Earnings: JPMorgan Chase & Co. | General Dynamics | Apple | EBay | Advanced Micro Devices

JPMorgan Chase Posts 32 Percent Rise in Earnings

ST. LOUIS (Reuters) - JPMorgan Chase & Co. (JPM) the third largest U.S. bank, said Wednesday quarterly net income rose 32 percent on record investment banking fees and strong debt underwriting.

Net income was $3.3 billion, or 92 cents a diluted share, compared to $2.5 billion, or 71 cents a diluted share, in the year-earlier period. Year-ago results included a $248 million charge related to Hurricane Katrina.

Analysts, on average, had been looking for JPMorgan to earn 86 cents a share before one-time items, according to Reuters Estimates.

Net revenue increased 8 percent to $15.4 billion.

Over the last year, JPMorgan has squeezed out higher profits despite declining mortgage originations, a slowdown in credit card growth and charges from large acquisitions such as Bank One Corp.

JPMorgan's investment banking fees were a record $1.4 billion, up 44 percent from a year earlier. The results were driven by debt underwriting and fees from merger and acquisition advice.

JPMorgan Chief Executive Jamie Dimon said the company's retail banking business was hurt by weak results in mortgage banking.

The mortgage banking unit posted a net loss of $83 million, compared to net income of $53 million in the year-ago quarter.

JPMorgan shares are up 21 percent this year, beating the 17.5 rise on the AMEX Securities Broker Deal Index.

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General Dynamics Profit Jumps On Strong Sales

NEW YORK (Reuters) - Defense contractor General Dynamics Corp. (GD) said Wednesday its third-quarter profit rose 17 percent, helped by strong sales of its army vehicles and Gulfstream business jets.

The No. 4 Pentagon supplier, which makes Abrams tanks and Stryker combat vehicles for the U.S. Army, reported a quarterly profit of $438 million, or $1.08 per share, compared with $374 million, or 92 cents per share, a year earlier.

That was slightly ahead of Wall Street's forecast of $1.06 per share profit. Revenue rose 14.5 percent to $6.1 billion, slightly below analysts' average forecast of $6.27 billion.

Like other defense contractors, General Dynamics has benefited from heavy spending on U.S. Army equipment being used in Iraq and Afghanistan. It has also benefited from a global surge in business jet sales, helping its Gulfstream unit.

The company's funded backlog — a measure of work on its books that has already had money allotted for it — was $31.7 billion at the end of the quarter, up from $29.3 billion at the same time last year.

Apple Quarterly Profit Spikes, Shares Surge

Apple Computer Inc. (AAPL) Wednesday posted a 27 percent rise in quarterly profit, buoyed by strong sales of its Macintosh computers and higher shipments of its iPod digital music players, results well above analyst estimates and the stock surged.

Apple said net income for its fourth fiscal quarter ended Sept. 30 rose to $546 million, or 62 cents per share, from $430.0 million, or 50 cents per share, a year ago. Revenue climbed 32 percent to $4.84 billion.

The company said in July it expected earnings per share of 46 cents to 48 cents, including an estimated 3 cents per share for expensing stock options, on revenue of $4.5 billion to $4.6 billion. Analysts, on average, expected earnings of 51 cents per share — which includes stock-based compensation — on revenue of $4.67 billion.

For the current first quarter of fiscal 2007, which includes the crucial holiday-sales season, Apple said it expects earnings per share of 70 cents to 73 cents, and revenue in a range of $6.0 billion to $6.2 billion.

Analysts currently expect a first-quarter profit of 77 cents per share, on average, within a range of 62 cents to 84 cents, on revenue of $6.43 billion.

During the fourth quarter, Apple sold 8.73 million iPods, up 35 percent from a year ago, and 1.61 million Mac computers, which is a 30 percent increase from the year-earlier period.

Merrill Lynch analyst Richard Farmer expected fourth-quarter iPod shipments of 7.7 million and Mac shipments of 1.51 million. American Technology Research analyst Shaw Wu had forecast iPod sales of 8.5 million units and Mac shipments of 1.4 million.

Shares of Apple rose to $79.20 in composite trade after the company reported results. In regular trade, the stock climbed 24 cents to close at $74.53.

So far this year, shares of Apple have risen nearly 5 percent, based on Tuesday's close, compared with a 5 percent increase in the Morgan Stanley High-Tech Index, of which Apple is a constituent. Since its 2006 low in July, Apple stock is up 47 percent, also based on Tuesday's close.

EBay Profit Rises 10 Percent

SAN FRANCISCO (Reuters) - Online marketplace eBay Inc. (EBAY) Wednesday posted a better-than-expected 10 percent rise in quarterly profit but issued a revenue outlook for 2007 that is sharply below Wall Street forecasts.

EBay also said it expected fourth-quarter revenue in a range from $1.62 billion to $1.68 billion. Wall Street was looking for revenue in the year-end quarter to range from $1.60 billion to $1.73 billion, according to Reuters Estimates.

