Earnings Reports for July 25

— -- Ameritrade Posts Mixed Results

Online discount broker Ameritrade reported a91 percent increase in net revenues to $149 million for itssecond quarter, compared with $78 million in the same quarter lastyear.

But net income was $4.6 million, or 3 cents per share in thequarter ended June 30, compared with $8.9 million, or 5 cents pershare in last year’s third quarter.

The company spent $41 million on advertising in the latestquarter, compared with $12 million in last year’s third quarter,and it spent $16.2 million developing its OnMoney subsidiary,compared with $1.6 million in the third quarter last year. The Website OnMoney allows customers to organize their finances on theInternet.

Ameritrade, among the top 10 online brokers in number of trades,has been spending on advertising to develop its brand name and ontechnology to lower its costs per trade. Chief executive Tom Lewissaid those investments are paying off, and the company added186,000 accounts in the last quarter.

“We’re making investing a better customer experience by stayingkeenly focused on the needs of the self-directed investor,” Lewissaid.

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AT&T Meets Expectations

Quarterly profits at AT&T Corp.’s.and its newwireless group beat Wall Street forecasts, but the nation’s biggestlong-distance and cable TV company didn’t convince some analyststhat recent problems have been overcome.

AT&T said net profits totaled $1.75 billion or 53 cents a sharein the second quarter, up nearly 10 percent from $1.59 billion or49 cents a share in the same period in 1999.

Operating profits, which exclude certain one-time factors andAT&T’s stakes in Cablevision and ExciteAtHome, came to $1.88billion or 57 cents a share, topping the consensus forecast ofanalysts polled by First Call/Thomson Financial.

Second-quarter revenue totaled $16.87 billion, if adjusted toinclude a full quarter from the MediaOne, the cable TV company thatAT&T acquired in mid-June.

AT&T Wireless Group posted an unexpected profit of $22 millionor 6 cents a share in an abbreviated second quarter that beganApril 27, when the company was created through an initial publicoffering of a separate stock representing AT&T’s mobile phonebusiness and a new initiative to deliver calls and Web access tohomes using “fixed wireless” antennas. Analysts had expected thewireless group, which is still fully owned by AT&T, to show a lossof 1 cent per share, according to First Call.

Wireless revenues grew 31.9 percent to $2.48 billion comparedwith a year-ago tally of $1.88 billion. The average monthly revenueper subscriber was $71.50, up from the $66.40 reported for thesecond quarter of 1999.

But aside from the wireless group’s stellar showing, the update wasn’t quite so encouraging as some analysts had hoped,especially in terms of the business services unit’s recovery fromsome first-quarter stumbles and the company’s decision to waitbefore making forecasts for next year.

Meanwhile, AT&T’s second-quarter report also provided an earlypeak at the customer response to the new PocketNet online servicefor mobile phones launched in May and the company’s limited trialswith residential fixed wireless service.

At the end of the second quarter, there were more than 80,000PocketNet users among AT&T’s 11.7 million mobile phone subscribers,a figure that has increased to more than 100,000 in July. AT&Tdeclined to quantify how many of those customers were using thebasic version of PocketNet, which is free, except to say that morethan expected had signed up for premium services.

The fixed wireless service, introduced in the Dallas-Fort Wortharea in March, now has about 2,800 customers using 6,000 phonelines and about 70 percent of whom also signed up for high-speedInternet service. The average monthly bill has been about $85 permonth.

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Chevron Profits Triple

Higher oil and gas prices fueled ChevronCorp. to a $1.1 billion second-quarter profit, keeping the companyon course for the highest earnings in its long history.

The profit translated into $1.71 per share, more than triplingthe San Francisco-based company’s earnings of $350 million, or 53cents per share, from the same time last year. Second-quarterrevenue totaled $13.2 billion, a 52 percent gain from $8.7 billionin revenue in the same 1999 period.

The results marked the first time Chevron has ever earned morethan $1 billion in consecutive quarters. Through the first half ofthe year, Chevron earned $2.16 billion, up from $679 million at thesame 1999 juncture.

Chevron’s results were in line with Wall Street’s expectations.Excluding $25 million in special charges, the company earned $1.75per share. The consensus estimate of analysts polled by FirstCall/Thomson Financial was $1.74.

Like all oil companies, Chevron has been cashing on dramaticallyhigher energy prices, much to the chagrin of motorists across thecountry.

