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Earnings Roundup: Amgen first-quarter profit rises 15%

Amgen Inc. said Wednesday that higher sales of its anti-infection drugs helped lift first-quarter profit by 15%, but the biotech drugmaker cautioned that healthcare reform measures will tamp down full-year results.

The company said the recently passed healthcare legislation will trim $200 million to $250 million from fiscal 2010 results. Amgen expects adjusted profit and revenue will come in toward the lower end of its forecast of $5.05 to $5.25 a share on sales of $15.1 billion to $15.5 billion as a result.

Chairman and Chief Executive Kevin Sharer said the company “will take appropriate steps to manage the impact of the new U.S. healthcare reform law.”

In after-hours trading, Amgen shares fell 56 cents to $58.05 after closing down 2.4% at $58.71.

For the three months ended March 31, Amgen’s profit rose to $1.17 billion, or $1.18 a share, from $1.02 billion, or 98 cents, a year earlier. Excluding one-time costs, Amgen would have earned $1.30 a share — topping the $1.23 estimate of analysts surveyed by Thomson Reuters.

Revenue climbed 9% to $3.59 billion, slightly shy of analysts’ $3.65 billion forecast.

Amgen said sales of Neulasta and Neupogen, which help prevent infections in chemotherapy patients, rose 10% to $1.18 billion. The gains came from higher prices and greater demand, especially overseas, as the drugs enter new markets and patients are switched from Neupogen to the newer Neulasta.

Sales of rheumatoid arthritis and psoriasis drug Enbrel increased 6% to $804 million from $758 million.

Sales of Amgen’s anemia drugs rebounded 5% to $1.25 billion from $1.19 billion, as a 10% rise in Epogen sales helped offset flat sales of Aranesp.

Use of both anemia drugs began to fall in 2007 after studies linked them to side effects including faster tumor growth. Use of the drugs was restricted, which hurt Amgen’s sales growth. The company is hoping to regain sales momentum with its osteoporosis drug Prolia, which is currently being reviewed by the Food and Drug Administration.

The FDA is scheduled to make a decision on Prolia by July 25. Wall Street sees Prolia as a potential billion-seller that could recharge Amgen’s revenue growth.

BOEING

Healthcare law leads to charge

The new healthcare law took its toll on Boeing Co. earnings as the aerospace company reported a $150 million non-cash charge, or 20 cents a share, for a future tax benefit that it will lose.

The charge contributed to a 15% drop in Boeing’s net income of $519 million, or 70 cents a share, compared with a year earlier. Revenue at the Chicago company fell 8% to $15.2 billion as it delivered fewer airplanes to customers than in the same period in 2009: 108 compared with 121.

However, analysts were encouraged by signs that Boeing operations are getting back on track and that the worst of its development problems with the 787 Dreamliner aircraft and 747-8 jumbo jet appeared be in the past.

Boeing said it intended to begin delivering both aircraft to customers by year-end, turning programs that have been a drain on its finances into sources of revenue.

With global airlines recovering from the recent recession, Boeing is seeing a strong surge in demand for its aircraft and will decide this quarter whether to boost production of its top-seller, the 737 jet, this quarter, CEO Jim McNerney said. The company has already announced plans to speed production rates for the 777 and new, stretched version of the 747.

Boeing also said it had finalized the aerodynamic configuration of the 787. “We have completed sufficient testing to decide that no additional changes to the external lines or shape of the airplane are required,” said Scott Fancher, vice president and general manager of the 787 program.

Analysts were encouraged by the improving operating margin for Boeing’s commercial airplane business, 9.1% compared with 4.9% a year ago.

But observers continue to closely monitor the cash burned by Boeing as it completes research and development costs on the new planes and advances cash to suppliers who have been squeezed by the long delays to both planes. Boeing and its suppliers aren’t fully paid until airplanes are delivered to customers.

Boeing reported negative free cash flow of $471 million for the quarter, but said it still has reserves of $10.4 billion in cash and short-term securities to draw from.

“This was a decent quarter for Boeing,” wrote analyst Rob Stallard of Macquarie Securities in a research report.

AT&T

Slow quarter for subscriber growth

AT&T Inc., the largest U.S. phone company, added the fewest mobile subscribers in at least 12 quarters, crimping sales growth and stoking concerns about its reliance on the iPhone.

