Business briefs for Jan. 23, 2004

Friday, Jan. 23, 2004 | 11:20 a.m.

Stock program hurts earnings

SEATTLE -- Microsoft Corp. reported a drop in earnings Thursday for its fiscal second quarter as the software giant took a huge charge for stock-based compensation.

For the quarter ended Dec. 31, Microsoft reported earnings of $1.55 billion, or 14 cents per share, down from earnings of $1.87 billion, or 17 cents per share, in the year-ago period.

The earnings for the most-recent quarter included an after-tax charge of $2.17 billion, or 20 cents per share, in expenses related to stock-based compensation for employees. Without the charge, the company would have had earnings of 34 cents per share.

The Redmond, Wash.-based technology company reported revenue of $10.15 billion, up 19 percent from the $8.54 billion posted a year ago.

Remington powers up earnings

MADISON, Wis. -- Rayovac Corp., the third-largest U.S. battery maker, had a first-quarter profit as sales surged because of the purchase of the Remington razor business in September.

Net income was $22.2 million, or 67 cents a share, compared with a loss of $600,000, or 2 cents, in the year earlier period, the Madison, Wisconsin-based company said in a filing. Sales in the quarter ended Dec. 29 surged 74 percent to $454 million.

Higher demand for alkaline batteries in the U.S., the decline in the dollar against the euro and improving economic conditions in Latin America helped drive the gains. The company also is benefiting from sales of new shaving products at Remington, which it acquired for about $322 million to enter the razor business.

Sales spiral may continue

BEDMINSTER, N.J. -- AT&T Corp., the biggest U.S. long- distance telephone company, reported fourth-quarter earnings of $340 million and said sales will fall for a fifth straight year because competition is driving down calling prices.

Net income was 43 cents a share compared with a loss from continuing operations of $611 million, or 79 cents, a year earlier, AT&T said in a statement. Sales at the Bedminster, New Jersey-based company slid 13 percent to $8.10 billion from $9.29 billion.

Revenue this year will fall as much as 10 percent as rivals including Verizon Communications Inc. crowd a long-distance market plagued by excess capacity. Chief Executive David Dorman, who has yet to report any benefit from a pickup in U.S. economic growth, is slashing costs to compensate. He may ultimately have no choice but to sell the company, some analysts said.

Lawsuit, probe hurt results

NEW YORK -- Pfizer Inc., the world's biggest drugmaker, said fourth-quarter profit dropped 79 percent as it set aside money to resolve lawsuits and a government probe. Sales jumped 52 percent, boosted by the takeover of Pharmacia Corp.

Net income fell to $602 million, or 8 cents a share, from $2.86 billion, or 46 cents, a year earlier. Excluding acquisition costs and legal expenses, profit was 53 cents a share, beating the average analyst estimate of 51 cents.

Chief Executive Hank McKinnell's acquisition of Pharmacia last year is helping growth at Pfizer as the company gets more revenue from the Celebrex and Bextra painkillers. Pfizer expects the purchase to generate savings of about $3.4 billion this year, some $400 million more than it originally estimated.

Results meet 2000 levels

SAN FRANCISCO -- Discount broker Charles Schwab Corp. ended 2003 with its highest quarterly profit since the stock market peaked in early 2000, providing the latest sign of an investment revival on Main Street.

The San Francisco-based company said Thursday that it earned $148 million, or 11 cents per share, in the fourth quarter, meeting Wall Street expectations and reversing a loss of $79 million, or 6 cents per share, during the same 2002 period.

Revenue for the quarter totaled $1.12 billion, a 13 percent improvement from the $986 million posted in the prior year.

Poor underwear sales drop profit

CHICAGO -- Sara Lee Corp. reported a 10 percent drop in fiscal second-quarter net income Thursday, citing a weak quarter for underwear and intimate apparel, its biggest business.

The consumer products maker, whose brands range from Playtex bras and Hanes underwear to Jimmy Dean sausages and Douwe Egberts coffee, warned that earnings for the third quarter will come in under Wall Street's expectations as challenging market conditions continue.

Net earnings for the quarter ended Dec. 31 amounted to 39 cents a share, matching Wall Street expectations. A year earlier the company posted earnings of $348 million, or 42 cents a share.

Revenue climbed 5 percent to $5 billion from $4.8 billion, helped by a weak dollar. Unit volume, which often is a more accurate reflection of a company's sales performance, declined 3 percent.

The underwear unit, which accounts for about a third of company revenue, had a 2 percent decline in sales and a 37 percent slide in operating income, which was blamed in part on a disappointing holiday season for apparel.

Profit soars

ORLANDO, Fla. -- AirTran Holdings Inc., the parent of AirTran Airways, Thursday said its profit more than doubled in the latest quarter, boosted by cost controls and new aircraft.

The Orlando-based airline, which flies mainly out of Atlanta, said net income climbed to $21.7 million, or 24 cents a share. In the same period last year, it earned $7.5 million, or 10 cents a share.

Income for the latest period includes a charge of 10 cents a share for the retirement of debt. It also includes a credit of 16 cents a share for the reversal of a tax valuation allowance.

Excluding items, AirTran earned $16 million, or 18 cents a share, beating expectations by a penny. Total operating revenue increased 19 percent to $238.8 million from $200.3 million.

Plywood builds solid bottom line

BOISE, Idaho -- Stable office product sales and a solid plywood market pushed fourth-quarter profit up 11 percent for Boise Cascade Corp.

The company reported Thursday net income of $6.9 million, or 5 cents a share, for the quarter that ended Dec. 31, versus a profit of $6.2 million, or 5 cents a share, a year earlier. Revenue rose to $2.35 billion from $1.8 billion during the final quarter of 2002.

