Philip Morris Shares Rebound on Modest Costs for Recall

Philip Morris Cos. shares rose Tuesday after the company repeated that its unprecedented recall of 8 billion cigarettes may cost as little as $100 million in cash.

Philip Morris said it may lose another $100 million in revenue as it replaces Marlboro, Virginia Slims and other brands on retailers’ shelves this week.

Shares in the New York-based food, cigarette and beer company closed at $70.75 per share, up 87.5 cents on the New York Stock Exchange after a conference call between company officials, investors and Wall Street analysts.

The company’s stock fell $2 on Friday on news of the recall, which Philip Morris blamed on contaminants in a spray used to harden cigarette filters.

The defective filters could cause eye, nose and throat irritation, dizziness, coughing and wheezing or just leave a bad taste in the mouth, the largest U.S. tobacco company said last week in announcing the recall.

The long holiday weekend delayed the dispatch of company representatives to collect suspect cigarettes from 330,000 retailers. While more than half the stock had been pulled from shelves as of Tuesday, some store owners said they will continue to sell the cigarettes until contacted by the tobacco company.

Philip Morris said it is reclaiming the cigarettes from warehouses, wholesalers and retail outlets. The company said it ordered the recall after realizing that cigarettes with tainted filters could have reached merchants.

Philip Morris’ U.S. tobacco chief executive, James Morgan, said the company had replaced cigarettes at stores representing half its volume and will probably get to 75% by Thursday.

Morgan said he does not foresee any long-term impact on Philip Morris’ profit from operations.

Philip Morris says Hoechst Celanese Corp. is responsible. But the chemical maker said it “has found nothing to indicate that the company’s products or processes could have contributed to the problem.”