Earnings: Sony | Aetna | Comcast | Sprint Nextel | Kellogg | Bristol-Myers Squibb

Sony Profit Plunges 94 Percent

TOKYO - (AP) - Sony's profit plunged 94 percent for the July-September quarter as a global battery recall and red ink in its video-game business hurt the Japanese electronics and entertainment company.

Sony Corp (SNE)'s group net profit for the fiscal second quarter totaled 1.7 billion yen ($14 million), dwindling from 28.5 billion yen the same period the previous year, the Tokyo-based manufacturer said Thursday.

An extra cost of 51 billion yen ($429 million) related to a global recall of 9.6 million Sony laptop batteries was a major factor behind the sharp drop in profit.

Almost every major laptop maker in the world, including Dell Inc., Apple Computer Inc. and Lenovo, has announced recalls of Sony lithium-ion batteries that could overheat and burst into flames.

The recall — which has tarnished Sony's brand image as a longtime maker of icon products such as the Walkman portable player and PlayStation video game machine — offset the lift Sony's books got from an 8 percent rise in July-September sales to 1.85 trillion yen ($15.6 billion) from 1.7 trillion yen a year earlier.

Sony reported a 43.5 billion yen ($366 million) operating loss in its gaming division because of charges related to the preparation for the next-generation PlayStation 3 console, set to go on sale in the U.S. and Japan next month.

Sony said last month the machine's launch in Europe will be delayed until March next year because of mass production problems in a video technology called Blu-ray disk that the machine supports.

The company has also reduced the price in Japan for the much hyped PS3 by about 20 percent in an effort to win buyers — a move that's likely to reduce sales revenue because initial shipments are expected to be limited and sell out.

Sony kept unchanged Thursday its plan to ship 6 million PS3 machines in the fiscal year through March 2007. Research and development costs for the PS3 eroded profitability in the game unit, the company said in a statement.

Sony trimmed its fiscal 2006 shipment target for its lagging PlayStation Portable handheld machines to 9 million from the initial 12 million machines. Sony shipped 14 million PSP machines in fiscal 2005.

In contrast, Japanese rival Nintendo Co. is scoring success with its DS handheld machine. The maker of Pokemon and Super Mario games said Thursday that its group net profit for the first fiscal half soared nearly 50 percent.

In the core electronics segment, Sony's operating profit for the three months ended Sept. 30, shrank 71 percent to 8 billion yen ($67 million) from 28 billion yen a year earlier.

Sony has been trying to turn around its electronics business after getting beaten by rivals on key products such as Apple's iPod and liquid crystal display TVs from Sharp Corp. and Samsung Electronics Co.

The revival effort is being led by American Chief Executive Howard Stringer, the first foreigner to head Sony, but questions are already publicly being raised here about the management team of Stringer and Ryoji Chubachi, an electronics expert, following the battery troubles and production delays.

The charge for the battery recall hurt earnings in electronics, despite strong sales of Bravia flat-panel TVs and Cyber-shot digital cameras, Sony said. The absence of last year's gain from a pension fund reimbursement in Japan also contributed to the operating profit decline in that sector, it said.

Such stumbles forced Sony to revise last week its forecast for the fiscal year through March 2007, to 80 billion yen ($673 million), down 38 percent from its initial projection and down 35 percent from fiscal 2005.

It's expecting 8.23 trillion yen ($69 billion) in fiscal 2006 sales, up 10 percent from the previous year.

Chief Financial Officer Nobuyuki Oneda said Sony's liquid crystal display television business, which has been working to reduce losses, is expected to post a profit in the October-December quarter.

Sony's movie business also fared poorly, seeing its operating loss grow to 15.3 billion yen ($129 million) partly on flops such as "Zoom" and "All the King's Men," it said. Faring better were "Talladega Nights: The Ballad of Ricky Bobby," "Monster House" and "Click."

Sony has a music business, but it combined its recorded music business outside of Japan with Bertelsmann AG and the results are not part of Sony's group earnings, except when accounting for Sony's equity.

Best-selling albums included Justin Timberlake's "Future Sex/Love Sounds," Beyonce's "B'Day" and Christina Aguilera's "Back to Basics."

Sony's mobile phone operations are in a joint venture Sony Ericsson, where net income nearly tripled in the quarter, but the results are not part of the consolidated Sony statement.

For the first six months of the fiscal year, Sony posted a 34 billion yen ($286 million) profit, up 60 percent from the same period a year earlier, on 3.6 trillion yen ($30 billion) sales, up nearly 10 percent from the first half of fiscal 2005.

Sony shares, which have lost about 40 percent of their value over the last five years, stood unchanged in Tokyo trading at 4,820 yen ($40). The results were announced after the market closed.

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Aetna Sees Profit Rise

HARTFORD, Conn. - (AP) - Aetna Inc. (AET), one of the nation's largest health insurers, said Thursday its third-quarter profit climbed 28 percent on membership growth and premium and fee rate increases, and raised guidance for the full year.

