Earnings Reports for Oct. 25

ABC News

January 6, 2006, 1:17 AM ET

55 min read

— -- AT&T Tops Estimates; Announces Restructuring

AT&T, the biggest U.S.long-distance telephone company, said today itsthird-quarter earnings fell 12 percent, but topped WallStreet’s reduced expectations, as declining long-distance salesto residential customers offset strong wireless and datasales.

As New York-based AT&T unveiled a complex reorganization,the company said profits, excluding one-time items, fell to$1.44 billion, or 38 cents a share, compared with $1.63billion, or 50 cents a share, a year ago.

The results beat Wall Street’s tempered forecast of 36cents a share, according to research firm First Call/ThomsonFinancial. AT&T in May cut its growth forecasts for the rest ofthe year, citing faster-than-expected declines in sales oftelephone services to residential customers and sluggish salesto corporate customers.

Including one-time items, AT&T’s third-quarter net incomefell 19 percent to $1.32 billion, or 35 cents a share. Revenuesrose 4 percent to $16.98 billion.

Sales of communications services to consumers fell 11percent to $4.67 billion as AT&T continued to suffer fromincreased competition and price wars. Sales to corporatecustomers rose 2.5 percent to $7.11 billion. The company added750,000 wireless subscribers from a year ago. Cable-basedtelephone subscribers totalled 350,000 in the third quarter, upfrom 224,000 in the second quarter.BACK TO TOP

Viacom’s Profits Fall

Viacom reported today third-quarter earnings that topped expectations amid strong advertising growth at the media and entertainment giant, but profits were down from a year earlier, reflecting highertaxes and costs from its CBS purchase.

The New York-based company, whose properties include theMTV cable network and Paramount Studios, said net incomedropped to $33 million, or 2 cents a share, from $97 million,or 14 cents, in the same period last year.

Analysts on average had expected the company to post a lossof 2 cents a share, according to First Call/Thomson Financial.

Revenues rose 79 percent to $6 billion from $3.3 billion,powered by strong advertising revenue growth, especially atCBS, the broadcaster that scored a big hit with the TV showSurvivor, and its cable and radio operations.

“The quarter was fueled by double-digit ad sales growthacross the board, spurred by such ratings triumphs as CBS’ Survivor, which generated significant prime-time audience gainsat CBS, and MTV’s Video Music Awards, this year’s highest-ratedcable entertainment program,” Sumner Redstone, Viacom chairmanand chief executive said in a statement.

Pro forma revenues, which take into account the CBSacquisition, rose 7 percent to $6 billion from $5.6 billion inthe third quarter of 1999. Pro forma revenues at the companycable networks rose 13 percent to $1 billion, led bydouble-digit increases in ad revenues at MTV.

Infinity Broadcasting, in which Viacom acquired a majoritystake when it took over CBS, posted pro forma revenues of $1billion, up 12 percent on the year

Television pro forma revenues were also boosted by strongad revenue growth, up 3 percent to $1.8 billion.

The company’s entertainment division saw more moderategrowth of 2 percent to $792 million. Merrill Lynch analystJessica Reif Cohen had forecast slower entertainment revenuegrowth because of weaker attendance at Paramount Parks becauseof rainy weather conditions.

Third-quarter earnings before interest, taxes, depreciationand amortization (EBITDA) rose to $1.4 billion from $540million a year earlier. It said it was on track to deliverfull-year EBITDA of $5 billion and expects to achieve EBITDAgrowth of 20 percent for all of 2001.

Analysts say Viacom has positioned itself well to gainmajor advertising revenue from shows like “Survivor,” whichshould protect it from an expected slowdown in the advertisingmarket in the fourth quarter and next year.

Shares of Viacom closed up 7/16 at $56-1/2 on the New YorkStock Exchange on Tuesday. They have traded at a 52-week low of$41-11/16 and a 52-week higher of $76-1/16.BACK TO TOP

DuPont Lowers Outlook

DuPont reported third-quarterearnings of 51 cents a share today, matching the expectationof analysts, but lowered its outlook for the year, warning thatrising oil prices will hurt profits.

Analysts surveyed by First Call/Thomson had predicted earningsof 51 cents per share, 8 cents lower than the same period lastyear, for the nation’s largest chemical company.

For the first nine months of the year, DuPont reported earningsof $2.26, compared to $2.02 for the same period last year.

