Earnings: Xerox | Caterpillar | Kimberly-Clark | Hasbro | American Express

| Sun Microsystems

Xerox Sees Profit Fall On Costs, Sales

NEW YORK (Reuters) - Xerox Corp. (XRX), whose printers and services help companies manage office documents, on Monday said its quarterly profit fell, hurt by increased costs and a decline in equipment sales.

For the first quarter, net income before payment of preferred dividends was $200 million. After those payments, Xerox's profit was $186 million, or 20 cents a share, versus $196 million, or 20 cents a share.

Total revenue fell 2 percent to $3.70 billion, down from $3.78 billion.

Analysts on average were expecting a profit of 21 cents a share, according to Reuters Estimates, on revenue of $3.8 billion.

Equipment sale revenue declined 4 percent.

While the Stamford, Connecticut, company has rebounded from a perception that it was struggling to overcome sustained losses and an accounting scandal, analysts have voiced concern that it is taking too long to turn new products and services into revenue growth. Xerox has said that over time, it expects digital and color copier sales to yield higher profit margins.

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Caterpillar Beats Expectations

CHICAGO (Reuters) - Heavy equipment maker Caterpillar Inc. (CAT) reported on Monday that earnings rose a better-than-expected 48 percent in the first quarter, thanks in part to strong sales to mining and energy companies.

The company also raised its guidance for full-year earnings.

Caterpillar reported a first-quarter profit of $840 million, or $1.20 a share, compared with $581 million, or 81 cents a share, a year earlier.

Sales rose 13 percent to $9.39 billion, the company said.

The results were better than expected. Analysts, on average, expected Caterpillar to report earnings of $1.06 per share, according to Reuters Estimates.

Caterpillar raised its guidance for full-year earnings to between $4.85 and $5.20 a share, up from a previous range of $4.65 to $5.00.

It reiterated its expectation that it will generate $40 billion in sales during the year.

Caterpillar, which makes earth-moving equipment, diesel engines and gas turbines, has enjoyed a series of strong quarters thanks to a recovery in its industrial markets, a robust global construction market, and high commodity prices, which have prompted mining companies worldwide to step up production.

Over the past year, shares of Caterpillar, which is part of the Dow Jones industrial average, have outperformed their blue chip peers.

The company trades at about 15.9 times expected 2006 earnings, a slight premium to its peers, which trade at an average of 15.2 times expected earnings.

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Kimberly-Clark Earnings Fall On Charges

CHICAGO (Reuters) - Kimberly-Clark Corp. (KMB), which makes Kleenex tissues and Huggies diapers, on Monday said first-quarter profit fell nearly 39 percent due to restructuring charges, but price increases on some paper products helped it offset higher costs for raw materials.

The Dallas-based company also stood by its previous forecast for full-year earnings.

Net profit was $275.1 million, or 60 cents per share, down from $450.1 million, or 93 cents per share, a year earlier.

Excluding charges from its ongoing restructuring, Kimberly-Clark earned 93 cents per share, meeting the high end of its forecast of 90 cents to 93 cents per share.

Analysts on average expected a profit of 92 cents per share, according to Reuters Estimates.

Sales rose 4.2 percent to nearly $4.07 billion, topping the analysts' average forecast of just below $4.04 billion.

Kimberly-Clark said it still expected to earn $3.85 to $3.95 per share this year, before items. For the second quarter, it said earnings before items should be similar to or slightly better than the first quarter, in a range of 93 cents to 95 cents per share.

Analysts on average expect earnings of 94 cents a share for the current second quarter and $3.89 for the year.

Kimberly-Clark is in the midst of cutting about 10 percent of its work force and closing or selling about 20 plants as it works to improve its diaper and health care businesses and expand in emerging markets. The company unveiled the restructuring plan in July, just months before Procter & Gamble Co. (PG) bought Gillette Co., giving it better leverage in developing regions.

Shares of Dallas-based Kimberly-Clark fell nearly 3.2 percent during the quarter, while P&G shares dipped less than 1.2 percent in that time.

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Hasbro Loss Narrows

NEW YORK (Reuters) - Hasbro Inc. (HAS), the No. 2 U.S. toy company, on Monday said its quarterly loss narrowed as strong sales of its board games and products like Playskool, Littlest Pet Shop, Nerf and Transformers offset falling "Star Wars" toy sales.

Star Wars products, which include lightsabers and action figures, accounted for 16 percent of Hasbro's revenue in 2005. But the toy company has said it expects sales of the category to fall as the latest "Star Wars" movie was released last year.

Hasbro posted a first-quarter loss of $4.9 million, or 3 cents per share, including a stock-based compensation expense of 2 cents per share. On the same basis, the year-ago net loss was $7.2 million, or 4 cents per share.

The company was not required to report its earnings including stock compensation a year earlier. Therefore, its year earlier net loss was $3.7 million, or 2 cents per share.

Analysts, on average, expected a loss of 2 cents per share, including stock-based compensation, according to Reuters Estimates.

It is not uncommon for toymakers, who ring up the bulk of their profits during the fourth-quarter holiday shopping season, to post losses in the seasonally slow first quarter.

Hasbro's revenue rose 3 percent to $468.2 million, beating analyst targets of $427.3 million.

Revenue in its North American segment rose 7 percent to $310.3 million. International segment revenue fell 5 percent to $145.5 million, hurt by a foreign exchange impact of about $10.4 million.

Toymakers have been suffering from an industrywide slump as electronic gadgets like video games and digital music players pull away once-captive young consumers, and rising costs and cutthroat competition eat into margins.

