Business briefs for Jan. 30, 2004

Thursday, Jan. 29, 2004 | 11:05 a.m.

Restructuring hurts results

TOKYO -- Profit at Sony Corp. fell 26 percent in the December quarter, hurt by restructuring costs, a stronger yen and declining revenue in the movie and video game divisions.

Sony's profit reported Wednesday of 92.6 billion yen ($874 million) in the quarter was, however, larger than expected, in part because of improved sales of home electronics during the holiday shopping season. Sales rose 0.7 percent, to a quarterly record of 2.32 trillion yen ($21.9 billion).

Sony, the world's second-largest electronics maker, also raised its profit goal for the financial year ending in March by 10 percent, to 55 billion yen ($519 million), because of the yen's decline against the euro.

Low mortgage rates propel profit

BLOOMFIELD HILLS, Mich. -- Pulte Homes Inc., the fourth-largest U.S. home builder by stock market value and a big builder in Las Vegas, Wednesday said fourth-quarter earnings jumped 44 percent as low mortgage rates spurred home sales.

Profit from continuing operations was a record $248 million, or $1.95 a share when adjusted to reflect a stock split, from $172 million, or $1.39, a year earlier, the Bloomfield Hills, Mich.-based company said in a statement. Analysts expected the company to have earned $1.88 a share, according to the average estimate in a Thomson Financial poll.

U.S. homebuilders such as Pulte are profiting as the lowest mortgage rates in a generation encourage people to buy houses. Pulte's revenue rose 23 percent to $3.1 billion, as the company sold 11,159 houses in the U.S., a 17 percent increase.

Low rates lift profit for mortgage lender

CALABASAS, Calif. -- Countrywide Financial Corp., the second-largest U.S. mortgage lender, Tuesday said fourth-quarter earnings more than doubled as lower borrowing costs spurred people to buy homes.

Net income rose 121 percent to $563.7 million, or $2.74 a share, from $254.9 million, or $1.45, a year earlier, the company said in a statement. Revenue increased 51 percent to $2.11 billion.

Insurer swings to a profit

HARTFORD, Conn. -- Travelers Property Casualty Corp., the commercial insurer merging with St. Paul Cos., Wednesday said it earned $488.7 million in the fourth quarter after shoring up asbestos reserves a year ago.

Net income was 49 cents a share, compared with a loss of $793.4 million, or 79 cents a share, in the same period a year earlier, the company said.

Travelers said profit was cut by $203.5 million as it raised reserves, mostly because its Gulf Insurance unit priced professional liability and other unique risk coverage policies too cheaply in prior years. Profit excluding investment gains was $463.3 million, or 46 cents a share, below the 48-cent-a-share average estimate of analysts polled by Thomson Financial.

Despite loss, UAL reports progress

CHICAGO -- United Airlines' parent company posted a $476 million loss for the fourth quarter, extending its string of money-losing quarters to 14, but cited "significant progress" and said it remains on target to emerge from Chapter 11 bankruptcy by midyear.

The loss reported Tuesday, the biggest in the industry this quarter, left UAL Corp. with a whopping $2.81 billion deficit for 2003, its second-worst ever and only slightly better than the $3.21 billion loss for 2002, when heavy losses forced it to make the largest bankruptcy filing in aviation history.

The loss for the final three months of 2003 amounted to $4.33 per share, compared with a loss of $1.47 billion, or $20.70 per share, for the same period a year earlier.

Revenue rose to $3.62 billion from $3.47 billion, including a 10 percent increase in passenger revenue.

Tobacco maker's loss widens

WINSTON-SALEM, N.C. -- R.J. Reynolds Tobacco Holdings Corp., the second-biggest U.S. cigarette maker, Tuesday said its fourth-quarter loss widened after firing 40 percent of its workforce and shifting marketing costs to its premium brands.

The loss widened to $136 million, or $1.62 a share, from $59 million, or 69 cents, in the year-earlier period. Sales fell 12 percent to $1.23 billion from $1.41 billion, the company said in a statement.

Military spending helps contractor

WALTHAM, Mass. -- Raytheon Co., the world's largest missile maker, Tuesday said fourth-quarter profit increased 40 percent because of rising U.S. defense spending. The company cut its forecast for the year because of higher pension expense.

Fourth quarter profit from continuing operations climbed to $217 million, or 52 cents a share, from $155 million, or 38 cents, a year earlier. The company said sales rose to $5.1 billion from $4.7 billion.

Raytheon's sales benefited from U.S. efforts to replenish its inventory of missiles and satellite-guided bombs used during the war with Iraq.

Chemical giant's profit up 82 percent

WILMINGTON, Dela. -- DuPont Co., the second-biggest U.S. chemical maker, Tuesday said fourth-quarter earnings jumped 82 percent on gains related to the sale of a synthetic-fibers business and revenue from electronics and coatings.

Net income increased to $636 million, or 63 cents a share, from $350 million, or 35 cents, a year earlier, DuPont said in a statement. Sales rose 14 percent to $6.48 billion from $5.68 billion.

Restructuring hurts results

NEWARK, N.J. -- Pharmaceutical company Merck & Co. reported lower profit and sales for the fourth quarter, partly because of restructuring costs and a new U.S. wholesaler distribution program.

The maker of cholesterol-lowering drug Zocor and arthritis drug Vioxx reported net income of $1.40 billion, or 62 cents per share, for the quarter ended Dec. 31, down 26 percent from $1.89 billion, or 83 cents a share, a year ago.

The year-ago results included its huge pharmacy benefit management subsidiary, Medco Health Solutions of Franklin Lakes, which Merck spun off on Aug. 19. Medco had provided about 60 percent of Merck's revenue.

Quarterly sales fell 7 percent to $5.63 billion from $6.06 billion a year ago.

