Earnings: Intel | Apple | EBay | Coke | JPMorgan Chase | Honeywell | Pfizer

Intel Reports Lower Profit, But Beats Estimates

SAN FRANCISCO (Reuters) - Intel Corp. (INTC) Wednesday reported lower quarterly profit on slowing demand for personal computers, but results beat analysts' estimates.

First-quarter net income was $1.35 billion, or 23 cents per share, compared with $2.18 billion, or 35 cents per share, a year earlier, the company said.

Analysts on average were expecting earnings of 22 cents per share, according to Reuters Estimates.

The stock rose 1 percent in after-hours trade on Inet following the profit report, which beat analysts' earnings per share estimates by a penny.

"The key positive for the quarter is we made the midpoint of the revised revenue guidance" given by Intel in March, Chief Financial Officer Andy Bryant told Reuters. "We held market share in units in the quarter."

First-quarter revenue fell to $8.94 billion from $9.43 billion. Analysts on average had forecast first-quarter revenue of $8.87 billion.

The company revised its full-year business forecast, saying revenue would fall 3 percent. In January, Intel had forecast 6 percent to 9 percent revenue growth in 2006.

Intel forecast second-quarter revenue between $8 billion and $8.6 billion, a decline from year-earlier revenue of $9.23 billion. Analysts expected $8.79 billion.

Intel in March lowered its first-quarter revenue forecast to between $8.7 billion and $9.1 billion from a previous range of $9.1 billion to $9.7 billion because of weaker-than-expected demand and a market share decline.

Santa Clara, California-based Intel, whose processors are found in about 90 percent of the world's personal computers, has been lowering prices to counter a growing challenge from smaller rival Advanced Micro Devices Inc. (AMD). Sunnyvale, California-based AMD has taken market share from Intel thanks to power usage and performance advantages.

Intel shares have slumped 24 percent in the past 12 months while AMD stock has surged 80 percent. Intel trades at 19.6 times estimated 2006 earnings per share compared with a multiple of 20.2 for AMD.

The company has steadily lost market share to AMD over the past several quarters and has aggressively cut prices on its processors to stop the slide.

Intel is also getting ready to a launch a raft of more powerful and efficient chips in hopes of closing the performance gap with AMD.

Apple Posts Higher Profits For Quarter

SAN FRANCISCO (Reuters) - Apple Computer Inc. (APPL) Wednesday posted a higher quarterly profit, helped by sales of its market-leading iPod digital music players that topped 8.5 million units.

Apple, also the maker of Macintosh computers, said net income for its second fiscal quarter ended April 1 rose to $410 million, or 47 cents per share, from $290 million, or 34 cents per share, in the year ago period. Revenue rose 34 percent to $4.36 billion from $3.24 billion.

Analysts had expected a profit of 43 cents per share before items, on average, within a wide range of 38 cents to 49 cents, on revenue ranging between $4.27 billion and $4.88 billion, with an average of $4.50 billion, according to Reuters Estimates.

The iPod player, which Apple introduced in October 2001, has rejuvenated the Mac maker and it now has more than 60 percent of the market for digital music players. Apple is also in the midst of moving its entire computer product line to using Intel Corp. (INTC) chips from those made by IBM.

So far this year, the company's shares have declined by nearly 10 percent, based on Tuesday's close. But in 2005, the stock more than doubled, and it tripled in 2004, far outperforming the stocks of rival computer makers.

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EBay Net Profit Dips on Options

SAN FRANCISCO (Reuters) - Web auctioneer EBay Inc. (EBAY) Wednesday posted a 3 percent drop in quarterly net profit after accounting for stock compensation costs and stuck to a 2006 revenue forecast at the low end of Wall Street's targets.

Net income for the first quarter dipped to $248.3 million, or 17 cents per diluted share, compared with $256.3 million, or 19 cents per share, a year earlier. Excluding one-time items, the latest quarter profit was 24 cents a share — matching Wall Street's consensus expectation.

Net revenue rose 35 percent to $1.39 billion, matching Wall Street's consensus forecast, but marking a deceleration in year-over-year revenue growth compared to previous quarters.

"We feel good and on track to deliver the full-year revenue we guided to earlier in the year," Bob Swan, eBay's recently hired chief financial officer, said in a phone interview ahead of the report.
Excluding the impact of stock compensation costs, eBay said its profit rose 20 percent to $306 million, or 21 cents a share.

