Strong Sales Boost GM to Record 2nd Quarter

General Motors Corp. posted record second-quarter earnings that exceeded analyst expectations on strong sales in the United States, where its market share showed signs of recovery despite intense price competition.

The world’s No. 1 auto maker said Tuesday that earnings from continuing operations totaled $1.73 billion, or $2.66 a share, a fivefold jump over the strike-depressed $306 million, or 40 cents, earned in the same quarter of 1998. The results exceed GM’s previous second-quarter best of $1.69 billion in 1995. Sales jumped 21% to $45.1 billion.

Analysts surveyed by First Call Corp. had projected earnings of $2.56 a share.

Analysts were encouraged that GM was regaining market share in the U.S., where it produced and sold more high-profit trucks during the April-June period. GM’s North American assembly operation is designed to function efficiently at 30% of the U.S. car and light-truck market. The company has struggled to regain the 30% share it enjoyed before last summer’s United Auto Workers strikes brought production nearly to a standstill.

GM estimated that its market share rose to 29.5% in the second quarter from 29% in the first. In June, its share was 30.5%.

That surprised analysts, because GM had been so aggressive with discounts in the second quarter of 1998, issuing 12 million “loyalty coupons” to lure previous customers to dealerships.

North American earnings totaled $1.5 billion, contrasted with a $194-million loss a year ago because of the strikes.

“In one of the most intensely competitive markets in recent history, our North American automotive operations took advantage of the strong demand and recorded net income of $1.5 billion, despite the extremely tough pricing environment in this key region,” GM Chairman Jack Smith said.

Analyst David Healy of Burnham Securities Inc. said the combination of higher truck sales and cost cuts contributed to the record earnings. GM said it reduced costs by $1.8 billion in the first half, about evenly split between the two quarters.

At a Glance

Other earnings, excluding one-time gains and charges unless noted:

AEROSPACE:

* General Dynamics Corp.’s profit rose 14% to $105 million, or 81 cents a share, a penny higher than estimates, as revenue grew 17% to $1.38 billion. The marine unit’s profit rose 29% as sales grew 30%, mostly from recently acquired National Steel & Shipbuilding Co. of San Diego. Operating profit at its information systems and technology division rose 50%, with a 6.6% rise in sales.

* Lockheed Martin Corp. reported a loss of $41 million, or 11 cents a share, for the second quarter because of increased costs and delayed rocket launches and satellite deliveries. Analysts were expecting a loss of 13 cents. Lockheed, the world’s second-largest aerospace company, had net income of $289 million, or 76 cents, a year ago. Revenue slipped 4.9% to $6.2 billion. The aeronautics division reported an operating loss after a profit a year ago, and all other units posted profit declines despite modest sales increases. Last month, Lockheed warned to expect the loss, citing delays in making C-130J cargo planes, fewer commercial satellite orders and postponed rocket launches.

* Rockwell International Corp.’s profit soared 42% in the fiscal third quarter to $156.4 million, or 80 cents a share, on stronger sales of its factory automation and airplane control equipment. Analysts were expecting 80 cents. Revenue rose 8.7% to $1.81 billion. In the Costa Mesa-based company’s automation division, profit jumped 14% as sales grew 5% on gains in Asia and North America. The avionics division’s profit climbed 48% on a 23% jump in revenue. Rockwell has cut costs in the factory automation business to counter reduced spending for capital equipment.

* TRW Inc.’s second-quarter profit from operations rose 22% to $153.5 million, or $1.25 a share, well above forecasts, with much of the improvement coming from newly acquired LucasVarity. Analysts were expecting $1.03. Sales jumped 58% to $4.79 billion, mostly because of LucasVarity. Without the auto parts maker, TRW’s results didn’t improve, mainly because of one-time costs of moving some production to Mexico, analysts said. Operating profit grew 28% in the space, defense and information systems business as sales rose 23%.

* United Technologies Corp. said its second-quarter profit from continuing operations rose 25% to $417 million, or 83 cents a share, as it kept a lid on expenses and boosted sales through acquisitions. Profit, including the auto parts unit it sold during the quarter, rose 18.6% to $427 million, or 85 cents, better than the 82 cents analysts estimated. Operating profit at jet engine maker Pratt & Whitney rose 15% on a 1% increase in sales.

The company, which also makes Otis elevators and Carrier air conditioners, said total sales from continuing operations rose 3.6% to $6.04 billion.

OTHER INDUSTRIES:

* DLJDirect Inc., the Internet brokerage of Donaldson, Lufkin & Jenrette Inc., said second-quarter profit more than quadrupled to $5.1 million, or 5 cents a share, from $1.2 million, or 1 cent. Revenue doubled to $59.7 million as customer trades more than doubled.

* Hambrecht & Quist Group said its net income more than doubled in the fiscal third quarter to $37.1 million, or $1.39 a share, from $13.9 million, or 52 cents, a year ago, bolstered by trading and investment banking. The results beat the two estimates of 65 cents and $1 a share in a First Call survey.

* Musicland Stores Corp. reported a second-quarter profit of $1.5 million, or 4 cents a share, contrasted with a loss of $4.66 million, or 14 cents, a year earlier, in a turnaround that beat analyst estimates by 3 cents a share. The retailer, whose chains include Sam Goody, said revenue rose 3.8% to $381.1 million. Sales at stores open at least a year rose 4.4%.

* Philip Morris Cos. said second-quarter earnings edged up 2.9% to $2.1 billion, or 85 cents a share, meeting forecasts, as its Kraft food unit lifted sales and pared costs, tempering declines in cigarette profit. Revenue rose 4.4% to $19.8 billion.

Sales and profit in the flagship tobacco business fell, largely because of higher cigarette prices in the U.S., but the company picked up market share. The company also benefited from a 13% rise in profit at its Miller beer unit.

* Tricon Global Restaurants Inc.’s earnings jumped 40% in its fiscal second quarter to $97 million, or 60 cents a share, in line with estimates, as revenue fell 6% to $1.89 billion. Stronger sales at Pizza Hut, which introduced new menu items, offset weakness at Taco Bell and KFC, where promotions tied to the latest “Star Wars” movie failed to generate sales.

TECHNOLOGY EARNINGS: Results for Lucent, Texas Instruments and others. C4