Charles O. Holliday Jr., DuPont chairman and chief executive,cited rising raw material costs and a slowing global economy inissuing the lowered earnings outlook for the rest of 2000.

The announcement marked the second time in two months thatDuPont has lowered its outlook. In June, the company predictedearnings of $3.01 for the year, but lowered its estimate inSeptember to between $2.85 and $2.95.

Holliday said today that $2.85 is the best the companycan expect for the year — and warned it may be lower.

“We are cautious about the prospects for top-line growth in thefourth quarter,” Holliday said.

DuPont stock closed Tuesday at $42.88, up $2.19, on the New YorkStock Exchange.

Like other large U.S. manufacturers, DuPont is struggling withskyrocketing prices for oil and natural gas. DuPont buys about $11billion worth of raw materials annually, about 40 percent of whichare oil and gas.

DuPont’s largest users of the hydrocarbons are its nylon andpolymer plants.

Holliday also warned that a strong U.S. dollar overseas and theend of a sales promotion program in the company’s pharmaceuticaldivision could hurt DuPont earnings in the last three months of theyear.

Third quarter income from continuing operations was $537million, compared to $625 million in the third quarter of 1999, adrop of $88 million or 14 percent.

Third quarter 2000 consolidated sales of $6.4 billion were flatversus third quarter 1999.

The company reported higher sales volume, particularly in theAsia Pacific market, and higher selling prices, but those wereoffset by the higher raw material costs.BACK TO TOP

Clorox Q1 Net Rises 13%

Consumer productscompany Clorox said today that net income rose 13percent in its fiscal first quarter, as strong sales of homecare products and record summer demand for Kingsford charcoalhelped boost results.

The maker of Clorox bleach, Formula 409 cleaner and HiddenValley Ranch salad dressing said net income before a one-timecharge was $100 million, or 42 cents a share, in the quarterended Sept. 30. Including the charge, net income totalled $98million, or 41 cents a share. Last year the company had netincome of $87 million, or 36 cents per share.

Analysts on average had expected the company to reportearnings of 41 cents a share, according to market research firmFirst Call/Thomson Financial. A company spokesman could not beimmediately reached for comment.

Oakland, California-based Clorox, which also makes FreshStep cat litter and Glad plastic bags, said revenue rose 5percent to $985 million.

First-quarter results were in line with the company’s goalsof mid-single-digit revenue growth and low-double-digit earningsgrowth for the full year, Chairman and Chief Executive OfficerCraig Sullivan said in a statement.

It also met its year-end goal to offer digital subscriberline (DSL) high-speed Internet access service in 72 marketsahead of schedule. Qwest added 38,000 subscribers during thequarter and now has 213,000 DSL subscribers. It expects to have250,000 DSL subscribers by year-end.

In an effort to cut expenses and streamline its operationsfollowing the purchase of U S West, Qwest plans to cut 11,000jobs, or 16 percent of its work force. About 4,500 jobs werecut by the end of the quarter.

Halloween Sweetens Hershey

Hershey Foods, theNo. 1 U.S. producer of chocolates, said today itsthird-quarter earnings rose 23 percent, beating the averageanalyst forecast, boosted by strong back-to-school and Halloweendemand for candy.

The maker of Hershey’s bars, Reese’s Peanut Butter Cups andJolly Rancher candies said net income reached $107.4 million, or78 cents a diluted share, in the quarter ended Oct. 1, comparedwith $87.6 million, or 62 cents, in the same period a year ago.

Analysts on average had expected Hershey, based in Hershey,Pa., to earn 76 cents a share, according to a poll bymarket researchers First Call/Thomson Financial.

Net sales climbed to $1.20 billion from $1.07 billion.

Hershey in September forecast strong sales for the secondhalf of 2000, citing solid demand, a lineup of new products andlogistical improvements that better prepared the company for theHalloween season, an important time of the year for sales.Operating problems led to product shortages the previous year.

“Admittedly we were in the depths of our shippingdifficulties during last year’s third quarter, but this year ournew information system and revamped Eastern distributionfacilities were much improved during this period of high demandfor our domestic confectionery business,” Kenneth Wolfe,Hershey’s chairman and chief executive, said in a statement.

The company said everyday business was also healthy duringthe period, on top of the strong back-to-school and Halloweenshipments.

