Earnings: Amazon.com, BP, AT&T, Altria, 3M, DuPont...More

Earnings: Amazon.com | BP | AT&T | DuPont | 3M | Altria | McDonald's | UPS |

Amazon.com 2Q Earnings Drop 58%

Amazon.com (AMZN) Tuesday reported a 58 percent drop in second-quarter net income as a severed partnership with Toysrus.com and higher technology investment spending cut into profits.

The company's stock fell 10 percent following the announcement.

The Internet retailer posted quarterly net income of $22 million, or 5 cents per share, compared with $52 million, or 12 cents per share, in the year-ago period. Sales rose 22 percent to $2.14 billion, within the range of Amazon's own forecast.

Operating income was $47 million in the quarter, compared to $104 million a year earlier. Amazon said operating income was crimped by $20 million in the quarter stemming from its contract termination and related fee dispute with Toysrus.com.

Excluding that $20 million, Amazon earned 7 cents a share, according to Reuters Estimates, matching Wall Street analysts' average estimate. Amazon officials were not immediately available to confirm that figure.

Amazon met its own forecasts for operating income and sales. Its second-quarter forecast had called for operating income to range between $32 million and $67 million, with revenue of between $2.03 billion and $2.18 billion.

Amazon warned in April that 2006 operating profit could be hurt by as much as $50 million from an acrimonious split with Toysrus.com, whose toys had been sold on Amazon's site. Amazon is appealing a court ruling allowing Toysrus.com to abandon the contract, but an appellate judge recently denied a motion by Amazon to forestall the termination until the appeal is decided.

Wall Street has fretted over decelerating sales growth and falling profit margins at Seattle-based Amazon, the Web's second-most popular commerce site behind eBay Inc., despite a 20 percent revenue rise in the first quarter.

A discount shipping program, Amazon Prime, has been costly to the company, which faces intense competition from online and brick-and-mortar rivals, and spending on technology and content has crimped profits.

Looking to the third quarter, Amazon forecast sales of $2.17 billion to $2.33 billion. Analysts, on average, anticipate third quarter sales of $2.21 billion, according to Reuters Estimates.

For full-year 2006, Amazon said it expects to record sales of $10.15 billion to $10.65 billion, up from a previous view of between $9.95 billion and $10.50 billion. Wall Street analysts are expecting sales of $10.15 billion, according to Reuters Estimates.

But Amazon forecast lower operating income for the year, in a range between $310 million and $440 million. That compares with a previous forecast of $390 million to $520 million.

Amazon shares fell to $30.20 in after-hours trade on the Inet electronic brokerage from a close of $33.59 on Nasdaq.

Shares of the online company, valued at 38 times estimated full-year 2007 earnings, trade at a premium to those of conventional retailers and many Internet stocks, including Google Inc. and eBay . Amazon also trades above the average multiple of 13 for companies in the Standard & Poor's Retailing Index and the Nasdaq 100 , at 19 times 2007 earnings.

BP Posts Record $6.11B Profit

LONDON, (Reuters) - Oil major BP Plc (BP) beat forecasts with a 23 percent rise in replacement cost net profit to a record $6.11 billion on Tuesday, as high oil prices and strong refining margins more than made up for a drop in output.

But BP also said its capital spending would rise around 5 percent this year due to cost inflation and it would spend $1 billion more over the next four years to improve safety at its U.S. refineries and to upgrade pipelines in Alaska.

The refineries have had a number of fatal accidents in the past two years and BP has suffered a series of leaks in Alaska.

Shares in BP, the second-largest fully-quoted oil company in the world by market value, opened lower, trading down 0.55 percent at 630 pence by 0734 GMT, compared with a 0.2 percent rise in the DJ Stoxx European oil and gas sector index.

The news comes as British newspapers report a feud at the top of BP, with the chairman, Peter Sutherland, seeking to force chief executive, John Browne, to retire as planned in 2008. Neither Sutherland nor Browne was immediately available for comment.

Excluding one-off items, the replacement cost result was $6.11 billion, ahead of an average forecast of $5.98 billion from a Reuters poll of 11 analysts and up from $5.81 billion in the second quarter of 2005, when the headline result was dampened by a $822 million one-off charge.

"It's steady as she goes," Jason Kenney, oil analyst at ING, said.

The replacement cost figure excludes changes in the value of inventories, and analysts say this figure, excluding one-offs, is the best measure of BP's underlying performance.


BP announced a further delay at its Thunder Horse platform in the U.S. Gulf of Mexico -- one of the company's largest new projects -- after workers discovered leaks.

Subject to weather, BP now hopes the platform will start up in early 2007. The company said last month it was aiming for a startup in the second half of 2006, while the platform was originally planned to come on stream in 2005.

BP also said rising costs had forced it to raise its capital expenditure in 2006 to $15.5-$16 billion from an earlier planned $15 billion. Analysts are concerned that rapid inflation in oil field costs are eating into oil companies' margins.

BP also faces higher taxes, with the average tax rate rising to 36 percent in the second quarter compared with 32 percent a year earlier.

BP said net income at its Russian joint venture TNK-BP rose to $645 million from $641 million in the same period of 2005, on slightly higher production.

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AT&T Profit Paced By Growth

NEW YORK (Reuters) - AT&T Inc. (T) Tuesday posted higher quarterly profit, bolstered by strong growth in wireless and high-speed Internet services.

