Earnings Reports for July 24

— -- Record Earnings at American Express

Financial servicescompany American Express Co. said second-quarterprofits rose 15 percent to a record, lifted by revenues frommanaging money for investors and increased consumer spending onits cards.

The New York-based company, best known for its signaturegreen charge cards and travelers checks, earned a record $740million, or 54 cents a share, compared with $646 million, or 47cents a share, in the year-ago quarter.

Wall Street analysts on average had expected AmericanExpress to earn 53 cents a share in the quarter.

American Express pulled in fees as customers racked upshopping bills on its charge cards and also bought more mutualfunds from the company. Its new “Blue” card for onlinepurchases also has been a hit with consumers.

Its profits rose even as higher interest rates putpressure on the credit card industry, pushing some borrowers tothe brink of default and dampening demand for new cards.

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Enron Earnings up 30%

Enron Corp., North America’sbiggest buyer and seller of electricity and natural gas, said second-quarter earnings rose 30 percent and beat WallStreet estimates as Internet-based trading boosted its corewholesale energy business. Net income rose to $289 million, or 34 cents per share, from$222 million, or 27 cents, in the second quarter of 1999.Analysts on average had expected earnings of 32 cents a share,according to First Call/Thomson Financial. Second-quarterrevenues rose 75 percent to $16.9 billion from $9.7 billion.

“Customers are increasingly relying on Enron to serve theirenergy needs, as evidenced by an almost 40 percent increase inwholesale energy volumes,” Chairman and CEO Ken Lay said in astatement.

“EnronOnline, our Web-based transaction system, registereda 92 percent increase in both volumes and transactions comparedto the first quarter,” he added.

In addition to its core energy business, Enron has branchedout into broadband telecommunications and recently acquired theLondon-based metals trading house MG Plc.

Analyst Mark Easterbrook of Dain Rauscher Wessels said thefaster-than-expected rise in second quarter earnings was broadlybased, reflecting strong wholesale volume growth, acceleratingprofitability at Enron’s energy outsourcing business and smallerthan expected start-up losses for the broadband operations.

Originally a natural gas pipeline operator, Enron haspursued opportunities created by deregulation to become NorthAmerica’s biggest wholesale gas and electricity marketer. Asenergy markets open up in Europe, it is seeking a leadingposition there, too.

Earlier this month Enron said it would also start postingbuy and sell prices for gas and power on two non-proprietaryonline trading systems, True Quote and HoustonStreet.

Enron Energy Services, an outsourcing business that buyselectricity and gas on behalf of commercial and light industrialcustomers posted its third consecutive quarterly profit.

Enron said its new broadband telecommunications business,which was not trading a year ago, posted a loss of $8 million onrevenues of $151 million. Enron has previously said it expectsthe business to become profitable around 2003.

The company sells bandwidth, or capacity, on its own fiberoptic network and is also pioneering the development ofstandardised tradable contracts to create a more liquid market.

Last week it announced plans to cooperate with BlockbusterInc. to deliver movies on demand to households via digitalsubscriber lines by the end of this year.

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Goodyear Earnings Skid 9%

Goodyear Tire & Rubber Co. reported second-quarter earnings fell 9 percent and were hurt byresistance to price increases, rising raw material costs andcompetition. The nation’s No. 1 tire manufacturer earned $59.7 million, or 38cents per share, down from $65.7 million, or 41 cents per share, inthe second quarter of 1999.

The Akron-based company had warned in late June that itssecond-quarter earnings would be below analysts’ estimates of 58cents per share.

Goodyear, which has posted some of its lowest profits in adecade, announced two weeks ago that it was shaking up itsmanagement to improve growth.

Revenues increased almost 14 percent to $3.47 billion, comparedwith $3.05 billion a year ago.

Tire unit volume rose 20 percent, primarily due to the additionof the Dunlop tire operations it acquired during an alliance withJapan’s Sumitomo Rubber Industries. Dunlop tire operationscontributed $564 million in revenues.

Price increases implemented in the second quarter met withmarketplace resistance and had a negative impact on volume in NorthAmerica and Europe. The strong dollar and weak Euro helped decreaseGoodyear’s overseas sales.

For the first six months, Goodyear earned $123.3 million, or 78cents per share, up from $91.2 million, or 57 cents per share, inthe first half of 1999.

Revenues were $7.01 billion, up from $6.04 billion.

