Wednesday, Oct. 30, 2002 | 11:20 a.m.
SUN STAFF AND WIRE REPORTS
Cox Communications Inc. of Atlanta, the fifth-largest U.S. cable company, reported a third-quarter loss Tuesday on declining investments and higher costs.
Revenue rose 18 percent after it added more digital, telephone and Internet customers in Las Vegas and other markets.
The net loss was $73.1 million, or 12 cents a share, compared with net income of $143 million, or 23 cents, in the year-earlier period, when Cox had a gain on investments. Sales rose to $1.28 billion from $1.08 billion, the company said in a statement.
Cox signed up more customers for its three bundled services, even as it said growth for its basic-cable service would fall short of estimates. The company expects the number of basic-cable subscribers will grow at a rate of 1.1 percent to 1.2 percent, less than an earlier forecast of 1.3 percent to 1.5 percent.
"The bottom line is that it is not going negative," said Wayne Wilbanks, chief investment officer of Wilbanks Smith & Thomas Asset Management, which has considered investing in Cox. "All the gravy is in the ancillary services. There are tremendous profit margins, and we will see even better margins down the line."
The company added 157,300 high-speed Internet users, 73,000 cable-telephony customers and 71,900 digital cable subscribers in the most recent quarter. The number of basic-cable customers rose 1.2 percent from 6.26 million.
Shares of Cox fell $2.30 Tuesday. They have fallen 28 percent this year.
Total costs rose 20 percent from the year-ago quarter. Cox, with about $8 billion of debt, said interest expense increased to $141.8 million from $136.3 million a year earlier.
Selling, general and administrative costs increased 25 percent to $555.2 million, driven in part by higher maintenance and labor costs. Programming costs rose 11 percent to $266.4 million because of rate increases and new channels.
The most recent quarter's results included a $102.7 million gain on derivative investments tied to the price of Sprint PCS shares. Cox also recorded an investment loss of $157.9 million for a decline in the market value of those shares.
A year earlier, Cox had a gain of $469.6 million, in part from the sale of its interests in the Outdoor Life and Speedvision cable networks.
Operating cash flow rose 14 percent to $453.4 million from $396.6 million in the most recent quarter. Cox defines operating cash flow as earnings before interest, taxes, depreciation, amortization and investment gains and losses.
Many investors and analysts use operating cash flow to measure the performance of cable companies because it shows how much cash is available to make interest payments and excludes noncash charges such as depreciation associated with upgrading cable systems.
The Greenspun family, owner of the Las Vegas Sun, is a minority investor in Cox's Las Vegas system.
Procter & Gamble
Cincinnati-based Procter & Gamble Co. said today its first-quarter earnings increased by 33 percent, beating Wall Street's expectations on improved performance from its health care, beauty care, and fabric and home care businesses.
The consumer products giant earned $1.46 billion, or $1.04 a share, in the quarter ended Sept. 30, up from $1.10 billion, or 79 cents per share, a year ago.
Excluding a $113 million after-tax expense for a corporate restructuring to reduce the work force and product lines, the company made $1.12 per share in the latest quarter. That beat the consensus forecast of $1.10 a share by analysts surveyed by Thomson First Call.
Sales rose to $10.8 billion, up 11 percent from $9.8 billion in the same quarter of 2001.
The increased business in the health care, beauty care, and fabric and home care units accounted for the increase, the company said.
P&G's volume of products shipped increased by 10 percent during the latest quarter, excluding businesses bought or sold during the past year.
The company's products include Tide detergent, Crest toothpaste, Ivory soap, Pampers diapers, Folgers coffee, Olay personal care items and Pringles snack chips.
Toyota
Toyota Motor Corp., the world's third-largest automaker, said second-quarter profit rose 56 percent to a record, spurred by brisk U.S. and European sales, and cost cuts.
Net income rose to 201.4 billion yen ($1.6 billion) in the three months ended on Sept. 30 from 128.7 billion yen in the year-earlier quarter. The result, derived by subtracting first-quarter numbers from first-half totals, beat the average 133.3 billion yen estimate of 10 analysts in a Bloomberg survey.
"Toyota is a company that keeps coming up with the goods and we're definitely seeing some results in there from increased efficiency," said Akihide Kinugawa, who helps manage 20 billion yen at T&D Asset Management Co., including auto shares. "If you want to be safe you stick with Toyota."
Japan's biggest automaker is set to join rivals Nissan Motor Co. and Honda Motor Co. in reporting record profits this business year as success in the U.S. makes up for flagging sales at home. Toyota's market share rose to a record 10.4 percent in the first nine months of the calendar year, even as General Motors Corp. and other rivals offered consumers zero-interest loans.
"Auto demand correlates with spending on housing and we still think demand for autos will continue to be strong," said Toyota Executive Vice-President Ryuji Araki.
Volkswagen
Volkswagen AG's profit dropped by 51 percent in the third quarter even as sales edged up.
Europe's biggest automaker said today it earned 439 million euros ($432 million) for the July-September period compared with 903 million euros in 2001.
Sales rose 2.2 percent to 21.21 billion euros ($21.87 billion), from 20.76 billion euros in the year-earlier period.
Its operating profit fell 32 percent to 1.18 billion euros ($1.16 billion) largely due to less favorable exchange rates, higher warranty and start-up costs and the absence of an extraordinary item that boosted last year's figure.
The company said "the slightly positive development of the world economy in the first half of the year did not continue" in the third quarter.
Still, Volkswagen said it was still confident it would hit its target for pre-tax profit this year of some 4 billion euros ($3.9 billion), down from 4.41 billion last year.
In the first nine months, the company said its net profit fell by 21.9 percent to 1.84 billion euros ($1.81 billion) from 2.36 billion euros in 2001. Sales fell 1.5 percent to 65.27 billion euros ($64.2 billion) from 66.26 billion euros a year earlier.
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