Equipment maker projects growth

PEORIA, Ill. -- Caterpillar Inc., the world's largest maker of earthmoving equipment, Tuesday said it sees 2004 profit rising 40 percent and sales increasing 12 percent. Fourth-quarter net income rose 14 percent because of cost cuts and higher machinery orders.

Low interest rates in 2004 will encourage customers to replace equipment and spur housing and commercial construction, Caterpillar said in a statement. Higher metal prices will boost sales of trucks and other mining machinery, the company said.

Fourth-quarter net income rose to $349 million, or 97 cents a share, from $305 million, or 88 cents, a year earlier. Sales rose 20 percent to $6.47 billion from $5.38 billion, the company said.

Low interest rates and higher construction spending in the United States and Asia helped boost machine sales.

Aviation giant reverses loss

BETHESDA, Md. -- Lockheed Martin said higher sales of jet fighters and cargo planes drove up fourth-quarter earnings, reversing a loss the nation's largest defense contractor posted a year ago.

On Tuesday, the company reported fourth-quarter earnings of $344 million, or 77 cents per share, which beat the expectations of analysts surveyed by Thomson First Call by a penny.

In the fourth quarter of 2002, Lockheed posted a loss of $347 million, or 77 cents per share, due largely to a $1.3 billion charge from the sale of its telecommunications division.

Fourth-quarter sales rose 15 percent to $8.98 billion from $7.78 billion a year ago.

Telecom firm's profit declines

SAN ANTONIO -- SBC Communications Inc., the second- largest U.S. local-phone company, Tuesday said fourth-quarter profit slid 62 percent as the defection of customers to competitors such as AT&T Corp. trimmed sales.

Net income fell to $905 million, or 27 cents a share, from $2.36 billion, or 71 cents, a year earlier, SBC said. Sales declined 10 percent to $10.1 billion from $11.2 billion.

This week, the company announced plans to offer local and long distance service in Las Vegas.

Outlook sputters

NEW YORK -- JetBlue Airways Corp., a low-fare carrier that has been profitable for 12 straight quarters, said fourth-quarter earnings rose 29 percent as it added flights and carried more passengers.

The company's shares fell as much as 7 percent as JetBlue forecast lower profit margins for the current quarter and 2004. The New York-based airline faces stiffer competition as larger rivals trim costs and are better able to match low fares.

Fourth-quarter net income rose to $19.5 million, or 17 cents a share, from $15.2 million, or 15 cents, in the same period a year earlier, JetBlue said in a statement. Sales rose 40 percent to $262.9 million from $187.3 million.

JetBlue expects an operating margin, or income before taxes and interest as a percentage of sales, of 9 percent to 11 percent this quarter, Chief Financial Officer John Owen said on a conference call. The margin was 15.9 percent in the same quarter last year.

JetBlue shares fell $1.32 to $22.68 in morning trading.

Holidays ship upside surprise

ATLANTA -- UPS Inc. said strong gains in its domestic and overseas business and a boost from the holiday shipping season helped it post a profit of $856 million in the fourth quarter, beating Wall Street expectations.

The world's largest shipping carrier said its earnings amounted to 75 cents a share. A year ago, UPS reported a profit of $1.50 billion, or $1.32 a share, but said today it has adjusted that to $670 million, or 59 cents a share, to account for a settlement of a $1 billion tax dispute with the Internal Revenue Service.

Excluding one-time items, Atlanta-based UPS said it earned $799 million, or 70 cents a share, in the latest quarter. Revenue rose 8 percent to $8.93 billion from $8.26 billion a year ago.

Retailer disappoints

HOFFMAN ESTATES, Ill. -- Sears, Roebuck & Co. said fiscal fourth- quarter net income more than doubled because of a $4.1 billion pretax gain from the sale of its credit-card division. The retailer's shares fell as much as 8.8 percent after the company forecast disappointing earnings for this year.

Sears, the largest department store chain, said in a statement that profit, excluding an accounting change and some costs, will be $3.80 to $4.05 a share. The company had been forecast to earn $4.36 in 2004.

Fourth-quarter net income climbed to $2.75 billion, or $10.84 a share, from $848 million, or $2.67, in the year-earlier period. Revenue for the quarter ended Jan. 3 dropped 2.1 percent to $12.3 billion because of the November sale of the finance arm to Citigroup Inc.

Shares of Sears fell $3.78 to $42.02 in morning trading on the New York Stock Exchange.

Tax refund to the rescue

CHICAGO -- Boeing Co. ended a turbulent 2003 by nearly doubling its earnings in the fourth quarter thanks to a $1.1 billion federal tax refund that offset the continuing decline of its once-dominant commercial airplane business.

The refund gave Boeing a profit of $1.11 billion for the quarter and kept it from falling into the red for the year, a year in which the company dropped to the No. 2 slot (behind Airbus) for commercial airplane manufacturers.

Net income for the last three months of the year amounted to $1.37 per share, up from $590 million, or 73 cents a share, a year earlier.

Excluding the Internal Revenue Service refund, earnings were 50 cents a share, or 4 cents more than the consensus estimate of analysts surveyed by Thomson First Call. Revenue fell 3.5 percent to $13.2 billion from $13.7 billion.

Beauty products brighten earnings

CINCINNATI -- Procter & Gamble Co., the biggest U.S. household-goods maker, Wednesday said second-quarter profit climbed 22 percent, bolstered by its acquisition of Wella AG and higher sales of medicines such as heartburn drug Prilosec.

Net income rose to $1.82 billion, or $1.30 a share, from $1.49 billion, or $1.06, in the year-earlier period, the company said in a statement. Sales in the quarter ended Dec. 31 increased 20 percent to $13.2 billion, including a 4 percent currency gain.

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