Greater sales volumes and favourable commodity costs,primarily for cocoa and milk, boosted operating income despitehigher logistics, marketing and administrative costs, Hersheysaid.

“We expect a good finish for the year, although ourchallenge, as always, will be to strive for continuousimprovement in customer service, while controlling costs andexecuting effective marketing programs,” Wolfe said.

Tyco’s Q4 Operating Net Up 40%

Diversified manufacturer Tyco International said today that fourth-quarteroperating earnings rose 40 percent, beating Wall Streetestimates, on double-digit internal growth, surging electronicssales and the integration of big-ticket acquisitions.

Tyco, which also makes telecom, medical and fire protectionproducts, earned $1.1 billion, or 64 cents a diluted share,before special items, compared with $782.7 million, or 46 centsa diluted share, in the year-ago quarter.

Analysts, on average, were looking for Tyco to earn 63cents a share, according to First Call/Thomson Financial. Netincome rose to $1.9 billion or $1.12 per diluted share from$780.5 million or 46 cents per share in last year’s fourthquarter.

Fourth-quarter sales at Tyco — based in Bermuda, but withheadquarters in Exeter, N.H. — rose 25 percent to $7.81billion, up from $6.22 billion in the year-ago quarter.

Tyco’s electronic operations posted a 66 percent increasein sales from the introduction of new products such ashigh-speed connectors and wireless components and theintegration of three acquisitions, the company said.

Fourth-quarter operating profits from electronics increased69 percent to $746.8 million on sales of $2.88 billion, thecompany said.

“Tyco continues to show no signs of slowing down,” TycoChairman Dennis Kozlowski said in a statement.

During the quarter, Tyco generated $2.1 billion in net cashfrom the initial public offering of its majority-owned underseafiber-optic cable operation TyCom Ltd. Tyco also completed thesale of ADT Automotive for $1 billion in cash. Last week, Tyco completed its $4.2 billion acquisition ofSt. Louis, Mo.-based Mallinckrodt Inc., a leading maker ofdisposable medical products.

For the fiscal 2000 year ended Sept. 30, Tyco’s earningsbefore special charges rose 42 percent to $3.73 billion, or$2.18 per diluted share. Revenues for the year rose 29 percentto $28.93 billion.

Kozlowski said the company’s cash flow of $3.3 billiongenerated from organic growth and new acquisitions has put Tycoon course for “another solid year in 2001.

Dial’s Profits Pluge

Consumer products and cannedmeats maker Dial said today that third-quarterearnings, hurt by lower sales and higher raw material costs,plunged 86 percent even before a restructuring charge.

Profit before the charge was $4.4 million, or 5 cents ashare, down from $30.8 million, or 31 cents, a year ago, themaker of Dial soap, Armour canned meats and other productssaid. Sales fell 6 percent to $411.1 million.

Analysts on average had expected Scottsdale, Ariz.-basedDial, whose management is trying to decide whether to put thecompany up for sale, to post earnings of 3 cents a share in thequarter. Dial had previously warned that earnings would drop to3 to 5 cents a share before one-time items, down from earlieranalysts’ consensus estimates of 14 cents a share.

Including a $48.7 million charge in the third quarter forseverance and restructuring of its speciality personal carebusiness and a joint venture with Germany’s Henkel KGaA, thecompany reported a loss of $26.2 million, or 29 cents a dilutedshare. A $4.6 million pretax gain in the third quarter fromchanges to certain benefit plans partially offset the charge.

The report offered little in the way of new information forinvestors, as a new management team, lead by chief executiveofficer Herbert Baum, had already forecast the earnings and thecharge.

“I think the jury’s still out,” John Hughes, brandedconsumer products analyst at Dain Rauscher Wessels, said aboutinvestor reaction to the earnings report. “We want to measurethis management team.”

Dial announced the charge related to those areas and forseverance payments for previous management last week. It alsosaid it cut its dividend in half to strengthen its balancesheet and repay debt. Additional charges are expected in thefourth quarter, with the total expected to reach $60 million to$70 million.

Baum took the helm in August, after the company had issuedits third earnings warning for the year. The company has beenplagued by acquisitions that have not performed well and by thepractice of previous management to sell products at discountsto retailers at the end of quarters to meet sales goals, aprocess known as trade loading. Under Baum, the company hasended that practice.

Baum has also said that management will decide by themiddle of 2001 whether to keep the company independent, sellit, sell parts of it, or form new business alliances.

