Earnings Reports for Oct. 20

ABC News

January 6, 2006, 1:17 AM ET

24 min read

— -- Coke’s Profits Pop

Coca-Cola reported today a 36 percent jump in quarterly profit, narrowly beatingWall Street expectations despite flat volume growth in thebeverage giant’s key North American market.

Atlanta-based Coca-Cola, the world’s largest soft drinkscompany, earned $1.07 billion, or 43 cents a share, afternonrecurring items in the third quarter of 2000, compared to aprofit of $787 million, or 32 cents a share, in the same periodlast year.

Excluding the nonrecurring items, Coca-Cola earned 42cents a share in the period. Analysts on average had forecastthe beverage giant would make 41 cents a share, according toFirst Call/Thomson Financial, which tracks consensus data.

Coca-Cola said worldwide unit case volume, a key measure offinancial health in the soft drinks industry, increased in thethird quarter by 4 percent, but there was zero growth in NorthAmerica.

The company also said it was comfortable with itspreviously established objective of growing worldwide volumesby 5 percent in 2000, and with its previous range of earningsper share estimates for this year and 2001.

Ericsson: Increase and a Warning

Ericsson posted a 67 percentincrease in third-quarter profit today but said its losseswidened in its cellular phone unit, causing it to lower itsexpectations for full year results in that area.

Shares of the world’s third biggest wireless equipment makerplunged 21 percent in heavy trading on the Stockholm stock exchange.

The mixed report came a day after Finnish rival Nokia reported a40 percent jump in profits for the latest quarter, a 50 percentgain in sales and a bullish outlook. The surprisingly strongshowing by the world’s largest mobile phone producer came in sharpcontrast to last week’s dismal report from U.S.-based No. 2Motorola and contributed to a powerful rebound by the entiretechnology sector on Thursday.

Ericsson earned $450 million in the threemonths ended Sept. 30, or 9 cents per share. Net sales for the quarter were $6.9 billion.

Its consumer products unit, which produces the handsets, had anoperating loss of $422.8 million despite a 43percent sales increase. The operating loss was wider than its lossin the preceding quarter.

Ericsson said it expects a loss of around $1.6 billion for the full year in its mobile phone unit.

The company blamed component shortages from a key supplier,anticipated price competition in the next quarter and restructuringcharges. It announced that it was transferring the production ofhandset units from Sweden and the United States to “low-costunits” in Asia, Latin America and Eastern Europe to try to restoreprofitability.

The company continued to perform strongly in the infrastructurearea and was optimistic about strong demand for so-calledthird-generation technology that allows handsets to rapidly accessthe Internet and download electronic mail, music and pictures.

“We are going to get out of this situation that we’re in,”company President Kurt Hellstroem said in a conference call,acknowledging that there would be “no easy solution.”

The operating loss was offset by strong sales and profitabilityin the company’s key infrastructure area. The network operatorsunit increased sales 37 percent and had an operating profit of $834.6 million.

Net income for the first nine months was $1.9 billion. Nine-monthrevenue rose to $19.7 billion.

Ericsson, which has more than 103,000 employees in 140countries, said its fastest growing markets were North America andLatin America.

Merck Beats Estimates

Pharmaceutical giant Merck reported today a 19 percent rise in third-quarterprofits, handily beating Wall Street expectations on sizzlingsales of newer drugs, such as Vioxx for arthritis andcholesterol fighter Zocor.

The Whitehouse Station, N.J.-based company, which alsomakes asthma drug Singulair and osteoporosis treatment Fosamax,reported net income of $1.84 billion, or 78 cents per share, upfrom $1.54 billion, or 64 cents per share, in the year-agoperiod.

Analysts on average had predicted Merck, the No. 2 U.S.drug maker and one of the 30 stocks in the Dow Jones industrialaverage, would earn 73 cents per share, according to FirstCall/Thomson Financial.

The company reported a 29 percent jump in total sales, to$10.6 billion. Fosamax sales jumped 29 percent to $360 millionand Singulair sales soared 81 percent to $235 million. Zocorchalked up global sales of almost $1.4 billion, up 18 percent.

Commenting on its outlook for the fourth quarter, Mercksaid it is comfortable with the range of earnings estimates —73 to 76 cents per share — among analysts polled by FirstCall.

Tribune’s Profits Dip, Will Sell Unit

Tribune, publisher of the Chicago Tribune and the LosAngeles Times, reported today lower third-quarter earnings, but the results topped analysts’ lowered expectations thanks to strong results from its broadcasting and interactive media businesses.

Chicago-based Tribune, which became the third-largest U.S. newspaper group after buying Times-Mirror Co. in June, said it earned $73.6 million, or22 cents per share, in the third quarter, down from $113.9 million, or 32 cents per share, a year earlier.

Analysts on average had expected the company to post earnings of 21 cents a share, according to research firm First Call/Thomson Financial. Tribunesaid earlier this year that its full-year financial performance would fall short of earlier expectations after its $8 billion purchase of Times Mirror.

The company said it remains comfortable with its fourth-quarter earnings estimate of 35 to 40 cents a share before special items.

Also today, Tribune said it would sell its Times Mirror Magazines operation to Time Warner’s Time unit for $475million. Together with other divestitures it has pursued this year, Tribune said it expects to realize after-tax proceeds of about $2 billion, which it will useto pay off debt and repurchase stock.

Sales at the company’s systemwide restaurants, which includecompany-operated and franchised units, rose to $10.512 billionfrom $9.998 billion in 1999.

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.

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

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

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

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

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.

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.

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

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.

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.

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 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.

Fleet on Oct. 2 agreed to buy regional bank Summit Bancorpin a deal that would create New Jersey’s largest bank andexpand its reach in the U.S. Northeast. In July Fleet agreed tobuy New York Stock Exchange specialist firm M.J. Meehan & Co.LLC, which would expand its market-making capabilities to thecommon stock of 433 companies.

Caterpillar’s Flat Third-Quarter

Caterpillar, the world’s largest maker of earth-moving equipment, said today it expected slight rises in revenue in 2000 and 2001 and reported its third-quarter per shareprofit narrowly beat recently lowered estimates after softness in key markets, higher costs and unfavorable currency translations took their toll.

Peoria, Ill.-based Caterpillar, which warned analysts two weeks ago that it would not meet third-quarter profit forecasts at the time, said it earned $216million, or 62 cents per share, on revenue of $4.78 billion in the latest quarter. That compares with $219 million, or 61 cents, on revenue of $4.72 billion inthe year-ago period.

According to a First Call/Thomson Financial survey, the mean estimate was for a 58 cent profit per share. Analysts trimmed their estimates by 10 centsafter the company issued its warning last month.

In addition to weakness in some of its key markets, Caterpillar said its performance also was undermined by unfavorable currency impact and costsrelated to selling, general and administrative, and research and development. The favorable impacts of a tax adjustment, improved price realization (excluding currency) and higher sales volume largely offset the unfavorable items.

In a statement, Caterpillar’s chairman and chief executive Glen Barton said, “In response to these conditions, we have redoubled efforts to reduce costs toensure we deliver acceptable results for the full year.”

For 2000, analysts on average were forecasting a profit of $2.88 per share, up from $2.63 per share in 1999.

Barton added, “...Our geographic and product diversity is a major strength, and we continue to benefit from the unprecedented demand for electric powerand energy development applications.”

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Earnings Reports for Oct. 20