Sierra Health earnings increase

Tuesday, Oct. 22, 2002 | 11:13 a.m.

SUN STAFF AND WIRE REPORTS

Sierra Health Services Inc. of Las Vegas, the largest health insurer in Nevada, Monday reported a profit from continuing operations for the quarter ended Sept. 30 of $12.1 million or 38 cents per share, compared to net income from continuing operations of $4.6 million or 16 cents in the year-ago quarter.

Revenues from continuing operations for the third quarter were $381 million, up 15 percent from the 2001 quarter.

Net income, including the firm's discontinued historically money-losing Texas healthcare operations, was $14.1 million or 44 cents versus a loss of $7.6 million or 26 cents in the year-ago period.

Sierra said that according to First Call, analysts had expected the company to post an average 36 cents per diluted share for the third quarter from continuing operations.

"I continue to remain very pleased with the results from the core operating segments of this company," said Dr. Anthony Marlon, chairman and chief executive officer. "We have done an excellent job of refocusing all lines of business to achieve profitability. I believe Sierra has successfully completed its turnaround."

In the third quarter of 2002, medical premium revenue, from continuing operations, increased 18 percent to $218 million. "Same-store" commercial membership in Nevada was 185,800 people, an improvement of 10 percent from the same period in 2001 but flat sequentially, due to continued termination of unprofitable business, mainly in the Reno market.

Nevada commercial membership has grown nearly 7 percent year-to-date, comprising more than 55 percent of the available HMO managed care market in Nevada and approximately 70 percent of the available HMO managed care market in Las Vegas, Sierra said, noting strong gains in market penetration of the mid-size account group (50-500 people).

Pulte Homes

Pulte Homes Inc., the fourth-largest U.S. home builder by stock market value and a big player in Las Vegas with its Pulte and Del Webb brands, said its fiscal third-quarter profit rose a greater-than-expected 36 percent and raised its 2002 forecast.

The Bloomfield Hills, Mich., company's profit from continuing operations for the three-month period ended Sept. 30 rose to $113.5 million, or $1.83 a share, from $83.2 million, or $1.53, a year earlier. Per share results reflect an increase in shares outstanding. Revenue increased 26 percent to $1.86 billion, said James Zeumer, vice president of investor relations.

Home builders are profiting from falling interest rates that reached a 37-year low on Oct. 11, when the average U.S. rate for a 30-year fixed mortgage was 5.98 percent, according to Freddie Mac, the No. 2 buyer of U.S. mortgages. Pulte joins Lennar Corp., KB Home and other builders that have raised their profit forecasts for the year.

Results exceeded the $1.81 estimate of analysts surveyed by Thomson First Call. For the year, Pulte said it would earn $7.05 to $7.15 a share, compared with $6.92 estimate in First Call's poll.

But Pulte's shares fell 38 cents to $47.91 this morning on the New York Stock Exchange. The shares are up 7.3 percent for the year.

Pulte sold 7,280 homes in the United States during the period, 16 percent more than a year earlier. At the end of the quarter the company had a backlog of 13,675 homes valued at $3.5 billion, compared with 11,772 homes valued at $2.8 billion a year earlier.

Separately, the company said its board authorized the repurchase of $100 million of stock.

In the latest quarter, a gain of $9.94 million from discontinued operations resulted in net income of $123.4 million, or $1.99 a share. In the year-earlier quarter, a loss of $364,000 from discontinued operations led to net income of $82.8 million, or $1.52 a share.

Centex

Centex Corp. of Dallas, the third-largest U.S. home builder by stock market value and a player in Las Vegas, said its fiscal second-quarter earnings rose 24 percent, beating analyst estimates, as home sales rose 7 percent.

Net income rose to $115.6 million, or $1.83 a share, for the three months ended Sept. 30, from $93.4 million, or $1.50, a year earlier, the company said in a statement. Revenue rose 11 percent to $2.1 billion.

Analysts expected the company to earn $1.75 a share, according to a survey by Thomson First Call. The Dallas-based company's shares rose $3.36 to $48.81 at 4:02 p.m. Monday on the New York Stock Exchange.

The company sold 5,788 homes in the quarter, up from 5,418 a year earlier. Orders rose 38 percent to 7,257.