Chevron’s collected its biggest windfall from crude oilproduction. The company’s average price for crude oil was $25.39,up 79 percent from the same 1999 period. Chevron Chairman DavidO’Reilly said the company derived 90 percent of its second-quarterprofit from its exploration and production efforts.

Selling gasoline at the pump also generated hefty profits forChevron, although not as much as motorists might have imagined—oras much as industry analysts would have liked to see.

Internationally, Chevron’s refining and marketing divisionstruggled as the segment posted a profit of just $20 million, down67 percent from the same quarter last year.

Chevron said its U.S. gasoline profit margins on the West Coastwere actually lower in the second quarter this year becausesupplies were higher than last year when production slowdowns andshutdowns at several major California refineries drove up prices.

Rising natural gas prices also propelled Chevron during thequarter. The company’s price for natural gas averaged $3.35 perthousand cubic feet in the second quarter, a 63 percent increasefrom last year.

Despite Chevron’s banner year, investors continue to shun thecompany’s shares, as well as those of other oil giants. EnteringTuesday’s trading, Chevron’s stock was down by 11 percent so farthis year.

In an effort to boost its stock, Chevron has been buying backits own shares.

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Compaq Returns to Profitability

Compaq Computer Corp., the No.1 personal computer maker, posted a second-quarternet profit versus a loss last year, meeting Wall Streetexpectations and returning its commercial personal computersales unit to profitability ahead of schedule.

The Houston-based company reported net income of $387million, or 22 cents per share, compared with a loss of $184million, or 10 cents, in the year-earlier quarter. Revenues rose8 percent to $10.1 billion.

Excluding $25 million in investment gains, earnings perdiluted share were 21 cents in the 2000 second quarter.

Wall Street analysts on average had expected the company toearn 21 cents per share, according to First Call/ThomsonFinancial, which compiles brokerage estimates. Michael Capellas, president and chief executive, said he expected a stronger second half, meeting financialtargets set for the third and fourth quarters. “We’re focusedon delivering innovative technology, improving profitability andincreasing operational efficiency, he said. ”

Compaq’s commercial personal computing group generatedrevenue of $3.3 billion, an increase of 3 percentyear-over-year. The group returned to profitability in thesecond quarter — a quarter ahead of schedule—posting anoperating profit of $62 million. That represents an improvementof $286 million over the second quarter 1999.

Commercial PC products accounted for 33 percent ofsecond-quarter revenue.

Second-quarter gross margin, or gross profit expressed as apercentage of revenue, rose by 3 percentage points to 23.6percent.

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Earnings Up at eBay

Operating results forInternet auctioneer eBay Inc. beat Wall Street expectations as thecompany expanded its service around the world and shrugged offcomputer server problems that plagued it a year ago. For the three months ended June 30, eBay earned $11.6 million,or 4 cents a share, compared to $816,000, or break-even, adjustedfor a stock-split in the comparable period a year ago. Revenuesnearly doubled to $97.4 million from $49.5 million.

Analysts surveyed by First Call/Thomson Financial had predictedearnings of 3 cents a share.

The current quarter included charges for employee and executivestock plans and merger-related costs. Excluding those, income was$13.2 million, or 5 cents a share.

Executives with the San Jose, Calif.-based company reported that the number of registeredusers grew to 15.8 million by the end of June, up 12.6 million inthe previous quarter and 5.6 million a year ago.

Analysts say eBay is continuing to hold off competition fromYahoo! Inc. and Amazon.com by offering expanded services such asone introduced in the quarter for small businesses and a site forselling used automobiles.

EBay makes money by positioning itself as a neutral party thatcharges auctioneers for listings and taking a percentage of eachsale. The company last year suffered a series of embarrassingcrashes and slowdowns on its site but has since poured millions ofdollars into upgrading its systems to handle the crush of users wholog on for one-time “event” sales.

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Exxon Mobil Hits a Gusher

Exxon Mobil Corp. said second-quarter earnings more than doubed on the strength of higher oilprices and better profit margins on gasoline. The oil giant said second-quarter profit, excluding specialcharges and merger expenses, rose to $4.15 billion, or $1.18 ashare, from $1.86 billion, or 53 cents, in the same period lastyear on a pro forma basis. Second-quarter revenue climbed to$55.96 billion from $43.28 billion in the year earlier period.

Analysts surveyed by First Call/Thomson Financial wereforecasting earnings of $1.07 a share for the company, whichcompleted its acquisition of Mobil late last year.

