McDonald’s 2nd-Quarter Earnings Drop 16%

McDonald’s Corp. on Tuesday reported a 16% drop in profit, its third straight quarterly decline, as the burger giant’s stock rose modestly on its latest assurance that beef safety fears are easing in Europe, its top international market.

Squeezed by weak foreign currencies and other concerns, McDonald’s said it may close as many as 250 under-performing restaurants this quarter, primarily in emerging international markets. It stopped short, however, of trimming an ambitious expansion plan to open 1,500 restaurants worldwide this year.

The “mad-cow” and foot-and-mouth disease scare that has jarred Europe in recent months continues to make patrons there leery of beef, cutting into McDonald’s sales and resulting in what Chairman and Chief Executive Jack Greenberg said was “a tough six months.”

Net earnings for its second quarter were $440.9 million, or 34 cents a share, down from $525.9 million, or 39 cents, a year ago. That met expectations of Wall Street analysts polled by First Call/Thomson Financial, which were lowered last month after McDonald’s warned of another earnings shortfall.

Sales were $10.24 billion, essentially flat from a year ago, as a result of new restaurants and the recent acquisition of Boston Market. Sales declined 2% in Europe, which accounts for nearly a quarter of company sales, and 0.8% in the U.S.

Nonetheless, investors were cheered by McDonald’s statement for at least the third time this year that the worst of the European decline appears to be over. The company cited an increase in the last four months in France, where the beef woes first surfaced in October, along with strong results in Britain, although sales were off at existing restaurants in Germany, its No. 1 European market.

McDonald’s shares rose 62 cents to close at $28.39 on the New York Stock Exchange.

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

* Activision Inc. reported fiscal first-quarter net income of $29,000, or zero cents a share, contrasted with a net loss of $5.2 million, or 21 cents, a year ago. Analysts had forecast a 5-cent loss. Sales rose 30% to $110.5 million, the Santa Monica-based interactive game maker said.

* American Home Products Corp. said its second-quarter profit rose 16% to $477 million, or 36 cents a share, boosted by climbing sales of its Prevnar pneumococcal vaccine and Protonix heartburn treatment. Revenue rose 6.3% to $3.21 billion. Analysts on average were expecting 37 cents.

* Ameritrade Holding Corp. said its fiscal third-quarter earnings slumped 98% to $70,000, or break-even on a per-share basis, from $4.6 million, or 3 cents a share. Analysts were expecting a loss of 1 cent. Net revenue fell 26.5% to $112.6 million

* Avery Dennison Corp. reported second-quarter net income of $59.8 million, or 61 cents a share, down from $72.8 million, or 73 cents, a year ago. The firm had revised its second-quarter projections as a result of inventory reductions at, the continued economic slowdown in North America and expanded weakness in international markets. Revenue fell 3% to $960.8 million.

* Blockbuster Inc. said its second-quarter operating profit nearly doubled to $26.3 million, or 15 cents a share, exceeding analysts’ expectations of 10 cents, as movies such as “Cast Away” boosted DVD rentals. Sales rose 1% to $1.23 billion.

* Burlington Northern Santa Fe Corp. said second-quarter profit slid 22% to $195 million, or 50 cents a share, a penny better than forecasts, as the railroad’s costs rose and shipments of steel, food and automobiles declined. Revenue rose less than 1% to $2.27 billion, and the railroad said it expects revenue this quarter to be lower than the year-earlier level.

* Chiquita Brands International Inc. posted a second-quarter loss of $9 million, or 16 cents a share, citing higher production costs and declines in European currencies, including the euro. The banana producer earned $11 million, or 10 cents a share, in the year-ago period. Sales fell 1% to $595.4 million.

* Honeywell International Corp., whose purchase by General Electric Co. was blocked by European regulators this month, said second-quarter earnings fell 26% to $450 million, or 55 cents a share, 2 cents better than analysts’ forecasts. Revenue fell 3% to $6.1 billion. The latest results exclude $651 million in special charges.

* InfoSpace Inc.’s profit fell 76% in its second quarter to $2.64 million, or 1 cent a share, although analysts were expecting a loss of2 cents. The company said, however, that it expects third-quarter revenue to be down about 43% from a year ago. Second-quarter revenue inched up to $50.9 million from $50.5 million.

* Microsemi Corp. said profit rose 39% in its fiscal third quarter to $4.89 million, or 33 cents a share, but sales declined, sending its stock down as much as $15, or 22%, to $52 in extended trading. The Irvine-based company’s stock had closed up 55 cents at $67 on Nasdaq. The earnings were a penny better than analysts expected. Sales declined 0.7% to $59.5 million, excluding sales from three units now closed, as demand from technology and wireless telecommunications companies waned. Sales, including the three businesses, fell 6.3% to $60.1 million.

* QLogic Corp. said fiscal first-quarter profit fell 2% to $19.2 million, or 20 cents a share, missing analysts’ forecasts of 23 cents. The designer of chips and circuit boards that link computers and data storage systems said revenue rose 17% to $89.9 million.

* Qwest Communications International Inc. said its second-quarter profit fell 50% to $128 million, or 8 cents a share, in line with forecasts, and cut its 2001 growth outlook to the low end of its previous forecasts. The company’s latest results exclude $3.72 billion in one-time charges from the write-down of an investment in a joint venture.

* RadioShack Corp.’s second-quarter earnings fell 35% to $48.9 million, or 25 cents a share, meeting forecasts, as sales crept up 1.6% to $1.04 billion. The company also said full-year profit might not meet expectations if slow sales continue.

* Reebok International Ltd. said profit jumped 32% to $14.1 million, or 24 cents a share, beating analysts’ forecasts of 21 cents. The athletic shoe and apparel maker said sales rose 3.8% to $711 million, weakened by the effect of weak foreign currencies. Basketball shoe sales increased 20% on the strength of the Iverson shoe sales.

* Rockwell International Corp., the largest maker of factory automation equipment, said profit from continuing operations dropped 80% to $18 million, or 10 cents a share, as sales fell 14% to $1.02 billion. Analysts had cut their expectations to 6 cents from 45 cents in June, when the company warned of profit weakness and said it would cut 1,000 jobs.

* Apparel and footwear retailer Vans Inc. of Santa Fe Springs reported fiscal fourth-quarter net income of $2.7 million, or 16 cents a share, down from $1.8 million, or 12 cents, a year ago. Sales rose 28% to $85.2 million.