3M Co. of St. Paul, Minn., had its biggest quarterly profit in five years as the maker of products ranging from Post-it notes to medical inhalers cut costs and sales increased in Asia, its fastest-growing market.

Third-quarter net income increased 38 percent to $545 million, or $1.38 a share, from $394 million, or 99 cents, a year earlier. Sales rose 4.6 percent to $4.14 billion from $3.96 billion, 3M said in a statement.

Revenue overseas rose 8.8 percent, while U.S. sales were little changed. The company gets about a quarter of its sales from Asia and about half in the United States. 3M cut costs by changing the way it buys some materials, including through the use of auctions, Chief Financial Officer Patrick Campbell said.

"Legitimate, organic revenue growth, not tied to acquisitions, is what we're the most concerned about," said James Bitter, an analyst with Wilmington Trust Corp., which owns about 586,900 3M shares among the $25 billion it manages. "The market has learned the hard way that earnings can be managed in respect to expectations."

The company also said it may take a $1 billion charge against equity for its pension plan in the fourth quarter. 3M said it contributed $789 million to its U.S. pension fund last quarter.

3M said it doesn't see signs of the global economy improving. James McNerney, chief executive since January 2001, is managing 2,500 cost-cutting projects, using methods he learned during his 18 years at General Electric Co.

UPS

United Parcel Service Inc. of Atlanta reported a small increase in third-quarter profits today, despite the defection of some customers on fears of labor problems, but the results failed to meet Wall Street's expectations.

UPS said net income for the quarter was $578 million, or 51 cents per share, up from $568 million, or 50 cents a share, in the same period of 2001.

The result was just short of the 54 cent consensus of analysts surveyed by Thomson First Call. The company's outlook for the fourth-quarter was also below Wall Street forecasts. UPS said today that it expects fourth-quarter earnings to come in between 55 cents and 60 cents per share. The Thomson First Call forecast is for 61 cents.

McDonald's

McDonald's Corp. reported an 11 percent drop in earnings today, its seventh decline in the last eight quarters, and said it will sharply pare back new restaurant openings as it seeks to end its slump.

The fast-food giant, struggling amid the glut of U.S. restaurant competition and perceptions of poor service, among other problems, also said it needs a "significant improvement" in sales if it is to meet its full-year earnings target.

The Oak Brook, Ill.-based company said it now plans to open 600 traditional McDonald's restaurants worldwide next year, down from 1,050 in 2002, including a significant reduction in the United States.

It also expects to open 150 to 175 of the other restaurant chains it owns -- most notably a doubling of the Chipotle's Mexican brand.

Net earnings for the third quarter were $486.7 million, or 38 cents a share, down from $545.5 million, or 42 cents a share, a year earlier.

The results met analysts' consensus estimate, compiled by Thomson First Call and recently lowered after McDonald's warned it wouldn't meet its quarterly target.

Revenues rose 4 percent to $4.05 billion from $3.88 billion.

AT&T

AT&T Corp. eked out third-quarter net earnings of $207 million and beat Wall Street expectations today despite an 8 percent drop in revenue that largely resulted from continuing weakness in the long-distance market.

In the three months that ended Sept. 30, AT&T's earnings amounted to 5 cents a share, on revenue of $12 billion.

In the comparable quarter last year, AT&T posted earnings of $11.3 billion, or $3.13 a share, on revenue of $13 billion, but the profits at the time were hugely inflated by AT&T's spinoff of its wireless business. Taking only continuing operations into account, AT&T's comparable figure in the year-ago quarter was a loss of 69 cents per share.

Excluding one-time events this quarter, AT&T said its continuing operations earned 6 cents a share, beating the consensus Wall Street estimate of 5 cents, according to Thomson First Call. Revenue was slightly higher than expected.

In early trading on the New York Stock Exchange, AT&T shares were down 23 cents, nearly 2 percent, at $12.30.

Despite what AT&T called a "continued decline" in long-distance, the company said its sales of network-managing services to businesses are growing. The company based in Bedminster, N.J., also benefited significantly from a $40 million pretax gain in the third quarter from the sale of its old headquarters in Basking Ridge, N.J.

In the first nine months of the year, AT&T posted a net loss of $13.6 billion on revenue of $36 billion. In the comparable period of 2001, AT&T earned $11.3 billion on revenue of $39.8 billion.