Business briefs for July 24, 2001

Tuesday, July 24, 2001 | 10:37 a.m.

Washington Mutual profit soars

Washington Mutual Inc. of Seattle, an aggressive consumer and mortgage lender in Las Vegas, reported second quarter earnings of $798 million or 91 cents a share, up 49 percent from the year-ago quarter thanks largely to acquisitions.

Analysts surveyed by Thomson Financial/First Call had projected earnings of 81 cents.

Crediting a favorable interest rate environment and strategic initiatives, Washington Mutual said second quarter net interest income surged 53 percent to $1.67 billion.

Other operators of banks in the Las Vegas area reporting earnings in recent days include:

* Business Bank of Nevada. It earned $199,000 in the second quarter, down from $398,000 in the year-ago quarter. The bank blamed the decline on lower interest rates. Interest rate cuts have cut into the bank's margins, Business Bank said.

* Community Bank of Nevada, which said it earned $1.4 million in the second quarter. Comparable results for the prior-year quarter were not provided.

* First Republic Bank, based in San Francisco, which reported a second quarter profit of $5.9 million or 41 cents per share vs. $5.5 million or 39 cents in the year-ago quarter.

Pulte profit up, Del Webb flat

Pulte Homes Inc. and Del Webb Corp., two big home builders in Las Vegas that are merging, reported differing financial results today.

Based in Bloomfield Hills, Mich., Pulte today said second-quarter revenue increased from $983 million to $1 billion while quarterly net income jumped from $47.7 million or $1.15 per share to $59.8 million or $1.38 per share.

The builder said a 9 percent increase in its average selling price to $219,000 was partially offset by a 6 percent decrease in closings.

Pulte said second-quarter orders rose slightly to 5,178 homes and that the home-building industry remains "in very good condition, with solid demand and low levels of inventory."

Separately, Phoenix-based Del Webb said revenue for its fourth quarter ending June 30 fell from $635 million to $602 million and that its quarterly profit was flat at $31 million or $1.59 per share.

These numbers include a charge of 7 cents per share for costs associated with its takeover by Pulte and, for the 2000 quarter, a tax benefit of 22 cents per share.

Del Webb said business was strong in the most recent quarter, as pre-tax earnings were 16 percent higher than in last year's fourth quarter.

The company's backlog of homes under contract but not yet delivered was up 2 percent at June 30 to 3,682 units vs. 3,611 at June 30, 2000. The average contract sales amount per home increased 2 percent to $270,000 from $264,000.

"Webb approaches this merger with Pulte Homes in extremely good condition," said Del Webb President and Chief Executive Officer LeRoy Hanneman. "Our backlog is up, earnings are strong, our leverage is declining and our leadership in the active adult segment of the market is unquestioned."

The merger with Pulte Homes will be voted on at special Del Webb and Pulte shareholders meetings on July 27, with the closing anticipated July 31.

Del Webb said that at Anthem Las Vegas in Henderson, orders were off by 3.7 percent in the family and country club areas, but up 19.4 percent at Sun City Anthem. Hanneman noted that the Anthem Country Club community took orders for 61 custom lots valued at a total of $18.3 million.

Convention slump affects GES parent company

A slump in the meetings industry has resulted in double-digit percentage decreases in revenue and earnings for the convention and event division of the parent company of Las Vegas-based GES Exposition Services.

Viad Corp., Phoenix, reported earnings of $17.4 million, 20 cents a share, on revenue of $444.6 million for the second quarter ended June 30. In the same period a year earlier, the company reported earnings of $42.3 million, 46 cents a share, on revenue of $476.5 million.

Viad, which operates other convention and meeting company subsidiaries in addition to GES, reported trade show revenue was down significantly, particularly in the technology sector.

"2001 has been and will continue to be a very difficult year because of the convention and event businesses," said Robert Bohannon, chairman, president and chief executive officer of the company. "In those businesses, our customers are primarily Fortune 1000 companies and many customers have slashed spending. We have seen a drastic change in a very short time period.

"Revenues in the convention and event segment were up 10.6 percent in the first quarter of 2001 over first-quarter 2000 and down 13.9 percent the second quarter of 2001 versus the second quarter of 2000," he said. "We don't see a rebound in the second half."

Mad cow scare still hurting profits of fast food giant

CHICAGO -- Concerns about beef safety in Europe sent McDonald's Corp.'s profits lower for a third straight quarter.

But the hamburger chain said today that recent sales improvements in slumping European markets may signal the worst of the mad cow and foot-and-mouth disease scare is over.