Gross margin in the third quarter fell to 47.8 percent,before the charge, from 49.7 percent in a year ago. Margin washit by higher petroleum costs, lower sales and costs resultingfrom the consolidation of speciality personal care distributionand warehouse facilities.

Total debt at the end of the third quarter was $636.5million, down $20.5 million from the balance at the end of thesecond quarter, the company said.

Baum also reiterated Tuesday that the company wascomfortable with analysts’ estimates predicting on averageearnings of 50 cents a share in 2000, before one-time items.

Blockbuster’s Winning Quarter

Leading video store chainBlockbuster said today third-quarter cash earnings rose3 percent, well above Wall Street expectations, on growth in videorentals and international operations.

The Dallas-based company reported cash earnings of $22.6million, or 13 cents a share, excluding intangible amortization.That compares with $22.0 million, or 14 cents, a year earlier.

Wall Street on average expected 10 cents per share, accordingto research firm First Call/Thomson Financial.

“It’s a very, very good profitable and growing business,” saidDavid Riedel of Salomon Smith Barney after earnings wereannounced. He said the company’s position in its core business,video rentals, was virtually unmatched.

Video segment cash earnings, which excludes Blockbuster’s newmedia area, grew to $33.3 million, or 19 cents a share, for thethird quarter, which compares with $22.9 million, or 14 cents ashare during the same period last year.

Blockbuster rents videos, DVDs and video games, and operatesthe world’s largest video rental chain. It also has partnershipswith America Online and DIRECTV. Entertainment giant Viacom Inc.took Blockbuster public in August 1999 and owns more than 80percent of the company.

Including amortization and other items, Blockbuster reported anet loss of $19.3 million, or 11 cents a share, versus $19.1million, or 12 cents.

Looking ahead, the company also said its New Media unit lossesin the fourth quarter would be consistent with prior quarters, andsame-store revenues in the period would be in the high singledigits in percentage terms.BACK TO TOP

PG&E Reports 38% Rise in Revenue

With $2.9 billion in unrecognized losseslooming in the background, PG&E reported today a 38 percentincrease in third-quarter earnings that beat expectations.

The San Francisco-based holding company of Pacific Gas andElectric Co. reported net income of $225 million, or 62 cents pershare, up from $185 million, or 50 cents per share in the prioryear. PG&E’s continuing operations earned $248 million, or 68 centsper share, in the third quarter.

Analysts polled by First Call/Thomson Financial projectedearnings of 60 cents per share.

PG&E’s bottom line took a back seat to concerns about whetherthe company will be able to recoup its losses from California’ssoaring electricity prices while a government-mandated rate freezeprevents the utility from passing the costs along to customers.

PG&E said its losses from the electricity price shocksrose from $2.2 billion at the end of August to $2.9 billion at theend of September.

The mounting losses stem from a deregulated market where theenergy demands of California’s expanding population and economyhave outstripped supply, allowing electricity suppliers to tripleand quadruple their prices from 1999. Regulators are alsoinvestigating allegations of illegal price manipulation in themarket.

PG&E will have to write off those losses unless state regulatorsreverse their previous rulings and allow PG&E to retroactively billmillions of Northern California customers for the costs. If thecompany has to absorb the electricity losses, PG&E’s stock probablywould be ravaged.

The California Public Utilities Commission last week providedPG&E with a reprieve by agreeing to reconsider the issue. PG&E andanother major utility, Southern California Edison Co., are expectedto provide further details about their proposed solution indocuments scheduled to be filed with the PUC on Wednesday.

Consumer activists argue that PG&E should have to foot theentire bill for the higher electricity prices because the companyhas made billions of dollars by selling off assets as part ofCalifornia’s energy deregulation. PG&E said consumer groups aremisinterpreting the company’s finances.

In a conference call today, PG&E executives sought to strike aconciliatory tone to reassure both anxious customers and investors.

On the one hand, the company said, it would continue toessentially finance its customers’ bills. PG&E said it has borrowedbetween $700 million and $800 million to buy electricity fromwholesalers so far and has applied for approval to raise its creditlimit by an additional $2 billion.

On the other hand, PG&E executives stressed they are workingfuriously with state and federal regulators to devise a plan thatwill ease the company’s financial burden. In the conference call,the executives indicated they hoped some sort of action might betaken before the end of the year.

