Earnings season continued to be a rough ride for Wall Street, with a handful of big-name companies either issuing gloomy outlooks or missing projections altogether.
Though there has been some dispute about whether third-quarter earnings would be a significant market mover, stock futures faced intense pressure from the reports that came out before the bell Wednesday.
Boeing (NYSE: BA) led the disappointment with a sharply lower third-quarter profit. A strike by its plane assembly workers wiped out almost a month of production at its Seattle-area plants.
The plane maker and defense contractor said it would not update its financial outlook until after the end of the strike by its largest union, now in its seventh week. The two sides are set to resume talks on Thursday.
Boeing, which outsold EADS unit Airbus last year, said quarterly net profit fell to $695 million, or 96 cents per share, from $1.1 billion, or $1.44 per share, a year earlier.
Excluding certain one-time items, the company reported profit of $1.02 per share. That beat Wall Street's lowered average forecast of $1 per share, according to Reuters Estimates, but there continued to be concerns about the company going forward and shares fell nearly 5 percent in premarket trading. (Read earnings report here)
AT&T Misses Expectations
AT&T (NYSE: t) missed third-quarter earnings expectations Wednesday despite gaining wireless subscribers.
Third-quarter adjusted earnings per share came in at 67 cents a share, below the consensus of 71 cents a share.
AT&T's third-quarter net profit rose to $3.23 billion, or 55 cents a share, from $3.06 billion, or 50 cents a share, a year earlier.
The telecom giant said it made a net gain of 2 million in total wireless subscribers in the quarter and 2.4 million iPhone 3G devices were activated.
Third-quarter revenue rose 4 percent from the year-ago period to $31,300 million, matching estimates.
McDonald's Beats as Diners Cut Costs
reported better-than-expected profit, fueled by strong sales in the United States and abroad as consumers sought lower prices when they dine out.
McDonald's third-quarter net income jumped 11 percent. The company said it was seeing continued strength in the current quarter, in the midst of a financial crisis that has raised fears of a global recession.
McDonald's profit rose to $1.19 billion, or $1.05 per share, from $1.07 billion, or 89 cents per share, a year earlier. Analysts on average were expecting 98 cents per share, according to Reuters Estimates.
Total revenue rose 6 percent to $6.27 billion, helped by a 7.1 percent increase in global same-store sales.
Domestic same-store sales, or sales at restaurants open at least 13 months, rose 4.7 percent, their highest increase this year. McDonald's said the growth was helped by well-known menu items including the Big Mac as well as Southern-style chicken and lower-priced drinks.
Wyeth Reports Flat Earnings
Drugmaker Wyeth (NYSE: wye) reported flat earnings for the third quarter, amid cost-cutting efforts that included layoffs.
The company said net income, excluding charges and items, was $1.22 billion, or 90 cents a share, vs. $1.23 billion, or 90 cents a share, in the year-ago period.
Revenue rose 5 percent to $4.89 billion, thanks partly to the weak dollar.
Analysts were expecting 90 cents a share, according to Thomson Reuters.
Merck Earnings Hit by Restructuring Costs
Merck (NYSE: mrk) reported earnings that were weighed down by big restructuring costs, including layoffs.
The company earned 80 cents a share vs. 51 cents a share in the year-ago period. That does not include restructuring charges of 29 cents a share. On average, analysts predicted a profit of 79 cents a share.
Net income was $1.09 compared with $1.52 billion a year ago, including charges and items worth about $729 million.
Revenue was $5.94 billion vs. analysts’ $5.98 billion forecast.
Merck forecast full-year earnings of $3.28-$3.32 a year, vs. the consensus forecast of $3.28.
The company expects to reduce its workforce by 12 percent this year.
Glaxo Beats Earnings Expectations
Glaxosmithkline posted third-quarter earnings ahead of expectations Wednesday as Japanese demand for leading drug Advair helped boost sales.
Third-quarter earnings per share were 25.2 pence, above consensus of 24.3 pence.
Sales for the quarter came in at 5,882 million pounds ($9587 million), ahead of the expected 5,695 million pounds.
Despite the improved sales in emerging markets, sales of mature pharmaceutical brands in the US are seeing pressure from generic competition, CEO Andrew Witty said in the earnings statement.
"In the short term, this is having a significant impact on pharmaceutical sales," Witty said.
GSK also raised its third-quarter dividend by 8 percent to 14 pence a share.
Wachovia Posts $4.8 Billion Loss
Troubled bank Wachovia (NYSE: wb) swung to a third-quarter loss of $4.8 billion, excluding impairment and expenses, as it continued to languish under the pressure of the credit collapse.