The lumber and paper company more than doubled its office products business with last month's $1.3 billion acquisition of Cleveland-based OfficeMax Inc.

Excluding special items and the net impact of the OfficeMax acquisition, Boise's net income was $18.3 million, or 24 cents per share, beating expectations by a penny.

Mobile phone sales strong

HELSINKI, Finland -- Nokia Corp.'s profit rose 12 percent in the fourth quarter, in line with expectations, amid growing mobile phone sales and signs of recovery in the market for telecommunications network equipment.

The world's biggest cell phone maker earned 1.17 billion euros ($1.48 billion) in the three-month period ending Dec. 31, up from 1.05 million euros a year earlier.

Sales were down 1 percent at 8.8 billion euros ($11.1 billion). The company said sales are expected to climb by 3 percent to 7 percent in the first quarter.

Mobile phone volume grew 20 percent compared with the same period a year earlier, but revenue was only up 4 percent at 7 billion euros ($8.8 billion).

Computer maker's profit improves

BLUE BELL, Pa. -- Unisys Corp., which sells server computers and related services to businesses, said fourth-quarter profit rose 25 percent on more U.S. government work.

Net income increased to $111.5 million, or 33 cents a share, from $89.1 million, or 27 cents, a year earlier, Unisys said in a statement. Revenue grew 5.1 percent to $1.64 billion.

Securities firm's profit rebounds

NEW YORK -- Merrill Lynch & Co.'s fourth-quarter profit more than doubled on 17 percent revenue growth and improved margins.

Merrill said Wednesday its fourth-quarter net income rose to $1.24 billion, or $1.23 a share, from $539 million, or 56 cents a share, in the same quarter a year earlier.

Revenue rose to $4.92 billion from $4.22 billion in the year-earlier fourth quarter.

Merrill's fourth-quarter asset management and portfolio service revenue grew 11 percent to $1.23 billion from $1.11 billion in the fourth quarter of 2002. Commission revenue rose 8 percent in the quarter to $1.16 billion.

The global markets and investment banking division posted fourth-quarter revenue of $2.2 billion, up 24 percent.

Restaurant firm's revenue rises

DALLAS -- Brinker International Inc., the operator of Chili's Grill & Bar, Romano's Macaroni Grill and other casual-dining chains, Tuesday said its profit jumped 19 percent in the latest quarter as it opened new restaurants.

Brinker reported net income of $44.1 million, or 45 cents a share, for the fiscal 2004 second quarter ended Dec. 24.

That was up from $37.2 million, or 38 cents a share, in the previous second quarter, when the company incurred impairment charges of $6.3 million, or 6 cents a share.

Revenue rose 12 percent to $886.5 million.

For the four weeks ended Dec. 24, sales rose 4.2 percent at Chili's, 4.4 percent at Romano's Macaroni Grill, 7.8 percent at On The Border, and 8.8 percent at Maggiano's Little Italy restaurants.

Chip maker's profit improves

SEOUL, South Korea -- Profit at Samsung Electronics, the world's largest maker of memory chips, jumped 24 percent as demand for its liquid crystal display screens and flash-memory chips used in digital cameras charged ahead.

Samsung has invested heavily in production and research, a move that critics called foolhardy during the 1997-98 Asian financial crisis, but one that has left the company well positioned.

Samsung said that it would continue to invest heavily this year, with an increase of 1 trillion won ($850 million) from 2003 spending, to 7.92 trillion won, or $6.7 billion. Samsung also projected that earnings growth would continue in the first quarter of this year, though January is generally a quiet month for sales.

Net profit for the final quarter of 2003 was 1.86 trillion won ($1.6 billion), up from 1.5 trillion won in the year-earlier period, Samsung said. Sales jumped more than 20 percent, to a quarterly record of 12.89 trillion won ($11.0 billion), while operating profit soared more than 60 percent, to 2.63 trillion won ($2.2 billion), also a record.

Sales of large flat-screen televisions, 22 inches or more in size, soared 122 percent, to 140,000 units, the company said.

Server giant's loss narrows

SANTA CLARA, Calif. -- Sun Microsystems Inc., whose server computers run corporate networks and websites, said its second-quarter loss narrowed on lower costs and a smaller-than-expected sales drop.

The net loss shrank to $125 million, or 4 cents a share, from $2.28 billion, or 72 cents, in the same period a year earlier, Santa Clara, California-based Sun said in a statement. Sales for the quarter ended Dec. 28 fell less than 1 percent to $2.89 billion from $2.92 billion.

Sun improved its gross margin, the share of sales left after paying production costs, to 41.8 percent from 40.1 percent in the first quarter, Chief Financial Officer Steve McGowan said in the statement. Sun is trying to sell cheaper servers running the Linux operating system to compete against Hewlett-Packard Co. and Dell Inc., which sell machines with Linux or Microsoft Corp. software and Intel Corp. chips.

Rising fuel costs hurt railroad

OMAHA, Neb. -- Union Pacific Corp., the biggest U.S. railroad, Wednesday said fourth-quarter earnings fell 9.5 percent as costs for fuel and wages increased.

Profit from continuing operations dropped to $333 million, or $1.28 a share, from $368 million, or $1.38, a year earlier. Revenue rose 5 percent to $2.97 billion excluding Overnite Transportation, which was sold in an initial public offering in October.

Union Pacific, which says it's the second-biggest user of diesel after the U.S. Navy, was hurt by a 14 percent rise in fuel costs, reflecting oil prices that are near 10-month highs. The company's increase in fuel costs last year was the most in 20 years, said Chief Financial Officer James Young.

Union Pacific was aided by a 9 percent increase in freight carried by a combination of rail and truck as the U.S. economy strengthened, a rail trade group said.

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