Earnings: IBM | Yahoo | Coca-Cola | United Technologies | Merrill Lynch | Johnson & Johnson

IBM Beats Analysts' Forecasts

International Business Machines (IBM) Corp.'s second-quarter profit rose nearly 11 percent, slightly exceeding analysts' forecasts despite another period of lackluster revenue growth.

From April through June, IBM earned $2.02 billion, $1.30 per share, on revenue of $21.9 billion, the company said Tuesday.

The consensus analyst estimate had been for earnings of $1.29 per share on revenue of $21.9 billion, according to Thomson Financial.

In the same period last year, IBM showed earnings of $1.83 billion, or $1.12 per share, with revenue of $22.3 billion. However, that quarter included one month of sales in IBM's personal-computer business, before the group's sale to Lenovo Group Ltd.

Excluding PCs, the second quarter last year saw earnings of $1.85 billion, or $1.14 per share, and revenue of $21.7 billion.

On that basis, IBM saw just a 1 percent revenue increase in the second quarter. Weak sales growth has plagued Big Blue for several quarters, forcing the company to use cost cuts to improve profits and stock buybacks to further boost earnings per share.

But investors have been especially unimpressed with IBM's prospects of late, dragging the stock to 52-week lows. Several analysts were expecting Tuesday's report to reveal little or no growth in contract signings in IBM's services division and so-so sales of server computers.

Indeed, the report showed that the services division signed a relatively low $9.6 billion in new contracts last quarter. Almost all of that revenue will not be counted until future periods, however. In the quarter itself, services revenue dropped 1 percent to $11.9 billion.

IBM shares gained 56 cents to close at $74.26 on the New York Stock Exchange before the earnings report was released. In extended trading the shares hit $76.17.

For the first half of the year, Armonk, N.Y.-based IBM showed profit of $3.73 billion, $2.37 per share, and revenue of $42.5 billion. In the first half of 2005 earnings were $3.23 billion, $1.96 per share, with revenue of $45.2 billion.

Yahoo Warns of Possible Slower-Than-Expected Growth Ahead

SAN FRANCISCO (Reuters) - Yahoo Inc. (YHOO) Tuesday posted a drop in quarterly income after a year-earlier investment gain, and the company cautioned that it could grow at a slower-than-expected pace for the rest of 2006.

Shares of the world's largest Internet media company fell 8.6 percent in extended-hours trade following the report.

Net income for the second quarter fell by about three-quarters to $164 million, or 11 cents per diluted share, compared with $754.7 million, or 51 cents per share, in the year-earlier quarter.

Net revenue rose 28 percent to $1.12 billion. Wall Street was looking for slightly higher net revenue, on average, of $1.14 billion, according to Reuters Estimates. Analysts' revenue forecasts ranged from $1.11 billion to $1.17 billion.

The year-earlier quarter included an after-tax investment gain of $552 million tied to the sale of shares from an early investment in Google Inc. (GOOG) and settlement of a Yahoo lawsuit over Google's use of its search technology.

The latest quarter's results met analysts' average profit forecast of 16 cents a share, excluding one-time items, according to Reuters Estimates. Including those items, the consensus net income estimate among analysts in the latest quarter was 11 cents a share.

For the third quarter, the Sunnyvale, California-based company forecast revenue, excluding traffic acquisition costs, of between $1.12 billion and $1.23 billion. Yahoo's revenue was expected by analysts to be slightly higher, at $1.15 billion to $1.24 billion, according to Reuters Estimates.

For the full 2006 year, the company projected revenue of between $4.60 billion and $4.85 billion. Wall Street was looking for revenue of $4.69 billion to $4.90 billion, according to Reuters Estimates.

Coca-Cola Earnings Beat Views

NEW YORK (Reuters) - Coca-Cola Co. (KO), the world's biggest soft-drink maker, on Tuesday posted better-than-expected earnings boosted by its PowerAde sports drink and Dasani bottled water brands.

The Atlanta-based company reported second-quarter profit of $1.84 billion, or 78 cents a share, from $1.72 billion, or 72 cents a share, a year earlier.

Excluding a gain from the sale of shares in the initial public offering of its Turkish bottler, Coke reported earnings of 74 cents, 2 cents ahead of Wall Street expectations, according to Reuters Estimates.

In the past year, Coke launched a flurry of brands such as coffee-infused soda Coke Blak and energy drink Vault and extended flavors of existing brands like Dasani flavored water, to cash in on the growth in the energy drinks and water segments.

Revenue for the second quarter rose to $6.48 billion from $6.31 billion. Analysts on average were expecting revenue of $6.48 billion.