The bank's loss amounted to $2.23 a share, compared with analyst predictions of a profit of 2 cents a share.
A year ago the company reported a profit of 90 cents a share.
The total loss came to $23.9 billion, or $11.18 a share, as the bank pushes forward on its acquisition by Wells Fargo.
The company said the losses were in line with its own expectations.
“We believe that it was prudent for Wachovia to put these losses behind them,” Wells Fargo’s Chief Financial Officer Howard Atkins said in a statement.
“The asset writedowns, reserve build, and other items are consistent with our acquisition assumptions."
Kimberly-Clark Profit Falls
Kimberly-Clark (NYSE: kmb) posted a lower quarterly profit Wednesday as it tried to offset higher raw material costs by increasing its prices and marketing spending.
The maker of Huggies diapers and Kleenex tissues also cut its full-year profit forecast, partly because it expects pressure in the current quarter from recent changes in currency exchange rates.
Kimberly-Clark earned $413.1 million, or 99 cents per share, in the third quarter, compared with $453.1 million, or $1.04 a share, a year earlier.
Excluding charges for cost-cutting measures, earnings were $1.02 a share, while analysts expected $1.01, according to Reuters Estimates.
Sales rose 8.2 percent to $5 billion.
In July, the company initiated its second set of price increases this year across most of its consumer brands to offset higher costs for oil and other raw materials.
Kimberly-Clark has also been shutting facilities and cutting staff to save money.
The company said it now expects to earn $4.15 to $4.20 per share this year, excluding certain items, versus a previous forecast of $4.20 to $4.30.
Analysts, on average, had expected $4.23.
Philip Morris Profit Beats Estimates
Marlboro cigarette maker Philip Morris International (NYSE: pm) posted higher-than-expected quarterly profit Wednesday, helped by price increases and a weak U.S. dollar.
The company, which was spun off from Altria Group (NYSE: mo) earlier this year, also maintained its full-year earnings forecast.
Third-quarter profit rose to $2.08 billion, or $1.01 a share, from $1.73 billion, or 82 cents a share, a year earlier.
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The 2007 figures are pro forma, as the company was still part of Altria at that time.
Excluding one-time items, earnings were 93 cents a share, the company said.
On that basis, analysts on average had forecast 89 cents, according to Reuters Estimates.
Sales, excluding excise taxes, rose 17.5 percent to $7 billion, helped by price increases and the weaker dollar.
Analysts were expecting $6.6 billion.
The number of cigarettes the company shipped rose 4 percent to 225.9 billion.
Philip Morris International stood by its 2008 earnings estimate of $3.32 to $3.38 a share.
Analysts on average forecast $3.34.
ConocoPhillips' Quarterly Profit Up 41%
ConocoPhillips (NYSE: cop) , the third-largest U.S. oil company, said Wednesday its quarterly earnings rose 41 percent on higher oil prices and topped Wall Street estimates even as storms in the Gulf of Mexico dented results in its refinery business.
Net income in the quarter increased to $5.2 billion or $3.39 per share, from $3.7 billion, or $2.23 per share, a year earlier.
Revenue climbed to $70 billion.
Analysts on average had expected the Houston company to report a profit of $3.08 per share and revenue of $73 billion, according to Reuters Estimates.
Production in the third quarter was 2.2 million barrels of oil equivalent per day and Conoco said it expects output in the fourth quarter will be higher.
Hurricanes Gustav and Ike, which swept through the Gulf of Mexico and battered the coast in September, reduced Conoco's output and cost its refining and marketing arm in the third quarter.
Northrop Grumman Profit Up
Northrop Grumman (NYSE: noc) reported a better-than-expected 5 percent increase in third-quarter profit, helped by higher sales of its military equipment.
The U.S. No. 3 defense contractor behind Lockheed Martin (NYSE: lmt) and Boeing beat analysts' average earnings estimate, and raised its forecast for the full year, as U.S. defense spending shows no immediate signs of slowing.
The company, which makes bombers, warships and a range of military electronics, reported quarterly net profit of $512 million, or $1.51 per share, compared with $489 million, or $1.41 per share, a year earlier.
Excluding one-time items, Northrop's earnings were $1.50 per share, while Wall Street was expecting $1.41, according to Reuters Estimates.
Sales rose 6 percent to $8.4 billion, above analysts' average forecast of $8.17 billion.
Northrop's information, aerospace and electronics units posted higher sales, but shipbuilding revenue fell slightly.
Northrop raised its full-year earnings per share forecast to $5.10 to $5.20, up from its previous forecast of $4.90 to $5.15.
Wall Street is expecting $5.12, on average.
- Reuters contributed to this story
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