Looking into 2007, the company projected revenue growth of 17 percent to 21 percent, which is a marked deceleration from the 25 percent consensus growth rate among Wall Street analysts surveyed by Reuters Estimates. By contrast, analysts expect eBay revenues to grow 29 percent, on average, for all of 2006.

Shares of eBay gained 3 percent to $29.40 in extended hours following the report, reversing a 1 percent decline in regular session trade on Nasdaq. The stock has lost around one-third of its value in the year to date amid concern of slowing growth.

Net income during the third-quarter for the San Jose, California-based company grew to $281 million, or 20 cents per diluted share, compared with the year-earlier quarter's $255 million, or 18 cents a share. Excluding stock-option costs, profit grew 30 percent to $332 million, or 23 cents a share.

Net revenue rose 31 percent to $1.45 billion thanks to a modest rebound in auction markets late in the quarter and continued strong growth in its PayPal online payments unit.

"I would characterize this as a very good quarter," President and Chief Executive Meg Whitman said. "We are stronger than we were in the core business, than we were in the last quarter" ended in June, she said.

"Stronger as we exit the quarter than when we came in," injected Chief Financial Officer Bob Swan. "We feel pretty good as we head into the key holiday selling season," he said.

Analysts, on average, expected eBay to report a net profit of $238.2 million, or 17 cents per share, according to Reuters Estimates. Excluding stock-compensation and other items, the consensus estimate was $343.6 million, or 24 cents per share.

EBay projected fourth-quarter net earnings per share in a range from 21 cents to 22 cents per diluted share, including 3 to 4 cents of option expense. Excluding option expenses and other items, the company projected a profit of 27 cents to 28 cents a share.

Third-quarter revenue had been expected to average around $1.43 billion, according to Reuters Estimates. Forecasts ranged between $1.40 billion and $1.47 billion.

"The revenue and earnings guidance for Q4, normally a strong holiday period, are modestly below where the Street average was for those numbers," said analyst Martin Pyykkonen of Global Crown Capital.

"Nothing's falling apart. It's a mid-20 percent grower now and that's not what it was," Pyykkonen said.

EBay said during the quarter it repurchased $667 million worth of stock, or one-third of its previously announced stock buyback program, at prices that averaged around $27.79.

AMD Posts Higher Profit, but Hurt by Price War

SAN FRANCISCO (Reuters) - Advanced Micro Devices Inc. (AMD) posted a higher quarterly profit Wednesday, but profit margins fell sharply, hurt by a price war with Intel Corp. (INTC), and the stock fell 13 percent.

AMD, the second-largest maker of computer processors, said it expected fourth-quarter sales to rise from the prior quarter but did not elaborate. Wall Street had forecast fourth quarter sales of $1.44 billion according to Reuters Estimates.

For the third quarter, AMD said net profit was $134.5 million, or 27 cents per share, versus $76 million, or 18 cents a share a year ago.

AMD was expected to have earned $116 million, or 23 cents per share, according to the average forecast of Wall Street analysts on Reuters Estimates.

Gross margin fell to 51.4 percent, from 56.8 percent the previous quarter. AMD did not explain the drastic drop, but analysts said it was likely due to the price war with Intel and a build-up of chips for Dell Inc., the world's No. 1 PC maker that AMD landed as a customer earlier this year.

"It goes to show that there is a benefit of getting into Dell (DELL), but there is also a cost," said Cody Acree, an analyst with Stifel Nicolaus.

Shares in AMD rose initially in extended electronic trading after the results were released but then shed 13.3 percent to trade at $21.50. The stock closed down 1 percent at $24.23 on the Big Board.

Revenue was $1.33 billion, down nearly 13 percent from $1.52 billion a year ago, before the company spun out its Spansion Inc.

memory chip unit. Analysts had expected third-quarter revenue of $1.31 billion.

AMD has been embroiled in a price war triggered by its larger rival Intel, which has been trying to clear unsold chips to make way for new processors aimed at taking back market share lost to its smaller rival over the past few quarters.

"Both of them (AMD and Intel) saw pretty massive average selling price declines," said Eric Ross, an analyst with ThinkEquity Partners.

"Most of the big PC original equipment manufacturers want to have more AMD because they are not finding a duality there, because they can then squeeze these guys on pricing."

AMD said it shipped 18 percent more processors in the quarter than the prior three months, adding that prices for its desktop chips had fallen while those for laptop and server processors had "improved".

AMD has risen about 3 percent since the start of its third quarter in early July but is down about 40 percent from its 52-week high hit in March. Intel shares have risen more than 10 percent since early July, and are about 20 percent below its year-high touched early last December.

The Sunnyvale, California-based company has steadily gained market share from Intel. It held more than 27 percent of the total PC market at the end of June, up from 18 percent a year earlier, according to market tracking firm Mercury Research.

Intel has fought back by overhauling its entire product line and slashing prices on older products. That hurt AMD's sales in the second quarter as it was also forced to trim its prices.

"AMD seems to be winning right now. But I wouldn't want to bet against Intel, they have the size and the clout here," said Michael Church, portfolio manager for Church Capital Management.

(Additional reporting by Philipp Gollner in San Francisco and Daisuke Wakabayashi in Seattle)