NEW YORK – Playboy Profit Drops 68 Percent; Marsh & McLennan Profit Rises Against Year-Earlier Loss; Qwest Reports Better-Than-Expected Quarterly Results; Levi Strauss Posts Q4 Profit; Deere First-Quarter Profit Increases
Record company Warner Music Group Corp. (WMG) on Tuesday said quarterly profit rose 91 percent, driven by stronger sales of higher-margin digital songs during the holiday season.
Warner, home to artists including Madonna, Green Day and James Blunt, said net income rose to $69 million, or 46 cents per share, for the first quarter ended Dec. 31, from $36 million, or 31 cents per share, a year earlier.
Revenue dropped to $1.04 billion from $1.09 billion, falling short of analysts' estimates of $1.09 billion, according to Reuters Estimates.
Revenue from its recorded music business decreased 2 percent to $920 million. However, digital revenue was $69 million, up 30 percent from the fourth quarter, and nearly triple levels of a year earlier.
Led by sales of music from artists including Madonna, Enya, and Notorious B.I.G., total recorded music operating income rose 9 percent to $166 million.
Playboy Profit Drops 68 Percent
Adult entertainment media company Playboy Enterprises Inc. (PLA) on Tuesday posted a 68 percent decline in fourth-quarter profit, hurt by sluggish advertising sales at its namesake magazine.
The company, which also owns adult TV channel Spice and a licensing business that markets merchandise bearing the Playboy bunny logo on clothing and other products, posted a profit of $4.6 million, or 14 cents per share, down from $14.5 million, or 43 cents a share, a year earlier.
Revenue rose 2 percent to $91 million.
Profit missed Wall Street expectations of 16 cents per share as compiled by Reuters Estimates. Revenue narrowly topped analysts' average estimate of $90.3 million.
Eyeing growth in global markets, Playboy has said it is in talks to launch a men's magazine not bearing the Playboy name in India and is seeking to return to Italy and Australia.
Playboy's publishing division was hurt by lower advertising and newsstand sales and reported a loss of $3.1 million, compared with a year-earlier profit of $1 million. Sales declined 15 percent.
Licensing earnings rose 89 percent to $5.5 million. Revenue rose 63 percent to $8 million.
Profit from TV and the Internet fell 19 percent to $11.9 million as U.S. TV revenue fell. Revenue, buoyed by international TV and online subscriptions, rose 6 percent to $56.3 million.
In December, the company said it expected 2006 earnings per share to rise by 20 percent to 25 percent, boosted by its entertainment and licensing group.
On Tuesday it forecast 2006 earnings per share of 67 cents to 70 cents.
Marsh & McLennan Profit Rises Against Year-Earlier Loss
Marsh & McLennan Cos. (MMC), on Tuesday posted a fourth-quarter profit compared with a year-earlier loss, but results for the world's largest insurance broker fell below Wall Street estimates as brokerage revenue declined.
Net income totaled $35 million, or 6 cents per share, compared with a year-earlier loss of $680 million, or $1.29. Year-earlier results reflected the settlement of a lawsuit by New York Attorney General Eliot Spitzer, accusing the company of rigging bids and steering business to insurers that paid hidden fees.
Excluding restructuring charges, stock options expensing and other items, fourth-quarter income rose to $154 million, or 28 cents per share, from $139 million, or 26 cents. Revenue fell 2 percent to $2.83 billion.
Analysts polled by Reuters Estimates, on average, expected profit of 31 cents per share on revenue of $2.98 billion.
Chief Executive Michael Cherkasky said in a statement, "Marsh had better client and staff retention and better profitability" in the quarter than earlier in the year. "We expect those trends to continue."
Marsh agreed to pay $850 million in its January 2005 settlement, and scrap the controversial fees known as "contingent commissions." Eight former Marsh executives were indicted in September as part of Spitzer's industrywide insurance probe.
Profit from continuing operations totaled $17 million, or 3 cents per share, excluding results from Marsh's U.S. wholesale broking operations, which are being sold or have been sold.
Marsh shares closed Monday at $31.22 on the New York Stock Exchange. The shares have fallen 3 percent in the last year, compared with a 6 percent rise in the Standard & Poor's Insurance Index. They have fallen 32 percent since Spitzer sued the company on Oct. 14, 2004.
Repairing Damage
Cherkasky is trying to repair the damage to Marsh's reputation, particularly in U.S. risk and insurance services.
Revenue fell 7 percent in overall risk and insurance services to $1.31 billion. Lower commercial insurance premium rates, especially in Europe, as well as currency changes and lower sales of equity investments hurt results, Marsh said.
Revenue at the company's Putnam Investments funds unit was off 12 percent to $360 million as average assets under management dropped 11 percent to $188 billion. Putnam was involved in a mutual fund trading scandal two years ago.