Coke shares are up 6 percent so far this year and trade at nearly 19 times expected 2006 earnings, while rival PepsiCo Inc.

is up 5.4 percent with a multiple of 21.

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United Technologies Profit Rises

BOSTON (Reuters) - Diversified manufacturer United Technologies Corp. (UTX) said Tuesday its second-quarter earnings rose 13.6 percent, helped by solid demand for its aerospace and industrial products and boosted by favorable exchange rates.

United Tech, whose operations range from Pratt & Whitney jet engines to Otis elevators, reported a profit of $1.1 billion, or $1.09 per share, compared with $971 million, or 95 cents per share, a year earlier.

Analysts had expected the company to report a profit of $1.01 per share, according to Reuters Estimates. United Tech said its $1.09 profit included 7 cents of gains in excess of restructuring charges.

Revenue rose 10 percent, to $12.26 billion from $11.15 billion a year earlier. Analysts had expected revenue of $11.85 billion, according to Reuters Estimates.

Citing the strong results, the company raised its full-year profit forecast to a range of $3.55 to $3.65 per share on revenue of $47 billion. Analysts had expected $3.62 per share on revenue of $46.15 billion, according to Reuters Estimates.

Second-quarter results were driven by strong demand for the Hartford, Connecticut, company's aerospace products, which include jet engines and airplane electronics and power systems.

This offset weaker results at the Carrier air conditioner unit, where results were hurt by slow production of a new product line, George David, chairman and chief executive officer, said in a statement.

United Tech's stock has risen 3.7 percent this year, compared with a 0.3 percent rise in the Dow Jones industrial average, of which it is a component.

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Merrill Lynch Earnings Rise 44 Percent

NEW YORK (Reuters) - Merrill Lynch & Co. Inc. (MER), the biggest U.S. brokerage, Tuesday said quarterly earnings rose 44 percent, helped by rising investment banking revenue.

The firm, whose businesses including stock brokerage, investment banking and asset management, said second-quarter earnings were $1.6 billion, or $1.63 a share, compared with $1.14 billion, or $1.14 a share, a year earlier.

Analysts polled by Reuters Estimates on average expected earnings of $1.53 before exceptional items.

Total revenue rose 29 percent to $8.16 billion, compared with analyst expectations of $7.59 billion.

Revenue from advising companies on mergers and acquisitions rose 38 percent to $296 million.

Revenue from stock and bond trading for institutional clients was $3.6 billion, up 37 percent from the same quarter last year but down 2 percent decline from the first quarter.

The decline from the first quarter came amid difficult trading conditions in May, when many competing investment banks said clients were shifting funds into less risky assets.

Merrill Lynch's shares have lagged many of its investment banking peers as investors have feared that the retail customers that have helped it perform well in recent quarters may flee at the first sign of weakness in the stock market.

The company's shares have risen 0.62 percent this year, compared with a 1 percent increase for the Amex Securities Broker Dealer index, and a nearly 11 percent gain for Goldman Sachs Group (GS), which commands one of the highest valuations in the financial sector.

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Johnson & Johnson Posts 9% Rise In Profit

NEW YORK (Reuters) - Johnson & Johnson (JNJ) Tuesday said its second-quarter profit rose 9 percent on higher-than-expected sales of its medical devices, consumer products and prescription medicines.

The diversified health-care company said it earned $2.82 billion or 95 cents per share, compared with $2.59 billion, or 86 cents per share, in the 2005 period.

Excluding special items, J&J earned 98 cents per share. Analysts, on average, expected 97 cents per share, according to Reuters Estimates.

"I think they definitely beat expectations," said A.G. Edwards analyst Jan Wald, with drug sales and medical device sales about $300 million and $500 million higher, respectively, than forecasts.

Company sales rose 4.7 percent to to $13.4 billion, a bit higher than Wall Street expectations of $13.29 billion.

The New Brunswick, New Jersey-based company said sales of medical devices rose 6.2 percent to $5.2 billion, on demand for its minimally invasive surgical products, its Cypher stent to prop open heart arteries, its contact lens brands and blood-glucose monitoring systems.

Global sales of prescription drugs rose 3.2 percent to $5.8 billion, led by its Risperdal treatment for schizophrenia, arthritis treatment Remicade, Topamax for epilepsy and Concerta for attention deficit hyperactivity disorder.

Sales of the company's array of consumer brands, including Splenda sweetener and Aveeno skin-care products, rose 5.3 percent to $2.4 billion.

Shares of J&J have risen 1.33 percent since the start of the year, closely tracking its peers on the American Stock Exchange Pharmaceutical Index which is up 1.31 percent in the same period.

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