Earnings, including AT&T's 60 percent stake in Cingular Wireless but excluding merger-related costs and other special items, were 58 cents a share, up 35 percent from a year earlier.

Analysts had expected 53 cents per share before special items, according to Reuters Estimates.

The company said earnings were helped by a rise in Cingular subscribers.

Shares of AT&T closed at $27.78 on Monday. They have risen 17 percent in the past 12 months, outperforming a 7 percent rise in the Standard & Poor's index of telecommunications providers.

AT&T was formed through the November 2005 merger between SBC Communications Inc. and AT&T Corp. It is set to buy BellSouth Corp. (BLS) later this year, taking full control of Cingular, their mobile phone joint venture.

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DuPont Profit Falls

NEW YORK (Reuters) - DuPont Co.'s (DD) second-quarter profit fell as price hikes for its products failed to offset increases in energy costs, the No. 2 U.S. chemicals maker said Tuesday.

Net income totaled $975 million, or $1.04 cents a share, compared with $1.02 billion, or $1.01 a share, a year earlier.

Before items, Wilmington, Delaware-based DuPont earned $1.01 a share. Analysts, on average, expected earnings of 95 cents a share, according to a survey by Reuters Estimates.

DuPont said in May it would raise prices across most of its product lines, but warned prices of oil and natural gas -- used to make chemicals and generate power for plants -- still remained significantly higher than a year earlier.

Shares of DuPont, a component of the Dow Jones industrial average, fell 1.45 percent during the quarter, underperforming the Standard and Poor's chemicals index , which fell 0.97 percent during the same period.

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3M Beats Weak Demand, Profit Rises

CHICAGO (Reuters) - Diversified manufacturer 3M Co. (MMM) on Tuesday posted a higher quarterly profit despite weak demand for optical film used in flat-screen monitors and TVs.

Net income in the second quarter rose to $882 million, or $1.15 a share, from $754 million, or 96 cents a share, in the year earlier quarter.

Excluding one-time items, it earned $1.05 a share. Analysts had expected $1.07 a share, according to Reuters Estimates.

Earlier this month, 3Mwarned of weaker-than-expected second-quarter results as demand for desktop monitors dropped. The company, considered a bellwether for the U.S. economy because of a portfolio that ranges from Scotch tape to Thinsulate insulation, also blamed weak orders for higher end flat-panel televisions ahead of soccer's World Cup.

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Altria Posts Rise In Profit

CHICAGO (Reuters) - Altria Group Inc. (MO) Tuesday posted a 1.6 percent increase in quarterly net income, helped by price increases and market share gains in the United States.

The parent of Marlborocigarette makers Philip Morris USA and Philip Morris International and Oreo cookie maker Kraft Foods Inc. (KFT) posted profit of $2.71 billion, or $1.29 a share, for the second quarter. That compares with $2.67 billion, or $1.28 a share, a year earlier.

Altria shares are up more than 8 percent since July 5, when the Florida Supreme Court refused to reinstate a $145 billion damage award against the tobacco industry. That decision cleared a major hurdle from Altria's plan to spin off the rest of the Kraft business and possibly break Altria into three separate companies.

Altria shares, which have traded on legal decisions and expectations for the break-up in recent months, trade at about 14.2 times estimated 2007 earnings, compared with 12.8 times for the Dow Jones Industrial Average, which includes Altria as a component.

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McDonald's Profit Higher

CHICAGO (Reuters) - McDonald's Corp. (MCD) Tuesday said quarterly profit rose, helped by a popular Happy Meal promotion and strong European sales during the World Cup soccer tournament.

Second-quarter net income rose to $834.1 million, or 67 cents per share, from $530.4 million, or 42 cents per share, in the same period a year earlier.

Excluding income from the sale of some of its shares in Chipotle Mexican Grill Inc. and expense from a tax law change, earnings were 59 cents per share in the latest period, in line with the preliminary figure McDonald's gave last week.

McDonald's has been adding premium items such as an Asian chicken salad in an effort to boost sales. A recent Happy Meal promotion tied to the animated movie "Cars" also lifted demand in the latest period. Sales were particularly strong in Germany, which hosted the World Cup.

McDonald's shares trade at about 15.6 times analysts' profit forecasts for the current year, compared with 26.9 times for smaller rival Wendy's International Inc. (WEN), according to Reuters Estimates.

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UPS Profit Rises, But Misses Views

CHICAGO (Reuters) - United Parcel Service Inc. (UPS), the world's largest package delivery company, said Tuesday that quarterly net profit rose, citing rising demand for small packages worldwide, but results missed market expectations.

UPS also announced an earnings outlook for the third quarter that came in below analyst forecasts.

The Atlanta-based company reported second-quarter net income of $1.06 billion, or 97 cents a share, compared with $986 million, or 88 cents a share, a year earlier.

Analysts had expected earnings per share of $1.00, according to Reuters Estimates.

UPS reported revenue for the quarter of $11.74 billion, compared with $10.2 billion a year earlier. Analysts on average expected $11.6 billion.

The company said in a statement that it expected earnings per share for the third quarter of 87 cents to 91 cents.

Analysts have forecast earnings per share of 97 cents for the quarter.

"Our global small package volume growth in the second quarter was robust, resulting in a solid earnings gain," said UPS Chief Executive Officer Mike Eskew in a statement. "The global small package market continues to expand and we are seeing significant opportunities for UPS."