Goodyear employs more than 105,000 people in its 90 facilitiesworldwide.

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HCA Earnings Top Estimates

HCA-Healthcare Corp., the nation’s largest investor-owned hospital group, said second-quarter earnings, excluding a $498 million aftertaxcharge from settling Medicare fraud claims, rose higher thanforecasted. Including the charge, tied to civil suits stemming from athree-year government investigation of billing practices,Nashville-based HCA-Healthcare posted a loss of $272 million, or48 cents a share.

HCA’s profit excluding the charge rose to $223 million, or40 cents a share, from $182 million, or 31 cents. Operatingearnings were aided by higher reimbursement rates for Medicare.Analysts on average had estimated operating earnings at 36 centsa share, according to First Call/Thomson Financial.

Second-quarter revenues fell to $4.13 billion from $4.16billion a year ago.

Settlement of the civil suits with the Department of Justicetotalled $745 million on a before-tax basis.

HCA-Healthcare, which changed its name from Columbia-HCA inMay, divested about one third of its assets and changed its topmanagement since the start of the investigation.

HCA operated 204 hospitals and 83 ambulatory surgerycenters, including nine hospitals and three ambulatory centersthrough joint ventures, as of June 30, 2000. A year ago, thecompany operated 220 hospitals and 85 ambulatory surgerycenters, with joint venture holdings accounting for 16 hospitalsand four ambulatory surgery centers.

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Merck Beats Estimates by 4 Cents

Merck & Co. posted a 16 percent increase insecond quarter profits and the pharmaceutical giant said it expectsfull year 2000 earnings to surpass Wall Street forecasts. Merck’snew arthritis drug Vioxx and its cholesterol pill Zocor led thegains.

Merck’s profit rose to $1.72 billion or 73 cents per share from$1.47 billion or 61 cents per share a year ago. Results beat analysts estimates by 4 cents, according to FirstCall/Thomson Financial. Sales rose 18 percent to $9.5 billion from$8.02 billion.

“This proves that Merck is trying to send a message to WallStreet that the company is more optimistic about the future thaneveryone else,” said Alex Zisson, analyst with Chase H&Q.

With the expiration of patents on a several key drugs, 2000 wassupposed to mark the start of some trying times at the nation’ssecond-largest drugmaker.

But Merck, which has always promised it would weather the patentstorm without losing ground to competitors, is showing its newdrugs, such as Vioxx and the asthma drug Singulair, will help makeup the lost revenue, analysts said.

In August, Merck’s Vasotec, a hypertension drug, loses patentprotection, making it susceptible to generic competition. The pill,which had more than $2 billion in sales last year, is one of fourMerck drug scheduled to lose patent protection in the next twoyears.

So confident about its future, Whitehouse Station, N.J.-basedMerck said it would beat the $2.76-$2.81 full year earningsestimates compiled by First Call/Thomson Financial. That wouldequate to 13 percent to 15 percent earnings growth.

Vioxx, introduced a year ago, had $475 million in sales in thesecond quarter, up from $370 million in the first quarter. Vioxx isone of two hot new prescription painkillers on the market, and isin heated competition with Celebrex, co-marketed by Pfizer andPharmacia Inc.

Sales of Zocor rose 20 percent in the second quarter to $1.3billion. Zocor is the world’s leading cholesterol pill, though U.S.sales lag behind Pfizer’s Lipitor.

Other fast selling Merck drugs include:

The hypertension drugs Cozaar/Hyzaar, which had sales increase24 percent to $415 million, asthma drug Singulair, which had salesincrease 91 percent to $210 million and osteoporosis drug Fosamaxwhich had sales rise 33 percent to $325 million.

On the down side, the hypertension drug Vasotec fell 17 percentto $530 million in the quarter. Merck said it expects to lose about80 percent of Vasotec sales within the first year after the drugcomes off patent.

For the first six months of 2000, Merck earned $3.22 billion or$1.37 per share, up $2.77 billion or $1.15 per share a year ago.Sales rose 18 percent to $18.3 billion from $15.6 billion.

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Lipitor Sales Boost Pfizer

Strong sales of Pfizer Inc.’s cholesterol pillLipitor helped the nation’s largest drugmaker post second-quarterresults that beat Wall Street expectations.

For the three months ended June 30, Pfizer earned $1.15 billion,or 18 cents per share, compared with $1.16 billion, or 18 cents pershare in the year-ago period, the company said Monday.