Consulting revenue, including Mercer Human Resource Consulting, rose 6 percent to $966 million, and risk consulting and technology revenue advanced 14 percent to $230 million.
Marsh has cut about 5,000 jobs in a restructuring program. It said it saved $160 million last year, and plans to save an additional $215 million in 2006, all in risk and insurance services. Restructuring costs totaled $320 million in 2005, and should total $50 million in the first half of 2006, it said.
Qwest Reports Better-Than-Expected Quarterly Results
Qwest Communications International Inc. (Q), the fourth largest U.S. local telephone company, on Tuesday reported better-than-expected quarterly results, fueled by demand for its long-distance and high-speed Internet services.
Qwest, which in recent years has struggled to manage its huge debt and money-losing long-haul voice and data business, said it believes it can turn a profit in 2006 through cost reduction and increased sales of telecommunications products.
In the fourth-quarter, Qwest had a net loss of $528 million, or 28 cents a share, compared with a loss of $139 million, or 8 cents a share, a year earlier.
The latest quarter included a loss of $430 million related to the early retirement of debt.
Excluding the debt costs and other special items, Qwest posted break-even per share results, beating analysts' expectation of a loss of 5 cents a share, according to Reuters Estimates.
Revenue rose 1.3 percent to $3.48 billion, matching analysts' forecast.
Qwest said it ended the quarter with 4.8 million long-distance lines, up 6 percent over a year ago, and added 140,000 high-speed Internet lines, up 10 percent from the third quarter, and 43 percent over one year ago.
In a statement, Qwest Chief Financial Officer Oren Shaffer said the company is on a "path to profitability," fueled by solid gains in growth areas, including a 43 percent rise in 2005 in high-speed Internet customers.
Shares of Qwest rose 2.2 to $6.03 in early trade on the New York Stock Exchange on Monday.
Unlike the other three Baby Bells, Qwest does not own a wireless unit or a cash-generating directory business, and does not pay its shareholders a dividend.
Shares of Qwest have risen 48 percent since it lost out to Verizon Communications Inc. a year ago in a bid to acquire MCI Inc., as Qwest investors bet on cost-cuts to improve profitability.
Jeans maker Levi Strauss & Co. Tuesday reported a fourth-quarter profit, helped by lower taxes and fewer losses on currency hedging contracts.
"We substantially improved the company's profitability and ended an eight-year sales decline," Chief Executive Phil Marineau said in a statement.
The company, which is privately held but reports earnings because of its debt, posted net profit of $44 million, compared with a year-earlier loss of $19 million.
Operating profit rose to $121 million, or 11 percent of net sales, from $94 million, or 8 percent. Levi Strauss said it benefited from a drop in restructuring charges, lower administrative expenses and higher gross profit.
Net sales were flat from a year earlier at $1.16 billion, but on a constant-currency basis they rose 0.4 percent. European sales were down 17 percent but rose 7 percent in the Asia Pacific region and 5 percent in North America.
The San Francisco company reported higher sales of its successful lower-cost Signature line, sold in such stores as Wal-Mart Stores Inc. and Target Corp., as well as its Dockers and Levi's brands.
Looking ahead, "2006 will be challenging given the ongoing uncertainty of the retail marketplace in the United States and Europe, but I'm encouraged by our prospects given the innovative and highly competitive products that we have in the pipeline," Marineau said.
In recent years, Levi Strauss has undergone a global restructuring, closing factories, laying off workers and revamping its product line to regain market share from rivals that range from Wrangler to premium jeans lines like Antik Denim and 7 For All Mankind.
Deere First-Quarter Profit Increases
CHICAGO - Deere & Co. (DE), the world's largest maker of farm equipment, said on Tuesday that its quarterly earnings rose nearly 6 percent as a surge in orders from landscapers and builders helped offset a sharp drop in sales to the agricultural sector.
The company said its fiscal first-quarter profit rose 5.9 percent to $235.9 million, or 99 cents a share, from $222.8 million, or 89 cents a share, a year earlier.
Deere, which also makes construction equipment and lawn and garden products, said sales in the quarter rose 7 percent to $4.20 billion.
Analysts, on average, expected Moline, Ill.,-based Deere to report a profit of 83 cents a share on sales of $3.91 billion, according to Reuters Estimates.
Rising interest rates, high fuel prices, and a depressed market for farm commodities have been cutting into demand for farm equipment, while high raw materials prices have pressured profit margins.
During the quarter, Deere said its sales in the agricultural division dropped 6 percent to $1.89 billion.
But that drop was more than offset by an increase in sales to consumers and commercial landscapers, as well as he construction and forestry businesses, Deere said.
"The farm business is soft, and the construction and lawn and garden are carrying the company right now," said Longbow Research analyst Eli Lustgarten.
Deere shares have risen about 8 percent over the past 52 weeks, outperforming the Standard & Poor's 500 index, which has risen about 6.6 percent during the same period.
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