Net earnings for the second quarter were $440.9 million, or 34 cents a share, down 16 percent from $525.9 million, or 39 cents a share, in the same period a year ago. That met the expectations of Wall Street analysts polled by Thomson Financial/First Call, which were lowered last month after McDonald's warned of the latest earnings shortfall.

Sales were $10.239 billion, up fractionally from $10.238 billion a year ago but only as a result of new restaurants and the recent acquisition of Boston Market. Sales in existing restaurants declined.

As a result of what Chairman and Chief Executive Jack Greenberg called "a tough six months," including weak currencies abroad, the Oak Brook, Ill.-based company said it is considering closing as many as 250 underperforming restaurants located primarily in emerging markets.

Loss reported by telecommunications giant

AT&T reported a loss in the second quarter Monday, hampered by the swift erosion of revenue from long-distance operations and a $1 billion-plus plunge in the value of an Internet-related investment.

The nation's largest provider of long-distance and cable-television services lost $149 million, or 5 cents a share, compared with a profit of $1.77 billion, or 53 cents, in the period a year ago. The loss, its third consecutive quarterly shortfall, includes one-time events like expenses related to this month's spinoff of AT&T Wireless.

Excluding one-time items, AT&T had profit from continuing operations of 4 cents a share, a 91 percent decline from 47 cents a share a year earlier. Those results, which include the $1.1 billion write-down of AT&T's investment in Net2Phone, an Internet telephony company, were on the high end of estimates from analysts surveyed by Thomson Financial/First Call. Analysts had expected AT&T to earn 3 cents a share.

AT&T's overall revenue, excluding sales from AT&T Wireless, fell 3 percent in the second quarter to $13.3 billion.

AT&T said it expected revenue to decline at a similar rate in the third quarter as slower economic growth has an impact on consumer and business calling. The company expects to report a profit between 2 cents to 5 cents a share in the third quarter.

Exxon Mobil earnings slip, Chevron profits rise

Exxon Mobil Corp., the world's largest publicly-traded oil company, said today that its second quarter profits slipped slightly from the year-ago quarter on rising costs and a weakening of crude oil and natural gas prices. The results fell short of Wall Street's expectations.

For the quarter ended June 30, Exxon Mobil's net income fell to $4.46 billion, or 65 cents per share, from $4.53 billion or 65 cents a year ago. The 2000 results include a $380 million gain primarily from the sale of assets required as part the 1999 merger of Exxon and Mobil.

Excluding one-time items, Exxon Mobil's profits rose slightly to a record $4.38 billion, or 64 cents per share, due to sharply higher natural gas prices early in the quarter and better profit margins from refining oil. The comparable figure from the year-ago quarter was $4.15 billion, or 60 cents per share.

Analysts surveyed by Thomson Financial/First Call had pegged earnings at 66 cents per share.

Revenue was $56.46 billion, up from $55.96 billion a year earlier.

Meanwhile, Chevron Corp.'s second quarter earnings surged nearly 19 percent, surpassing expectations, as the oil giant profited from gasoline prices that soared above $2 per gallon in its home state of California.

San Francisco-based Chevron earned $1.32 billion, or $2.05 per share, in the three months ended June 30, compared with $1.12 billion, or $1.71 per share, at the same time last year.

Wall Street sizes up earnings by stripping out special accounting charges and by that standard, Chevron's results beat the market's expectations. Excluding one-time charges, Chevron earned $1.38 billion, or $2.15 per share, a 21 percent increase from last year's comparable period.

The consensus estimate among analysts polled by Thomson Financial/First call was $2.06 per share.

Chevron's second-quarter revenues, excluding gasoline taxes, totaled $11.9 billion, a 2 percent decrease from $12.2 billion last year.

Goodyear earnings plunge 90 percent

Goodyear Tire & Rubber Co.'s earnings fell about 90 percent in its second quarter, citing fewer orders from the auto and commercial truck industries.

The results matched Wall Street expectations, but Chairman and Chief Executive Samir Gibara also warned that "more production curtailments will be needed in the third quarter until demand improves."

It was not immediately known whether that means Goodyear would eliminate more jobs. Goodyear had said after the first quarter that job cuts this year would total about 7,800.

Goodyear earned $7.8 million, or 5 cents per share, in the quarter that ended June 30, down from $77.1 million, or 49 cents per share, in the second quarter of 2000.

Sales were $3.6 billion, about the same as in the year-ago period.

Goodyear said reduced original equipment shipments to manufacturers of autos and commercial trucks were partially offset by price increases and selling a greater percentage of higher-priced tires in the replacement market.

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