Excluding unusual items, including merger costs, Pfizer said ithad a profit of $1.44 billion, or 23 cents per share, up from $1.19billion or 19 cents a share in the same period a year ago. Resultsbeat Wall Street forecasts by a penny, according to analystssurveyed by First Call/Thomson Financial.

Sales rose 14 percent to $7.04 billion from $6.52 billion.

Sales of Lipitor, the top cholesterol pill in the United States,rose 40 percent to $1.26 billion. The drug was recently launched inJapan, and is expected to overtake Merck & Co’s Zocor as the topcholesterol drug worldwide.

Lipitor’s continued strong sales shows why Pfizer went all outin its battle to acquire Warner-Lambert, which initially was goingto merge with rival American Home Products. The deal closed earlierthis summer.

The only downside to Pfizer’s report was Viagra, which had flatsales at $304 million. Pfizer officials said prescriptions arestill rising 28 percent in the United States and could not easilyexplain why sales were unchanged.

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Losses Narrow at Priceline.com

Priceline.com Inc., theInternet commerce firm that allows customers to name their ownprices for products from airline tickets to groceries, said second-quarter loss narrowed more than Wall Street hadexpected as revenue more than tripled and more customers placedrepeat offers.

Priceline, which began selling “name-your-own-price”airline tickets over the Internet in April 1998, has said itexpects to become profitable soon.

“We believe we are rounding the final turn and on thehomestretch towards profitability,” said Daniel Schulman,president and chief executive officer.

“We continue to attract record new customers, but even moreimportantly, our loyalty among existing customers isaccelerating,” Schulman said, adding that the customer “repeatrate” rose to 39 percent, from 26 percent a year ago.

However, Priceline claims that its business model — whichgathers guaranteed demand from buyers and then shops around fora seller at the desired price — is unique.

The company, whose catchy ad campaign features actor WilliamShatner, also cites independent research to argue that it is themost widely recognised e-commerce brand in the United States,along with Amazon.com Inc.

Norwalk, Conn.-based Priceline said its loss, excludingcertain items, narrowed to $1.6 million, or 1 cent per share,from a loss of $13.9 million, or a loss of 10 cents, in theyear-earlier quarter. Both quarters’ results excluded $381,000in non-cash supplier warrant charges, and this year’s lossexcluded $2.5 million in option payroll taxes.

Wall Street analysts had been expecting Priceline to reporta loss of 3 cents per share.

Second-quarter revenue more than tripled to $352.1 millionfrom $111.6 million. The company said it had added 1.5 millionnew customers in the quarter, bringing its customer base to 6.8million.

Including one-time items, Priceline reported a loss of $11.7million, or 7 cents per share, compared with a loss of $14.3million, or 10 cents per share.

The company said its second-quarter gross profit of $55.2million was 406 percent higher than its year-earlier grossprofit of $10.9 million.

Priceline shares have fallen by more than 60 percent in thepast year, on investor worries over the long-term viability andprofitability of “dot-com” companies.

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Texas Instruments Tops Expectations

Texas Instruments topped second quarterearnings expectations. The maker of computerchips for cellular phones posted earnings of 75 cents a share onrevenue of $2.8 billion. The earningsinclude an investment gain from the sale of Micron Technologystock.

Without that one-time gain, Texas Instruments earned 31 cents ashare, a penny better than the First Call consensus estimate. Thatcompares to 23 cents per share in the year ago period, alsoexcluding items. For the quarter ended June 30, the Dallas-based company had netincome of $1.28 billion, or 78 cents a share, compared with $330million, or 21 cents per share in the year-ago period.

The results include a gain of $1.21 billion, or 45 cents ashare, from the sale of its memory chip business to MicronTechnology in September 1998.

Excluding that item, the company had pro-forma earnings of $525million, or 31 cents a share, up 37 percent from $384 million, or23 cents a share, in the year-ago quarter.

Analysts surveyed by First Call/Thomson Financial had peggedearnings, excluding the one-time gain, of 30 cents per share.

Revenues rose 19 percent to $2.84 billion on strong sales ofcomputer chips for semiconductors, wireless services and digitalsubscriber line and cable modem products.

The bulk of the gain came from $2.41 billion in sales ofsemiconductor chips, up 22 percent from a year ago.

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The Associated Press and Reuters contributed to this report.