“We believe the immediate and long-term solutions are cominginto focus,” PG&E Chairman Robert Glynn said. “In summary, theright people are working on the right solutions.”

Through the first nine months of the year, PG&E earned $753million, or $2.09 per share, up from $538 million, or $1.46 pershare, in the comparable 1999 period.

Sluggish Sales Cost HasbroHasbro, the No. 2U.S. toy maker, reported today that its profits fell 84percent due to sluggish sales and mounting losses in itsinteractive operations.

Hasbro said net income fell to $13.8 million, or 8 cents adiluted share, compared with $85.2 million, or 43 cents, forthe same quarter a year ago.

Analysts lowered their expectations to 7 cents a share forthe quarter, according to market research firm FirstCall/Thomson Financial. Hasbro warned last week that itsperformance would fall well short of previous estimates largelybecause of a sharp slowdown in sales of Pokemon and Star Warsproducts. It also said it was slashing its work force by about5 percent.

Worldwide net revenues dropped to $1.07 billion from $1.10billion in the year-ago period.

“Even with challenging comparisons against last year’srecord results, I’m not pleased with our third-quarterperformance,” Hasbro Chairman Alan Hassenfeld said in astatement.

Hasbro’s most recent outlook for full-year 2000 earningsper share was 40 cents to 50 cents, before $140 million to $170million in pretax charges.

Hassenfeld said the company was evaluating the fourthquarter before providing a revenue and earnings outlook for2001.

Earnings in the third-quarter included a pretax loss of $6million from Internet games operation Games.com. Itsinteractive division did not live up to already-reducedexpectations, and Hasbro said last week it was exploringstrategic alternatives for the business.

Pokemon toy demand in the U.S. was soft, but stronginternationally, the company said. Revenues from Star Warstoys are expected to be minimal in 2000.

U.S. Bancorp Meets Estimates

Regional bank U.S. Bancorpsaid today its third-quarter operating earningsrose 0.5 percent, in line with expectations, as loan volumeincreased but expenses did too.

Minneapolis-based U.S. Bancorp, which this month announcedit was being bought by rival Firstar Corp. in a stock dealworth almost $20 billion, earned $410.9 million, or 55 cents adiluted share, in the third quarter, excluding one-time mergercharges and profits from securities sales. That compares with$409 million, or 56 cents a share, in the year-earlier period.

Results met Wall Street forecasts of 55 cents a share,according to market research firm First Call/ThomsonFinancial.

The bank’s net profits, including $9.6 million in mergercharges and one-time securities transactions, rose to $401.3million, or 54 cents per share, from $396.4 million, also 54cents per share.

U.S. Bancorp’s provision for loan losses in the thirdquarter rose 22 percent to $173 million. Net interest income,which includes the profit the bank makes from loans, rose 4.5percent to $883 million as loan volume continued to growdespite higher interest rates.

Quaker Oats Q3 Profit Up 16%

Quaker Oats, maker of hotand cold cereals, said today its third-quarter earningsrose 16 percent, beating the average analyst forecast, oncontinued robust demand for its Gatorade sports drink.

The company also said it expects full-year 2000 earnings pershare growth before items in the range of 20 percent or slightlybetter.

The Chicago-based food company, whose stable of productsincludes breakfast bars, Rice-A-Roni side dishes and Aunt Jemimapancake mixes and syrup, said earnings rose to $159.2 million,or $1.15 per diluted share, in the quarter. That compares with$137.3 million, or $1.01 a diluted share, excluding unusualitems in the same period a year ago.

Analysts on average had expected the company to earn $1.11 ashare, according to First Call/Thomson Financial, which tracksearnings data.

Third-quarter net sales rose to $1.48 billion from $1.38billion a year ago.

Gillette’s Profits Fall; Names New CEO

Gillette today reportedits third-quarter earnings fell 1 percent, meeting WallStreet’s estimates, as currency problems plagued the consumerproducts giant.

The Boston-based maker of razors and blades, Oral Btoothbrushes and Duracell batteries, also said Chairman andChief Executive Michael Hawley was retiring immediately. EdwardDegraan was named acting chief executive and Richard Pivirottowas named non-executive chairman of the board.

Gillette posted third-quarter earnings of $350 million, or33 cents a share, from continuing operations, compared withearnings of $355 million, or 32 cents per diluted share for thesame period in 1999.