Hasbro's results came a week after larger rival Mattel Inc. (MAT) reported an operating loss in its first quarter and predicted a challenging 2006.

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American Express Sees 18 Percent Rise In Profit

NEW YORK (Reuters) - American Express Co. (AXP), the credit card and travel services company, Monday said first-quarter profit rose 18 percent, helped by increased spending by consumers and small businesses and new partnerships with large banks.

Profit from continuing operations rose to $876 million, or 70 cents per share, from $745 million, or 59 cents, a year earlier. Analysts polled by Reuters Estimates on average forecast profit of 69 cents per share.

American Express added 1.5 million cardholders in the quarter, giving it 72.5 million. Of these, about three-fifths are in the United States.

The No. 4 U.S. card issuer, which is based in New York, has benefited from co-branding partnerships with former rivals such as Bank of America Corp. (BAC) and Citigroup Inc. (C).

"The numbers looked good," said Mark Batty, an analyst at PNC Advisors in Philadelphia. "American Express is benefiting from the longer-term trend of consumers and small businesses switching from cash and checks to credit cards."

Overall profit fell 8 percent to $873 million, or 69 cents per share, from $946 million, or 75 cents.

Year-earlier results included the Ameriprise Financial Inc. brokerage, which American Express spun off at the end of September to focus on more profitable businesses.

Return on equity, which measures how well a company reinvests earnings, rose to 27.3 percent from 22.8 percent. Batty called the 32.1 percent ROE from continuing operations "a very powerful number."

"EYE-POPPER"

A decline in bankruptcy filings from the fourth quarter and lower-than-expected costs for Hurricane Katrina added $98 million to profit. Credit losses fell 18 percent from the fourth quarter to $668 million.

Revenue rose 12 percent to $6.33 billion, below the average forecast for $6.44 billion. Expenses grew 10 percent to $5.01 billion, as American Express advertised more and offered increased rewards to higher-spending customers.

Shares of American Express fell 58 cents to $51.67 in afternoon trading on the New York Stock Exchange.

At American Express' annual meeting on Monday, Chief Executive Kenneth Chenault said revenue growth was "among the strongest we've generated in several years," helped by the "continued strength of consumer and small business spending."

A 2004 U.S. Supreme Court decision allowed American Express to offer cards through banks that previously stuck with Visa and MasterCard.

"We were really heartened by the number of cards in force, which was an eye-popper," said Jim Russell, director of core equity strategy at Fifth Third Asset Management in Cincinnati.

"The distribution of cards through third-party vendors is starting to take hold," Russell added. "They will be able to expand their brand and reach, improving market share."

Fifth Third does not own American Express shares, while PNC Advisors owns them.

"PARANOID"

Chenault said he welcomes but remains "paranoid" about competition.

He also said he expects to maintain a strong relationship with Wal-Mart Stores Inc. , the world's largest retailer. Wal-Mart is seeking regulatory approval for a controversial plan to open its own bank.

By segment, U.S. card services profit rose 13 percent to $546 million as revenue increased 15 percent to $3.18 billion.

Net income from international card and commercial services rose 11 percent to $213 million. Revenue increased 7 percent to $2.3 billion, despite lower travel commissions and fees.

Meanwhile, net income from global network and merchant services surged 50 percent to $166 million, while revenue rose 11 percent to $705 million.

Sun Microsystems Posts Higher Earnings

SAN FRANCISCO (Reuters) - Sun Microsystems Inc. (SUNW) Monday posted a quarterly net loss due to merger- and other related charges as revenue climbed, boosted by the computer maker's acquisition of Storage Technology Corp.

Sun has struggled since the implosion of the dot-com and telecommunications investment bubbles to deliver consistent revenue growth and profitability. The company has introduced a line of servers called Galaxy that use Advanced Micro Devices Inc.'s (AMD) Opteron processors, but sales have yet to boost Sun's revenue materially.

"I don't think anyone was looking for a big upside on revenue and earnings," said Pacific Crest Securities analyst Brent Bracelin. "What people are really looking for is some sort of evidence that we're at the beginning of a turnaround."

Sun said it had a net loss of $217 million, or 6 cents per share, for its fiscal third quarter ended March 26, compared with a year-ago net loss of $28 million, or 1 cent per share. Revenue rose 21 percent to $3.18 billion.

Analysts were expecting a net loss of 7 cents per share, on average, within a range of a net loss of 4 cents per share to 9 cents per share, according to Reuters Estimates. Revenue was pegged at $3.2 billion, within a range of $3.05 billion to $3.33 billion.

The charges amounted to 5 cents per share, and excluding them, Sun had a loss of 1 cents per share. That compares with a 3-cent-per share loss expected by analysts, excluding items.

"We're growing again," said Sun Chief Executive Scott McNealy in a statement. "The next step is consistent profitability."

Sun said that its traditional business -- the sale of its servers running the Solaris version of the Unix operating system and Sun's own microprocessors -- grew in the United States from a year ago, and in most of Asia, parts of Europe and nearly all parts of the Americas outside the United States.

"We delivered the results we were anticipating," said Michael Lehman, the Sun chief financial officer who recently came out of retirement to resume his previous duties as CFO.

Shares of Sun have risen 18 percent so far this year, based on Friday's closing price, on investor optimism that Galaxy sales would take off. The Merrill Lynch 100 Technology Index, of which Sun is a constituent, has increased 10 percent in the same time period.

As is typical with Sun, the company did not give a revenue or per-share forecast for its current quarter.

In regular Nasdaq trade on Monday, Sun shares rose 5 cents, or 1 percent, to close at $4.98. In extended trade, the stock initially climbed a further 1.8 percent to $5.07, then settled back to $4.99.