3 Oil Companies See Their Profits Surge
Unocal Corp. said second-quarter earnings surged tenfold because of higher oil and natural gas prices, beating estimates, and said that third-quarter profit will top forecasts.
Texaco Inc., the third-largest U.S. oil company, and Phillips Petroleum Co., No. 5, also said second-quarter profits surged on higher oil and natural gas prices.
El Segundo-based Unocal said profit from continuing operations climbed to $170 million, or 69 cents a share, from $16 million, or 6 cents, a year earlier. The results exceeded the 63-cent average estimate of analysts polled by First Call/Thomson Financial.
Unocal, which explores for oil and gas primarily in the Gulf of Mexico and Asia, said sales rose 56% to $2.25 billion.
Unocal forecast profit of more than 70 cents for the third quarter and between $2.70 and $2.90 for the year. First Call’s estimates are 66 cents and $2.44, respectively.
Cash flow, which indicates a company’s ability to pursue new projects, rose 61% to $495 million. The company cut debt to $2.78 billion, or a 48% debt-to-capitalization ratio, from $2.85 billion, or 51%, at the end of 1999.
Among the one-time items excluded from Unocal’s latest earnings figures was a $55-million gain from payments made by rival oil companies that infringed on its reformulated gasoline patent.
Texaco said profit from operations more than doubled to $641 million, or $1.17 a share, from $286 million, or 52 cents, a year earlier, as sales rose 46% to $12.1 billion. The results were a penny higher than the average estimate of analysts. Estimates ranged from $1.09 to $1.41.
Texaco has a bigger share of its business in Asia, where stiff competition kept a lid on retail gasoline prices.
Texaco’s profit from selling gasoline and other fuels fell 9%, to $170 million. Profit from finding and selling oil and natural gas soared 170% to $588 million.
Phillips said earnings more than quadrupled to $439 million, or $1.73 a share, from $108 million, or 43 cents, a year earlier. Sales rose 69% to $5.4 billion. The earnings topped First Call’s average estimate of $1.56.
Profit from finding and selling oil and natural gas soared nearly fourfold to $396 million, while profit from refining crude oil and selling fuels such as gasoline, jumped 132% to $86 million. Unocal shares rose $1.56 to close at $30.31, while Texaco rose $1.69 to $50.31 and Phillips rose $1.50 to $49.25, all on the New York Stock Exchange.
At a Glance
Other earnings, excluding one-time gains or charges unless noted, include:
TECHNOLOGY
* Buy.com Inc. said its second-quarter loss narrowed to $23.1 million, or 18 cents a share, from $25.5 million, or 29 cents, as it spent more on marketing and expansion internationally. The results were far better than the 23-cent average estimate of analysts. Sales rose 49% to $193.2 million.
* EarthLink Inc. reported a second-quarter loss of $35.2 million, or 29 cents a share, on higher marketing and customer-support costs, but the loss wasn’t nearly as bad as the 36 cents analysts expected. The Internet service company lost $36.1 million, or 35 cents, a year ago. Revenue grew 41% to $230.9 million.
* Electronic Data Systems Corp. said second-quarter profit rose 14% to $254.3 million, or 53 cents a share, matching expectations, as the computer-services company signed a record number of new contracts. Sales were virtually flat at $4.62 billion. The company said last month that changes in its sales organization would hurt revenue.
* OpenTV Corp., maker of software for interactive television, said its second-quarter loss to $7.8 million, or 17 cents a share, from $2.1 million, or 6 cents, as it spent more to develop and sell its products. Sales rose 83% to $11.3 million.
* StorageNetworks Inc. said its second-quarter loss widened dramatically to $31.3 million, or $1.20 a share, from $3 million, or 12 cents, a year ago, as expenses soared along with revenue. The data-storage company said revenue swelled to $8 million from $440,000, while expenses climbed to $39.9 million from $3.5 million.
OTHER INDUSTRIES
* American International Group Inc., the largest U.S. insurer by market value, said its second-quarter operating income rose 13% to $1.43 billion, or 92 cents a share, driven by price increases in property-casualty insurance and higher life insurance sales. Revenue rose 12% to $11.43 billion. The results matched analyst forecasts.
