Earnings Reports for July 26

— -- Amazon Beats Estimates by 2 Cents

Amazon.com Inc. beat Wall Street’s estimates for second-quarter earnings. The Seattle Internet retailer said sales grew 84 percent from the same period a year ago. The company also had an 32 percent increase inlosses. The company lost $89 million, or 33 cents per share, onsales of $578 million.

The earnings report was released after the close of trading on Wall Street. Shares of Amazon.com closed at $36.06¼, down $1.56¼, onthe Nasdaq Stock Market.

The company said that its U.S. book, music and video divisionswere all profitable in the quarter, posting just over $10 millionin gross profits. Amazon.com’s electronics division also sawgrowth, though the company did not immediately quantify it.

“While we continue to see improvements in all our businesses,we are especially pleased with the profitability in our U.S. Books,Music and Video group and the unusual growth in our Electronicsstore,” said Amazon.com chairman Jeff Bezos, who said thecompany was on target for its year 2000 objectives. Answering critics who say the e-commerce giant will run out ofmoney before the end of the year, Amazon.com Chief FinancialOfficer Warren Jensen said the company had $908 million on hand atthe end of the quarter and should have more than $1 billion byyear’s end.

“I don’t see anything here that falls under the heading of badnews,” said J.P. Morgan analyst Tom Wyman. “

The company, which gained nearly 3 million new customers in thequarter, experienced only a modest gain in sales compared to thefirst quarter. The second quarter is, however, considered theslowest time of year for most retailers.

And losses were down from the first quarter of this year, whenthe company lost 35 cents per share. Analysts had hoped to see sucha decrease, looking for a sign that the company would eventuallybecome profitable.

Bezos and other company officials said Amazon.com would not beprofitable before 2002 at the earliest.

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Drug Sales Give Amgen a Boost

Amgen Inc.’s second quarterearnings rose 13 percent on improving sales of its mainstay kidneydialysis and chemotherapy drug Epogen, the biotechnology companysaid. Amgen earned $303 million, or 28 cents per share, up from $268million, or 25 cents per share in the same period a year ago. Theresults were a penny better than Wall Street forecasts, accordingto analysts surveyed by First Call/Thompson Financial.

Sales rose 11 percent to $914 million.

For the six-month period Amgen earned $568.8 million, or 52cents per share, up from $514.8 million, or 48 cents per share, ayear earlier.

The second-quarter increase came despite spending on the launchof several new drugs over the next two or three years, said KevinSharer, Amgen’s president and chief executive officer.

Sales of Epogen increased 15 percent to $493 million. Epogenstimulates red blood cell production in chemotherapy and kidneydialysis patients.

Sales of Neupogen, another longtime moneymaker for Amgen, roseonly 2 percent during the quarter. Sales were hurt by lowwholesaler inventories and unfavorable foreign exchange rates, thecompany said. Neupogen boosts the production of white blood cells.

Amgen plans to launch four new drugs, including NESP, a new,more powerful red cell stimulator that the company will be able tosell in Europe in competition with a version of Epogen sold byJohnson & Johnson. Amgen shares European marketing rights forEpogen with Johnson & Johnson under a 14-year-old licensingagreement.

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Daimler Chrysler Profit Up 18%

Second-quarter profits rose 18 percent atDaimlerChrysler AG, topping expectations, but the automaker warnedthat earnings for the rest of the year would be hurt by larger U.S.sales incentives and the cost of launching new Chrysler cars andminivans.

The U.S.-German company reported that profits totaled$1.67 billion, or $1.66 a share, from April to June as a strongshowing for Mercedes-Benz and other units offset lower earningsfrom the Chrysler division.

In the second quarter of 1999, the automaker posted a net profitof $1.41 billion, or $1.41 a share. Wall Street analysts hadexpected a per-share profit of $1.52 a share for the just endedquarter, according to a survey by First Call/Thomson Financial.

Second-quarter revenues rose 17 percent to $41.7 billioncompared with a year-ago tally of $35.6 billion.

Once again, the Chrysler division accounted for well over halfof the company’s profits, earning $1.1 billion in the quarter, butthat was 12 percent lower the unit earned in the same period lastyear — even though revenues rose 11 percent to $17.2 billion.

The company said the division was hurt by the cost of launchingnew versions of its minivans, mid-size sedans, coupes and thepopular Chrysler PT Cruiser. Profits also took a hit in June whenChrysler increased sales incentives as business began to sag.

Profits also declined at DaimlerChrysler Services, the company’sfinance arm, falling 18 percent to $210 million despite a 50percent increase in revenues. The company said profits were hurt byweak prices for used cars, higher refinancing costs and morecompetition for leasing.

DaimlerChrysler warned that its operating profits will declinein the second half of 2000, especially the final three months ofthe year, due to the Chrysler incentives and launch costs.

But on a more positive note, Chairman Juergen Schrempp said in astatement, the company’s stakes in European aerospace andtelecommunications ventures are expected to boost net earnings

Other parts of the company reported improved second-quarterresults.

The Mercedes-Benz and Smart division increased earnings 22percent to $719 million, as revenues rose 18 percent to $10.9billion on stronger sales of Mercedes luxury cars in the UnitedStates and Europe and improved sales of the Smart minicar.