Shares of eBay have lost ground so far this year on concerns that growth in its core online auction business is maturing. The stock is off 6 percent this year.

EBay's stock was valued at 38 times 2006 earnings estimates. That compared with Internet peers Google Inc. (GOOG), trading at 46 times times 2006 forecasts, and Yahoo Inc. (YHOO), trading at 37 times 2006 forecasts, according to a valuation analysis by broker Piper Jaffray.

Coke Quarterly Profit Rises, Shares Climb

NEW YORK (Reuters) - Coca-Cola Co. (KO), the world's biggest soft-drink maker, on Wednesday posted a 10 percent rise in quarterly profit boosted by its PowerAde sports drink and Dasani bottled water brands and strong growth in China, Russia and Turkey.

Still, sales were flat due to a change in the way Coke records revenue from its Spanish business.

The Atlanta-based company, which rolled out a flurry of new products in the past year, reported first-quarter earnings of $1.1 billion, or 47 cents a share, from $1 billion, or 42 cents a share, a year earlier.

Excluding charges to write down the value of its Asian bottling operations, quarterly earnings were 49 cents a share, a penny above analysts' average estimates according to Reuters Estimates.

Revenue for the first quarter was little changed at $5.2 billion, slightly below Wall Street expectation of $5.3 billion. Sales were flat due to a change in Spain where Coke now accounts for only concentrate sales to bottlers and not sales of the finished product.

Although this change reduced revenue, profitability was not hurt, analysts said.

"The company is beating expectations despite weakness in some key markets, and if those markets stabilize, there could be more significant upside," wrote J.P. Morgan analyst John Faucher in a research note.

The company posted a 5 percent rise in unit case volume, a key sales measure in the beverage industry, led by continued strong growth in key emerging markets, including China, Russia, Brazil and Turkey. India, Philippines, Japan and Germany continued to be sore spots with volume declines.

Coke shares are up 3 percent so far this year and trade at nearly 18.2 times expected 2006 earnings, while rival PepsiCo Inc. (PEP) is down 1.2 percent with a price-to-earnings ratio of 19.8.

JPMorgan Chase 1Q Profit Surges

NEW YORK (Reuters) - JPMorgan Chase & Co. (JPM) on Wednesday said first-quarter profit surged 36 percent, beating expectations, on growth in investment and consumer banking as well as lower credit card losses.

Net income for the third-largest U.S. bank rose to $3.08 billion, or 86 cents a share, including a $341 million benefit related to lower credit card bankruptcies. That was offset by costs related to a new stock-compensation accounting rules, losses related to treasury portfolio changes and merger costs.

The New York bank's profit rose from $2.26 billion, or 63 cents, in the year-earlier period, when the company recorded a $558 million litigation charge.

Analysts, on average, expected JPMorgan to earn 83 cents a share in the quarter, excluding items, on revenue of $15.2 billion, according to Reuters Estimates.

The most recent results "reflected positive momentum across the firm," JPMorgan President and Chief Executive James Dimon said in a statement.

Total net revenue rose 12 percent to $15.9 billion, led by record investment banking income and increases in commercial banking, asset management and securities servicing revenue. The bank's retail financial services and credit card divisions, though, posted slightly lower revenue.

JPMorgan, the world's largest bank lender and No. 3 arranger of mergers so far this year, said its investment banking division generated the most M&A advisory fees since 2000. The bank also reported higher debt underwriting fees and record loan syndication fees, offset by lower bond and stock issuance.

Dimon also credited "improved" trading results, although fixed-income trading revenue fell 13 percent amid weaker performance in commodities and interstate markets, offset in part by record equities trading.

Under Dimon, who joined JPMorgan with the 2004 acquisition of his Bank One and was named chief executive on December 31, the bank has pumped up its trading and investment banking. JPMorgan is also bulking up its retail banking arm, as seen in the recent agreement to buy 328 bank branches from Bank of New York Co.

JPMorgan shares, which closed Tuesday trade at $42.60, have risen 24 percent in the past 12 months and 7.3 percent this year, outperforming its peers as investors bet the big bank is finally turning the corner after years of laggard performance.

Honeywell 1Q Earnings Jump

MORRIS TOWNSHIP, N.J. - Honeywell International Inc. (HON) said Wednesday its first-quarter earnings jumped 22 percent, boosted by a stronger performance in its aerospace and automation and control businesses.