Analysts surveyed by First Call/Thomson Financial hadestimated Gillette would earn 33 cents a share in the thirdquarter.

The company has had a string of disappointing earningsreports dating back to 1999, blaming a combination of foreignexchange rates and proper inventory stocking.

AHP’s Profits Rise 18% Before Charge

American Home Products posted today a steep rise in quarterly operating profits,matching analyst expectations, but the No. 5 U.S. drug makersaid it would have to set aside additional funds for its dietdrug settlement for which it has already paid billions in the“fen-phen” case.

The Madison, N.J.-based maker of Advil, Robitussin and theoestrogen replacement drug Premarin reported net income of $762million, or 58 cents per share, in the third quarter vs. a netloss of $2.87 billion, or $2.20 cents, in the year-ago period.

The year-ago loss mainly reflected a $4.75 billionlitigation charge for a settlement related to the diet drugsRedux and Pondimin. Excluding this charge from the 1999third-quarter results, income from continuing operations in thelatest quarter increased 18 percent to $762 million from $645million.

Analysts on average had estimated that the company, whoseWyeth-Ayerst unit will pay the U.S. government $30 million forviolations at two plants, would post earnings of 58 cents pershare, according to research firm First Call/ThomsonFinancial.

Looking forward, AHP said it expects additional reserveswill be required in the diet drug settlement. It said thatthough it is still unclear how much that will amount to, AHPexpects it to be lower than the $4.75 billion recorded in the1999 third quarter.

A spokesman for the company declined to specify a range ofthe amount of reserves that would be used.

Patients typically combined either Pondimin or Redux withanother diet suppressant called phentermine to make the“fen-phen” diet cocktail. AHP recalled Pondimin and Redux in1997 after some of the 6 million Americans who had takenfen-phen developed heart problems, including leaky valves.

Overall net sales increased 13 percent from the samequarter last year.

Worldwide pharmaceutical sales increased 14 percent for thequarter, sparked by higher revenues from recently approvedpneumococcal vaccine Prevnar, meningitis treatment Meningitic,arthritis treatment Enbrel and ulcer medicine Protonix. Salesof Effexor XR, for which American Home Products received anexpanded indication, also showed strong growth.

Excluding the negative impact of foreign exchange rates,worldwide pharmaceutical sales increased 17 percent for the2000 third quarter.

Global consumer health care sales increased 7 percent forthe quarter, as sales of the Centrum family of vitamin productsrose. However, the company experienced a sales slowdown forcold, cough and allergy products, as well as for pain relieverAnacin.

Excluding the effect of weak foreign currencies, worldwideconsumer health care sales increased 8 percent for thequarter.

“The double-digit sales and earnings growth through thefirst three quarters of 2000 have been driven by increaseddemand for franchise products and enhanced by an impressivenumber of new products introduced into the marketplace,” saidChairman and Chief Executive Officer John Stafford in astatement.BACK TO TOP

Raytheon Meets Expectations

Raytheon’s third-quarter earningsmet Wall Street’s expectations, reversing a loss from the year-agoperiod, helped by an increase in aircraft deliveries.

For the three months ended Sept. 30, Raytheon earned $105million, or 31 cents per share, up from a loss of $163 million, or48 cents per share in the year-ago period.

Earnings from continuing operations were $133 million, or 39cents per share, in line with a consensus estimate from analystssurveyed by First Call/Thomson Financial.

The Lexington, Mass.-based aerospace and defense company lost $89 million, or 26 cents pershare, from continuing operations in the year-ago period, in partdue to charges of $464 million, or 84 cents per share.

Revenue rose to $4.16 billion, up from $4.12 billion a year ago.

Sales in most divisions were similar to a year ago. TheElectronic Systems division reported sales of $1.9 billion, downfrom $2.0 billion.

Raytheon Aircraft Company, a division the company is reportedlytrying to sell to reduce its debt burden, recorded sales of $749million, up 6 percent from a year ago due to higher aircraftdeliveries.

For the nine months ending Oct. 1, Raytheon recorded net salesof $12.56 billion, down 4 percent from $13.02 billion over the sameperiod last year. Raytheon has a net loss for the first nine monthsof the year of $23 million, compared with earnings of $332 millionin the year-ago period.