* AutoNation Inc. said second-quarter earnings edged down less than 1% to $96.6 million, or 27 cents a share, on higher costs. Analysts expected 25 cents. The nation’s largest auto retailer said revenue rose 5.3% to $5.34 billion.
* CSX Corp. said second-quarter earnings slid 43% to $55 million, or 26 cents a share, a penny better than forecast. The railroad company’s revenue fell 16% to $2.19 billion.
* Chubb Corp. said second-quarter earnings rose 10% to $180.7 million, or $1 a share, better than the 97 cents forecast, driven by rate increases and lighter-than-usual storm losses for the insurer.
* Franklin Resources Inc. said fiscal third-quarter profit rose 14% to $140.4 million, or 58 cents. The mutual fund company said operating revenue rose slightly to $568.9 million from $566.8 million.
* Kellogg Co. said second-quarter profit rose 7.4% to $165.6 million, or 41 cents a share, in line with estimates, despite steep price cuts at its key U.S. cereal business. Net sales edged up 0.9% to $1.8 billion.
* Martha Stewart Living Omnimedia Inc. said profit rose 50% to $5.9 million, or 12 cents a share, well beyond analyst forecasts of 8 cents. Revenue rose 19% to $69.2 million, driven by higher demand for magazine advertising.
* MGM Mirage Inc. said second-quarter profit climbed 82% to $60.7 million, or 40 cents a share, from its Mirage casinos and new MGM Grand casino in Detroit. Revenue nearly doubled to $627.2 million from $319.1 million.
* Newell Rubbermaid Inc. said second-quarter earnings grew 22% to $138.3 million, or 52 cents a share, a penny better than estimates, on a 7% rise in sales to $1.71 billion. Cost cuts at Rubbermaid, which Newell acquired last year, helped boost profit at the division. Overall earnings were weakened by higher costs for fuel and resin, which is used to make many of Rubbermaid’s plastic products. The company said it will increase prices on some products to recoup the higher materials costs.
* Primedia Inc. said its second-quarter loss widened to $7.1 million, or 13 cents a share, from $4.9 million, or 12 cents, as the magazine publisher made Internet-related investments to become a full-fledged multimedia company. The results beat forecasts of a 19-cent loss. Revenue was virtually flat at $425.5 million, reflecting the sale of some businesses.
* R.R. Donnelley & Sons Co. said earnings rose 5% to $56.3 million, or 46 cents a share, as its catalog, book and magazine printing got a lift from the new “Harry Potter” book. Sales rose 11% to $1.39 billion. The company also named Gregory A. Stoklosa as chief financial officer.
* PE Corp. said losses at its Celera Genomics widened to $20.4 million, or 35 cents a share, in the fiscal fourth quarter from $19.9 million, or 39 cents, as it reached a milestone in determining the makeup of the human genetic code. The results matched the consensus forecast. Research spending more than doubled to $54 million as Celera raced to complete the world’s first assembly of the components of the human genetic code, seen as a key step in further understanding genes. Revenue nearly tripled to $15 million from $5.1 million. Customers such as Pfizer Inc. and biotechnology companies and universities pay to use Celera’s database. At PE’s PE Biosystems Group, profit rose 26% to $56.6 million, or 26 cents a share, as expected, as revenue grew 21% to $391.8 million.
* Starbucks Corp. reported a 42% surge in profit to $34.9 million, or 18 cents a share, in its fiscal third quarter, matching forecasts, as revenue jumped 31% to $555.5 million. Sales at Starbucks coffee stores open at least a year grew 10%. The company also increased the number of stores it plans to open this year from 750 to 900 worldwide. It now has 3,100 stores.
* Starwood Hotels & Resorts Worldwide Inc. said second-quarter earnings from continuing operations rose 34% to $114 million, or 56 cents a share, 2 cents better than forecasts, on higher room rates and occupancy levels. Starwood’s revenue jumped 19% to $1.15 billion.
* Union Pacific Corp., owner of the largest U.S. railroad, said second-quarter earnings rose 26% to $244 million, or 96 cents a share, well beyond analyst estimates of 77 cents, on increased automobile shipments. Revenue rose 7.4% to $2.98 billion.
* Young & Rubicam Inc., the advertising agency being bought by WPP Group, said second-quarter earnings rose 22% to $37.5 million, or 45 cents a share, as revenue grew 19% to $495 million.
