Altria Group Inc. (MO) Wednesday said quarterly profit fell 6.9 percent, as one-time charges at its Kraft Foods business and a loss in its financial services unit offset higher tobacco profit.

Altria stock fell 1 percent as the company forecast 2005 profit that could be below analysts' estimates, despite essentially taking the first price increase on its major U.S. cigarette brands in 2-1/2 years last month.

"With the tobacco price increase that they took in December on their major brands, there was a good chance that they could raise '05, not slightly lower it," said Tim Ghriskey, chief investment officer at Solaris Asset Management, which counts Altria stock as a core holding.

Other analysts said the forecast was in line with estimates.

Profit for Altria — the maker of Marlboro cigarettes (search) and majority owner of Kraft Foods Inc. (KFT) — was $1.95 billion, or 94 cents a share, compared with $2.09 billion, or $1.02 cents as share, a year earlier.

Excluding one-time items, earnings from continuing operations were $1.08. Analysts on average forecast $1.06 a share, according to Reuters Estimates.

While shares traded lower on the earnings report, investors are focused more on key legal rulings that are expected soon.

These include a ruling from a U.S. appeals court on whether the government can use racketeering laws to force the tobacco industry to pay $280 million in damages and the appeal of a $10.1 billion jury verdict in Illinois, where the company was found to have deceived smokers into thinking "light" cigarettes were safer than regular cigarettes.

Revenue rose 8.8 percent to $22.38 billion. Philip Morris USA (search) shipped 47.1 billion cigarettes in the quarter, up 1.5 percent.

Operating profit rose 9 percent at Philip Morris USA and 11.7 percent at Philip Morris International. That unit saw cigarette shipments increase 2.6 percent to 172.7 million in the quarter.

The financial services unit had a $106 million loss, due to an increase in its reserve for credit exposure related to the airline industry.

Altria also forecast 2005 earnings of $4.95 to $5.05 from continuing operations.

Excluding expected charges at Kraft, the forecast is $5.07 to $5.17. Analysts on average forecast $5.14 a share, according to Reuters Estimates.

Philip Morris USA effectively raised the price of Marlboro and three other brands by 10 cents a pack in December, the first increase in 2-1/2 years, which analysts said should help 2005 profit.

Philip Morris shares fell 59 cents to $61.70 on Wednesday on the New York Stock Exchange (search).