Mattel’s Profits Fall

Mattel, in the midst of arestructuring and under new leadership, said its profit fell 22percent in the third quarter because of declining sales.

The company said today it earned $174.3 million, or 41 centsper share, from continuing operations in the quarter ended Sept. 30as compared with profits of $222.2 million, or 52 cents per sharein the same period last year.

The results were in line with estimates of analysts surveyed byFirst Call/Thomson Financial.

Sales increased by 2 percent in the United States, but fell 5percent in international markets, the company reported. Sales ofthe company’s two largest brands — Barbie and Fisher-Price —increased during the quarter.

Mattel reported its earnings the day after the sale of itsmoney-losing interactive toy division, The Learning Co.

Mattel took a one-time charge of $441 million as the result ofthe sale, but said the sale would save it $1 million a day inoperating losses.

The company’s disastrous experience with The Learning Co. costformer chief executive Jill Barad her job. Barad was replaced inMay by chief executive Robert A. Eckert.

The company also took a restructuring charge of $74 million, or18 cents per share. Including one-time charges, the company lost$336.8 million, or 79 cents per share, in the quarter.

U.S. Airways Loses $30 Million in Q3

U.S. Airways, the No.6 U.S. airline, said today it lost $30 million in thethird quarter, more than expected, amid tough competition andfuel costs 75 percent higher than a year earlier.

Arlington, Va.-based US Airways, which has agreed to bebought by United Airlines parent UAL for $4.3 billion,said it lost 45 cents a share, compared with a loss of $85million, or $1.19 a share, in the period a year earlier, whenthe carrier suffered from a high degree of cancellationsbecause of bad weather and a slowdown by mechanics.

Analysts had on average forecast that US Airways would lose19 cents a share in the recent quarter, according to FirstCall/Thomson Financial.

Revenues rose 13 percent, to $2.38 billion from $2.10billion a year earlier.

US Airways shares closed at $32-1/4 on Tuesday, down 9/16,despite the $60 a share offer price in the UAL deal, amidwidespread doubts that regulators will allow the deal to closeas envisioned.

Wachovia Will Cut JobsSoutheast U.S. regional bankWachovia reported today a 20 percent drop inthird-quarter net income because of merger costs and chargesrelated to a sweeping restructuring plan, but operating resultsmet Wall Street expectations.

Excluding merger costs and restructuring charges, theWinston-Salem, N.C.-based bank’s earnings were up about 4percent to $270.2 million, or $1.32 a share. Including thecharges, Wachovia earned $205.3 million, or $1.00 a dilutedshare, in the third quarter. That compares with reported netincome of $257.5 million, or $1.25 a share, a year ago.

Wall Street was expecting the company to post operatingearnings of $1.32 a share, according to market research firmFirst Call/Thomson Financial. Wachovia, which is the process ofcutting 1,800 jobs as it revamps its operations, said pre-taxrestructuring charges and merger-related costs totalled $99.8million in the third quarter. The bank said the rest of therestructuring charges, about $30 million, will be taken in thenext two quarters.

Wachovia’s provision for loan losses in the third quarterwas $124 million, up from $76.8 million during the same periodlast year. Net interest income, after the provision for loanlosses, fell 6 percent to $506.8 million.

The bank holding company in June warned investors thatrising interest rates would hurt second-quarter and full-yearprofits. In September it said its president and chief operatingofficer, G. Joseph Prendergast, would retire after the end ofthis year.

Visteon Earnings Fall

Third-quarter earnings at auto parts supplierVisteon Corp. fell 69 percent due to price and production cuts byits former parent, Ford Motor Co.

Visteon said its earnings totaled $48 million, or 37cents a share, for the three months ended Sept. 30, compared with$155 million, or $1.19 a share, in the year-ago period.

The results equaled Wall Street expectations that Visteon hadlowered in August, according to analysts surveyed by FirstCall/Thomson Financial.

Revenues fell 4 percent, from $4.6 billion to $4.4 billion.

Visteon attributed the earnings decline to a 5 percent price cutgiven to Ford before being spun off as a separately traded company.Ford accounted for 83 percent of Visteon’s business in the thirdquarter, Visteon’s first full quarter on its own since the spinoffin June.

Visteon also was hurt by the shutdown at three Ford factories toshift tires from new cars to replacing 6.5 million recalledFirestone tires. The parts maker also said the weakness of the euroagainst the dollar dragged on profits as well.