American Express Posts 12% Profit Increase
American Express Co.’s fourth-quarter profit rose 12%, as its cardholders borrowed more money. But the stock fell 7.5% Monday, its biggest one-day decline since April after the company said it expected profit growth to slow this year.
Net income rose to $677 million, or 50 cents a share, from $606 million, or a split-adjusted 44 cents, in the fourth quarter of 1999. The shares fell $3.63 to close at $45 on the New York Stock Exchange.
The company, run by Kenneth Chenault after Harvey Golub retired on Dec. 31, said credit card receivables increased 28%, while charge card receivables rose 7.4%. That helped boost full-year earnings per share by 14%, near the high end of the company’s target range.
But the card and travel services company said it expects 2001 EPS growth to be “at the low end” of that range as the U.S. economy slows and financial markets continue to weaken.
“This may mean that American Express is starting to feel the pain of competition and is finding it more difficult to grow against some of these mono-line players that have become increasingly large and competitive,” said James Ellman of Merrill Lynch Investment Managers.
“Hiding behind the curtain of a weak economy when other companies are meeting and beating estimates means that the economy may not be the only problem,” he said.
The company’s per-share results met the average estimate of analysts polled by First Call/Thomson Financial. San Francisco-based Providian Financial Corp. last week exceeded expectations, while Capital One Financial Corp. matched estimates.
Providian and Capital One have forecast 25% and 30% earnings per share growth, respectively.
New York-based American Express said fourth-quarter revenue on a managed basis rose 9.3% to $5.71 billion, led by its travel and card unit.
Net income at the division rose 16% to $470 million.
Cardholders spent $79 billion on the company’s charge and credit cards, 12% more than they spent the year-earlier quarter.
The number of American Express cards in force rose 12% to 51.7 million.
At a Glance
Other earnings, excluding one-time gains and charges unless noted:
* No. 4 software maker Computer Associates International Inc. reported a fiscal third-quarter loss of $342 million, or 59 cents a share, compared to profit of $401 million, or 72 cents, a year ago. Sales fell about 50% to $783 million. Excluding goodwill, the company would have had a profit of $247 million, or 42 cents.
* UnionBanCal Corp. reported fourth-quarter net income of $8.4 million, or 5 cents per share, compared with $137 million, or 83 cents, a year ago. The San Francisco-based bank said earnings were depressed by a provision for credit losses of $250 million versus $30 million last year. Net interest income rose 8% to $399.3 million.
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Earnings Reports
A sampling of companies reporting quarterly earnings Monday, ranked by year-over-year earnings-per-share (EPS) growth, compiled by First Call/Thomson Financial.
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Analysts’ % above/ Year- Ticker est. Actual below ago Company symbol EPS EPS estimate qtr. Vitesse Semiconductor VTSS $0.24 $0.25 +4% $0.11 Conoco COCB 0.85 0.91 +7 0.51 Coach COH 0.86 0.88 +2 0.65 Texas Instruments TXN 0.33 0.31 -6 0.26 Comerica CMA 1.19 1.20 +1 1.08 Air Prod. & Chem. APD 0.61 0.62 +2 0.56 BellSouth BLS 0.59 0.57 -3 0.53 Nationwide Health NHP 0.53 0.54 +2 0.55 FMC FMC 1.50 1.57 +5 1.69 Lexmark Holding LXK 0.61 0.64 +5 0.73 Eaton ETN 1.41 1.40 -1 1.59 Safeco SAFC -0.08 -0.08 0 0.24 Drugstore.com DSCM -0.55 -0.45 NM -0.84 Callaway Golf ELY -0.01 0.01 NM 0.00
Year- over-year Company % change Vitesse Semiconductor +127% Conoco +78 Coach +35 Texas Instruments +19 Comerica +11 Air Prod. & Chem. +11 BellSouth +8 Nationwide Health -2 FMC -7 Lexmark Holding -12 Eaton -12 Safeco NM Drugstore.com NM Callaway Golf NM
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Notes: NM = not meaningful. A loss in any period makes percentage change not calculable.
Year-over-year growth and percentage changes are based on earnings-per-share figures and may differ from percentage changes based on total profit.
For more information on First Call, check www.firstcall.com.