First-quarter sales of $30.6 billion missed the $30.7-billion average of estimates compiled by Bloomberg. A net new 512,000 contract subscribers signed up, compared with almost 900,000 a year earlier, Dallas-based AT&T said.

Net income fell 21% to $2.48 billion, or 42 cents a share, from $3.13 billion, or 53 cents, a year earlier, Dallas-based AT&T said. The company recorded $1 billion in expenses last quarter because of new health-care legislation that eliminated tax breaks on some health benefits for retirees.

Excluding that, earnings were 59 cents a share, compared with analysts’ average 55-cent estimate.

QUALCOMM

Sales, profit forecasts fail to meet predictions

Qualcomm Inc., the biggest maker of microchips that run mobile phones, forecast sales and profit that fell short of analysts’ predictions, signaling consumers may be opting for handsets that are less profitable for the company.

Profit this quarter will be 40 cents to 44 cents a share, San Diego-based Qualcomm said. Analysts had predicted 44 cents, according to the average estimate in a Bloomberg survey. Sales will be at least $2.5 billion, less than the $2.66 billion projected by analysts.

Net income was $774 million, or 46 cents a share, in the three months ended March 28. That compares with a loss of $289 million, or 18 cents a share, a year earlier, when the company paid to settle a patent case with Broadcom Corp. Sales were $2.66 billion.

Analysts had predicted profit of 46 cents a share on sales of $2.63 billion. Qualcomm had raised its forecasts for the second quarter on March 25, citing stronger-than-expected licensing and sales.

NETFLIX

Earnings soar 44% in first quarter

Netflix Inc. said first-quarter profit rose 44% as the movie subscription service added new users and boosted online offerings.

Net income advanced to $32.3 million, or 59 cents a share, from $22.4 million, or 37 cents, a year earlier, the Los Gatos, Calif.-based company said. Sales rose 25% to $493.7 million, meeting the average estimate of analysts surveyed by Bloomberg.

Netflix added 1.7 million subscribers during the quarter for a total of 14 million. The company is expanding its digital offerings to allow users to stream movies and television shows through Web-enabled devices such as game consoles, Blu-ray players and Apple Inc.'s iPad. Netflix said 55% of its customers use the Web service.

The company forecast second-quarter earnings will rise to 62 cents to 73 cents a share on sales of as Smuch as $525 million. Analysts surveyed by Bloomberg estimated profit of 72 cents a share on sales of $516.4 million. Earnings for the full year will be $2.41 to $2.63 a share on sales of as much as $2.16 million. Analysts expected profit of $2.65.

EBAY

Competition lures users away

EBay Inc. forecast second-quarter profit that missed estimates after customers switched to competitors.

Profit will be 37 cents to 39 cents a share, excluding some items, the San Jose-based company said. Analysts in a Bloomberg survey had estimated 40 cents on average.

CEO John Donahoe is entering the third year of a turnaround effort to revive growth in the company’s main e-commerce site. He has expanded inventory, beefed up fraud protection for buyers, and steered the company away from auction sales. Those changes haven’t stemmed consumer defections to Amazon.com Inc., according to Citigroup Inc.

Revenue in the second quarter will be $2.15 billion to $2.2 billion, EBay said. Analysts had anticipated $2.21 billion.

First-quarter net income rose to $397.7 million, or 30 cents a share, from $357.1 million, or 28 cents, a year earlier. Excluding some costs, profit was 42 cents a share. Analysts had projected 41 cents on average.

Sales climbed to $2.2 billion, compared with an estimate of $2.19 billion.

STARBUCKS

Strong sales push profit up eightfold

Starbucks Corp. says its second-quarter profit ballooned more than eightfold as its revenue climbed 9%.

The coffee company says its better-than-expected results were boosted by stronger U.S. sales and robust international business.

For the three months that ended in late March, Starbucks earned $217.3 million, or 28 cents a share. Its revenue was $2.53 billion.

During the same period last year, the Seattle company earned $25 million, or 3 cents a share. Those results were weighed down by charges.

This was the fourth quarter in a row that Starbucks’ profit rose, after faltering for more than a year.


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