andabrasives said it still plans to increase 2001 earnings 10percent by cutting costs, including headcount. No restructuringcharge is planned, it said.

Analysts said few specifics were provided about how 3M plansto cut costs. 3M officials were not available to commentfurther.

On a telephone conference call with analysts this morning, 3M officials said they expect to achieve "significant"attrition in the company's employment levels.

"In terms of planning going forward, what we've got issignificant attrition in our forecast over years, clamping downon head count additions," a 3M official said on the conferencecall. "Overall, headcount will be up slightly because ofacquisitions."

The company, which had 74,440 employees as of Sept. 30,generally loses about 2,000 workers, or 2.7 percent, throughattrition each year.

Some analysts said they were slightly skeptical about how 3Mwill achieve its earnings goals.

"It seems like it's going to take quite a bit of costimprovement to get 10 percent earnings improvement with the kindof weak top line they're talking about in the U.S.," said PeterEnderlin, a Ryan, Beck analyst. He noted that overseas volumes,however, so far have been strong.

Others said they are worried that the U.S. slowdown mighteventually affect 3M's overseas operations as well.

"The concern going forward from here is what happens to theinternational revenue. What's the risk that they slowdown?" saidSalomon Smith Barney's Rosenzweig.

He said the strength of the U.S. dollar shouldn't have asmuch of an impact on 2001 earnings as it did last year.

"Obviously the yen works against them, but the euro isworking more in their favor than it was," he said.

The translation of foreign profits into U.S. dollars trimmed5 cents a share from fourth-quarter earnings.

3M's stock, a component of the Dow 30, has outperformed theDow Jones industrial average by more than 20 percent sinceabout a year ago. Most of those gains came on speculation and theeventual news that 3M would name McNerney, the first outsider torun the company in its nearly 100-year history.

3M said it will issue a more detailed financial statementnext week but will not hold another analyst conference call.BACK TO TOP

US Airways Losses Exceed Expectations

US Airways lost $101 million in the fourthquarter, hurt by rising fuel costs and increased competition withinthe industry.

The airline, which is seeking federal approval of itsacquisition by the parent company of United Airlines, reported aloss Wednesday of $1.50 per share for the last three months of2000.

That was far greater than analysts' expectations of a $1.10 lossper share, based on a survey of analysts by First Call/ThomsonFinancial. It was also worse than the fourth quarter of 1999, whenthe company lost $81 million, or $1.16 a share.

Quarterly revenue rose 10 percent, from $2.14 billion to $2.36billion.

US Airways chairman Stephen Wolf said in a statement that thepending deal with UAL Corp.'s United Airlines will restore thecompany's financial health. "The economic impact of the trulynational and international network that will result from our mergerwith United bodes well for both the traveling public and thecommunities we serve," he said.

The Justice Department is expected to complete its review of themerger by April.

For the year, the Arlington-based airline lost $269 million, or$4.02 per share, including charges, on revenue of $9.27 billion.Last year, the company turned a profit of $197 million, or $2.64 ashare, on revenue of $8.60 billion.BACK TO TOP

The Associated Press and Reuters contributed to this report.