The diversified manufacturer said net income increased to $436 million, or 52 cents per share, from $358 million, or 42 cents per share, a year ago.

The results exceeded Wall Street expectations. Sixteen analysts surveyed by Thomson Financial had predicted net income of 49 cents per share, and sales of $7.18 billion.

Sales grew 12 percent to $7.24 billion from $6.45 billion in the year-earlier period due to growth across most segments, including a 5 percent gain in aerospace and a 19 percent rise in automation and control solutions, which include building security devices and thermostats.

Sales in Honeywell's smaller, specialty materials division, which includes refrigerants and electronic materials, increased 44 percent over the prior year due to acquisitions.

"Honeywell is off to a terrific start," said Chairman and CEO Dave Cote in a conference call with analysts Wednesday morning. "We said we wanted to have great positions in good industries. You're really starting to see the benefits in both that positioning and the growth and productivity plans we put in place."

Cote reiterated his outlook of 25 percent to 30 percent earnings growth in 2006.

Shares of Honeywell fell 25 cents to $43.91 in early trading on the New York Stock Exchange.

Pfizer Beats Expectations

NEW YORK (Reuters) - Pfizer Inc., (PFE) the world's largest drug maker, Wednesday reported higher-than-expected quarterly profit as lower costs and a favorable tax rate helped offset lower revenue.

The company also repeated its forecast of slightly lower earnings in 2006 as it faces higher marketing costs later in the year to launch new products.

The revenue decline, Pfizer's third in as many quarters, stemmed from generic competition, negative foreign exchange trends and last year's withdrawal of the company's Bextra painkiller.

"Pfizer beat expectations by managing their expenses and getting a favorable tax rate, so results were not as good as they looked," said Oppenheimer & Co. analyst Scott Henry.

First-quarter net income rose to $4.11 billion, or 56 cents per share, from $301 million, or 4 cents per share, a year earlier, when Pfizer took big charges for repatriating overseas profits.

Excluding special items, earnings rose to 61 cents per share from 54 cents, exceeding the average forecast of 53 cents from analysts polled by Reuters Estimates.

The news had little effect on the stock price, however. Pfizer shares were up 5 cents at $24.98 in midday New York Stock Exchange trade.

Natexis Bleichroeder analyst Jon LeCroy said he was not that excited about the better-than-expected first-quarter results because Pfizer did not boost its full-year 2006 forecast.

"I would expect costs to rise as the year goes on," LeCroy said. "They shifted some savings into this quarter."

Quarterly revenue fell 3 percent to $12.66 billion, hurt by competition from generics, including cheaper forms of the company's Zithromax antibiotic and treatments for epilepsy and high blood pressure.

The quarter also included no sales from Bextra, which Pfizer withdrew last year after regulators said the drug's risks outweighed its benefits.

Sales of cholesterol fighter Lipitor rose only 1 percent, to $3.11 billion, but Pfizer stuck to its forecast that the world's top-selling medicine would post sales of more than $13 billion for the full year.

Lipitor sales suffered from unfavorable foreign exchange rates and competition from other potent drugs, including Vytorin from Schering-Plough Corp. and Merck & Co. (MRK).

Moreover, U.S. health insurers are steering patients away from Lipitor to Merck's older cholesterol drug, Zocor, which will face competition from generics this summer.

But sales of Pfizer's Celebrex painkiller jumped 19 percent to $491 million. The company said it still was targeting more than $2 billion in Celebrex sales for the year.

Pfizer's newer medicines for schizophrenia and epilepsy also showed strong quarterly growth.

And the New York-based company benefited from a 7 percent decline in sales and marketing costs, as it continues a global effort to pare expenses. Costs are expected to rise later this year, however, as it launches a number of new drugs.

Pfizer said its effective tax rate of 19.7 percent in the first quarter resulted from a favorable change in the way the law regards certain restructuring activity. The company still expects an effective tax rate of about 22.5 percent on adjusted income for the full year.

Pfizer also affirmed its financial targets for 2007 and 2008.

Oppenheimer's Henry said Pfizer stock was trading at only about 12 to 13 times the company's expected 2006 diluted earnings per share, a big discount to the average price-to-earnings ratio of 16 for other large drug makers.

He said the share price reflected "very low" expectations of Pfizer's earnings prospects, even as the company plans this year to launch five more drugs.

Pfizer said it was still weighing options for its consumer health care business, including a sale or spinoff, and saw a decision on the unit in the third quarter.

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