Profits in DaimlerChrysler’s commercial vehicle division totaled$362 million, a 19 percent increase, as revenues rose 13 percent.The company said sales in North America weakened slightly from lastyear, while South American sales improved.

The aerospace division saw profits increase 30 percent to $234million, as revenues increased 6 percent to $2.3 billion.

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DuPont Beats Estimates

DuPont Co., the nation’s biggest chemical company, posted better-than-expectedprofits for the second-quarter, but warned that high energy andraw material costs would hurt its earnings over the remainder ofthe year.

Wilmington, Del-based DuPont said profits in the second halfof the year could drop 20 to 25 cents a share compared to a yearago because of soaring prices for crude oil and natural gas, thechief raw materials used by chemical companies.

Nonetheless, the company said earnings for the full yearshould still grow by 17 to 20 percent on the back of strongerprices for its chemicals and plastics and strong markets outsideof the United States.

And over the past several months, DuPont has managed toovercome some of the higher costs of raw materials with solidsales, which rose to $7.9 billion in the second quarter, up 13percent from the $7 billion it reported a year ago.

Its second quarter profits also squeezed past analysts’expectations, rising 7 percent to $949 million, or 90 cents ashare, before special items. In the same period a year ago,DuPont earned $886 million, or 78 cents.

Analysts surveyed by First Call/Thomson Financial hadexpected the company on average to earn 88 cents a share for thequarter.

“Overall these were solid results,” said Frank Mitsch, ananalyst with Chase H&Q. “If you consider the head winds theyfaced with respect to the weak Euro and high raw material costs,to show results is indicative of the strong portfolio theyhave.”

Charles O. Holliday, Jr., DuPont chairman and chiefexecutive officer, said more than half of the company’s key businesses delivered double-digit earnings growth in thesecond quarter.

DuPont’s strongest growth came from its performancecoatings, speciality polymers, and pigments and chemicalsbusiness. It also benefited from taking full ownership ofPioneer Hi-Bred, its seed company..

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3M Beats 2Q Earnings Estimates

A strong flow of new products andproductivity gains helped boost 3M Co. earnings nearly 12 percentin the second quarter to $470 million, up from $421 a year earlier. The earnings of $1.18 a share for the quarter ended June 30compared with $1.03 a share in the same period a year ago,excluding a one-time, after-tax gain of $55 million in the earlierperiod.

Sales for the quarter totaled $4.22 billion, up 9 percent from$3.86 billion in the second quarter of 1999.

The results beat by 2 cents the consensusestimate of analysts surveyed by First Call/Thomson Financial.

“We continue to deliver solid growth,” said L.D. DeSimone,chairman and chief executive. “Our electro communicationsbusinesses continued to register strong growth. We also saw solidgains in our consumer and office and our transportation, graphicsand safety segments.”

Minnesota Mining and Manufacturing Co. produces a wide range ofproducts, including Scotch tape, Post-it Notes and products for theelectronics, telecommunications, automotive, industrial, consumerand office, health care and safety markets.

Productivity gains also contributed to 3M’s performance, hesaid.

For the first six months, earnings totaled $957 million, or$2.39 a share, compared with $860 million, or $2.12 a share, a yearearlier.

The 2000 figure includes a one-time gain of $31 million, or 8cents a share, related to the termination of a health caremarketing agreement. The 1999 figure includes a one-time gain of$55 million, or 14 cents a share. Excluding the nonrecurring items,first-half earnings totaled $926 million, compared with $805million a year earlier.

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Xerox Warns on Second Half

Xerox Corp. reported a drop insecond-quarter earnings, citing a charge for accountingirregularities in its Mexico subsidiary and a decline in revenuesfor certain products.

The company reported net income of $145 million, or 19 cents pershare, compared with $448 million, or 62 cents per share in thesame period a year ago. That includes a charge of $78 million, or11 cents per share, to cover problems associated with its Mexicanoperation.

Without the special charge, Xerox had earnings of 30 cents pershare, which matched the estimate by a consensus of analystssurveyed by First Call/Thomson Financial.

Xerox had warned last month that it expected a charge of about 6cents per share for the Mexican problems.

Chief Executive Paul Allaire said the accountingirregularities, which are being investigated by the Securities& Exchange Commission, appear to have been caused by several seniormanagers in Mexico who collaborated to circumvent Xerox accountingpolicies and administrative procedures. Allaire said their actionsresulted in the charge, which is primarily for bad debt andunrecorded liabilities.

“We have no reason to believe that the special circumstancesthat existed in Mexico are replicated in any other country,”Allaire said.

Second-quarter revenue was $4.69 billion, 4 percent lower thanthe same period a year ago. Pre-currency revenue declined 1percent. Currency adversely impacted earnings by approximately 4cents during the quarter.

The company said a revenue decline in high-speed black-and-whiteproduction printing and publishing products created the mostsignificant effect on income.

Xerox said a realignment of its sales force also continued toadversely affect revenues.

The company said there were some improvements during thequarter, including Brazil’s continued strong recovery and a 50percent increase in Fuji Xerox’s net income.

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The Associated Press and Reuters contributed to this report.