Still, stronger commodity prices pushed earnings from itsexploration and production business to a record $2.8 billion, upfrom $1.1 billion in the second quarter of last year. Thecompany also said capital and exploration spending rose 10percent from the first quarter to $2.4 billion and will continueto increase over the remainder of the year.

Its downstream, or refining and marketing business, alsoposted stronger numbers alongside healthier profits margins ongasoline and other fuels. Exxon Mobil, which has sold its oilrefinery in Benicia, California and a string of retail stationsto meet anti-trust requirements, said income from its refiningand marketing arm rose to $998 million from $478 million.Overall, it said first half operating costs, excluding mergerexpenses, were down about $800 million from the first half oflast year.

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McDonald’s Matches Expectations

McDonald’s Corp. said second quarter net income rose amodest 2 percent, meeting Wall Street expectations. The globes biggest fast-food chain predicted better sales andoperating earnings in the second half of the year.

Net income in the quarter rose to $525.9 million, or 39cents a diluted share, compared with $518.1 million, or 37cents, in same quarter a year-ago.

Analysts had expected the burger giant to reporta profit of 39 cents a share, according to First Call/ThomsonFinancial, which tracks earnings data.

“Second quarter growth was affected by challengingyear-over-year comparisons, due to exceptional performance inseveral key markets in 1999,” said Jack Greenberg, McDonald’schairman and chief executive.

Systemwide sales, or sales at company-owned and franchisedrestaurants, rose 3 percent to $10.2 billion from $9.9 billionin the 1999 second quarter.

Sales in the United States were flat for the quarter at $5.2 billion as gains from restaurant expansion were offset by lowersame-store sales.

U.S. sales in the quarter were hurt by a decline in thepopularity of McDonald’s Teenie Beanie Babies toy promotion. Thepromotion was held in both the 2000 and 1999 second quarters,but enthusiasm for the small plush toys was not as great thisyear, the company said.

In Europe, operating income fell 7 percent to $281.5 millionas weak results in Germany had a significant impact. Excludingthe effect of currency translation, Europe’s operating incomerose 3 percent.

Sales in Europe during the second quarter fell 3 percent to$2.3 billion. On a constant currency basis, European sales rose7 percent.

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Nortel Reports Earnings Growth

Nortel Networks Corp., the world’s No. 2 network equipment supplier, cited surging demand for its fiber-optic,Internet and wireless equipment in reporting second-quarter earnings that surpassed its performance in the same period a year ago. Nortel said its profit from operations, excluding one-timecharges, rose to $561 million, or 18 cents a share, from $320million, or 11 cents a share, in the year earlier quarter.

Brokers polled by First Call/Thomson Financial estimated the profit at 14 cents a share. Theconsensus of brokers surveyed by IBES forecasting service wasfor 14 cents.

Including acquisition costs, Nortel reported a net loss of$745 million, or 26 cents a share, compared with a net loss of$258 million, or 10 cents a share, last year. Second-quarterrevenues grew 48 percent to $7.8 billion from $5.3 billion lastyear.

Nortel also said it expects sales in 2000 to grow in the low40 percent range, up from a previous estimate of 30-35 percent,and that growth in earnings per share from operations will be inthe high 30 percent range. Chief financial officer Frank Dunnsaid Nortel will outpace market growth rate of 20 percent in2001, with revenues and earnings per share from operationsincreasing in the 30 percent to 35 percent range.

Nortel, which earlier this week said it will spend $1.9 billion tomore than double fiber-optic manufacturing capacity, is in talksto sell its fiber-optic parts business to Corning Inc. Reports suggest that astock swap worth more than $100 billion would result in Nortelowning more than 50 percent of Corning, while Corning would ownthe optical parts unit and maintain its independence.

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Schering-Plough Meets Expectations

Drug manufacturer Schering-Plough Corp.,citing healthy international sales of its Claritin hay fevermedicine and other products, said second-quarterearnings climbed to 43 cents a share, a 16 percent increase overthe same period last year.

Sales were $2.6 billion, up 8 percent from 1999, the companysaid. Worldwide sales of antihistamine Claritin were up 9 percent,to $897 million. Net income was $634 million, up from $547 millionin 1999.

For the first half of the year, meanwhile, the company postedearnings per share of 85 cents, up 16 percent, on net income of$1.3 billion.

“Driven by worldwide growth in pharmaceuticals, Schering-Ploughturned in another solid performance in the second quarter, despitethe negative impact of foreign exchange,” said Richard Jay Kogan,chairman and chief executive.

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The Associated Press and Reuters contributed to this report.