Corporate earnings roundup

Charge leads AIG to its biggest loss

American International Group Inc., the world’s largest insurer, posted its largest quarterly loss Thursday and said it would raise $12.5 billion to strengthen its balance sheet.

The result marked the second consecutive quarter AIG posted record losses, hurt by a write-down of derivatives stemming in part from bad mortgage investments.

AIG said the first-quarter loss was $7.81 billion, or $3.09 a share, compared with net income of $4.13 billion, or $1.58, a year earlier.

Included in AIG’s red ink was a $9.11-billion charge for unrealized market valuation losses on credit swaps. AIG also recorded capital losses of $6.09 billion, primarily from impairment charges in its investment portfolio.

AIG said that it expected to raise $7.5 billion of the target amount through a common stock and equity-linked offering and that it increased its quarterly dividend.

Excluding all one-time items, AIG would have made a per-share profit of 93 cents, below the $1.48 that analysts, on average, expected, according to Reuters Estimates.

AIG raised its quarterly dividend 10% to 22 cents per common share, which puzzled some analysts.

“Why would you dilute your shareholders and raise your dividend?” said William Smith, chief executive of Smith Asset Management. “This could be one of the craziest things I’ve ever seen in my life.”

The shares dropped 5.8% in after-hours trading following the earnings news, after closing down 93 cents, or 2.1%, in the regular session at $44.15.

Warner Music sees deficit widen

Warner Music Group Corp. said that higher costs and a shift to digital music resulted in a wider fiscal second-quarter loss and that it had suspended dividends.

The company’s shares fell 16 cents, or 1.8%, to $8.89.

For the period ended March 31, the New York-based recording company reported a loss of $37 million, or 25 cents a share, compared with a loss of $27 million, or 19 cents, a year earlier. Sales grew 2% to $800 million.

Losses from continuing operations totaled 23 cents a share. On that basis, analysts polled by Thomson Financial expected a per-share loss of 12 cents on sales of $779.7 million.

“Physical recorded music sales continued to decline industrywide and slowing ring tone growth as well as a softening broader economy are negatively impacting the music industry,” Warner Music Chairman and Chief Executive Edgar Bronfman Jr. said.

Warner said it was suspending its dividend to shareholders to reduce debt amid the uncertain economy, unstable credit markets and continuing softness in the recorded music market.

Bronfman said the move would enable the company to sustain its investment level and develop its artist roster.

Vonage narrows loss on cost cuts

Vonage Holdings Corp., the unprofitable Internet phone company, reported a narrower first-quarter loss after cutting jobs and reducing marketing budgets.

The net loss shrank to $8.96 million, or 6 cents a share, from $72.3 million, or 47 cents, a year earlier, the Holmdel, N.J.-based company said. Sales rose 15% to $224.6 million.

Vonage shares fell 5 cents, or 2.7%, to $1.83.

Profit doubles at Kaiser Aluminum

Kaiser Aluminum Corp. said its first-quarter profit more than doubled, but its stock fell more than 10% after the company forecast lower production than anticipated this year.

“We are not market-constrained, we are production-constrained this year,” Chairman and Chief Executive Jack Hockema said.

He said there was a short, unplanned outage at a light-gauge furnace during the first quarter. In addition, a planned four-month shutdown for maintenance at another furnace in Spokane, Wash., starting in June, would lower the output of heat-treated plate, a high-strength aluminum product used primarily in the aerospace industry.

The Foothill Ranch-based company reported first-quarter earnings of $39.1 million, or $1.92 a share, compared with $17.1 million, or 85 cents, a year earlier. Sales rose 2% to $399 million.

Kaiser Aluminum shares fell $7.85 after the earnings announcement to $66.09. But some analysts attributed the decline not only to the lowered outlook but also to a correction after investors had driven up the stock on Wednesday on a TV analyst’s favorable forecast.

Higher sales trim loss at Six Flags

Amusement park chain Six Flags Inc. said its first-quarter loss narrowed as revenue increased at the fastest rate in six years.

The loss shrank to $149.9 million, or $1.62 a share, from $170.6 million, or $1.86, a year earlier, New York-based Six Flags said. Revenue jumped 35% to $68.2 million. Total attendance rose 19% to more than 1.4 million, the operator of Magic Mountain in Valencia said.

Six Flags shares fell 16 cents, or 6.7%, to $2.24.

Live Nation’s loss shrinks in quarter