Net income rose to $476.4 million, or 85 cents per share, in the three months ended Sept. 30 from $372.8 million, or 62 cents per share, during the same period last year.

Excluding reserve development, operating earnings grew to 78 cents per share in the latest quarter, up from 58 cents per share.

Analysts polled by Thomson Financial were looking for earnings of 72 cents per share.

Quarterly revenue increased 11 percent to $6.3 billion compared to $5.7 billion in the year-ago period, in line with analysts' expectations.

Fee and other revenue climbed 14 percent to $712.9 million from $626.8 million. Total medical membership gained 5 percent to 15.4 million compared to 14.7 milllion last year, and group insurance membership rose 12 percent to 15.3 million from 13.7 million, while pharmacy membership grew 10 percent to 10.2 million from 9.3 million.

Aetna raised guidance for 2006 operating earnings to $2.83 per share from prior estimates of $2.77 to $2.79. For 2007, the company predicted operating earnings of $3.26 per share, representing 15 percent growth.

Analysts are expecting fiscal 2006 profit of $2.76 per share, on average, and 2007 full-year earnings of $3.15 per share.

Comcast Profit Leaps On Acquisition

PHILADELPHIA - (AP) - Comcast Corp. (CMCSA), the nation's biggest cable TV company, said Thursday its profit soared in the third quarter, bolstered by its acquisition of a former rival's cable assets.

But excluding the gain, related to the Adelphia Communications Corp. purchase and asset swap that closed this summer, Comcast's profit more than doubled from a year ago while revenue climbed 22 percent from a year ago.

Philadelphia-based Comcast has been pulling away from its satellite television competitors with its vaunted "triple play" package of cable TV, high-speed Internet and digital voice plans priced at $99 for 12 months. The cable operator's next frontier will be business customers, which it's ramping up to reach with its broadband and phone service plans.

Comcast reported net income of $1.22 billion, or 58 cents a share, in the three months ended Sept. 30 versus $222 million, or 10 cents a share, a year ago.

Without the after-tax gains of $669 million from Adelphia, profits came to $548 million, or 26 cents a share.

Revenue rose to $6.43 billion from $5.28 billion a year ago.

Analysts surveyed by Thomson Financial expected Comcast to post profits of 19 cents a share on revenue of $6.41 billion.

Operating income rose to $1.2 billion from $841 million in the quarter while operating cash flow rose to $2.4 billion from $2 billion. Results reflect the Adelphia purchase.

Comcast's cable revenue, which mainly comprises its video, Internet and voice businesses, rose by 12 percent to $6.6 billion pro forma.

In the quarter, Comcast added 558,000 digital subscribers, up 77 percent and a quarterly record. Total digital customers reached 12.1 million. The number of new basic subscribers was flat, adding only 10,000 in the quarter to total 24 million. But it reversed last year's decline of 44,000.

On average, video customers paid $91.89 a month in the quarter, up from $81.94 last year.

In high-speed Internet, Comcast added 536,000 new customers, up 6 percent from last year's sign ups, for a total of 11 million. Average monthly cost per month rose to $43.14 for a subscriber, up from $42.45. Revenue rose by 22 percent to $1.4 billion, excluding Adelphia's impact.

Digital voice service had the biggest growth of all segments. It added 483,000 customers, up nearly seven-fold, to 1.3 million customers.

Sprint Nextel Profit Falls Due To Spinoff

RESTON, Va. - (AP) - Sprint Nextel Corp. (S) on Thursday said third-quarter profits were cut by more than half due to the spin-off of its local phone division, now known as Embarq Corp.

For the three months ending Sept. 30, the company reported earnings of $247 million, or 8 cents per share, compared to $514 million, or 23 cents per share during the same period a year ago.

Embarq added $253 million to last year's results.

Sprint said it earned 32 cents per share in the most recent quarter, after excluding 2 cents for special items and 22 cents for merger and acquisition-related amortization cost. That was a penny short of the average estimate of analysts surveyed by Thomson Financial.

Revenues for the quarter increased 34.6 percent to $10.5 billion from $7.8 billion during the same quarter a year ago. Analysts had expected revenues of $10.48 billion.

The year-ago figures reflect that Sprint didn't own Nextel Communications Inc. until August and don't include the results from affiliates it has acquired since then. Sprint also spun off its local telecommunications division to become Embarq Corp. in May.

Sprint Nextel, based in Reston with operational headquarters in Overland Park, Kan., said it added 233,000 wireless subscribers during the quarter for a total of 51.9 million. It said it lost 188,000 post-paid subscribers, which are the most profitable customers because they pay a monthly bill.

The company gained 216,000 subscribers through its pre-paid Boost subsidiary, saw a rebound of 177,000 customers from wholesale channels and a gain of 28,000 net subscribers from affiliates.

The number of added subscribers is far fewer than the 1.4 million reported earlier by competitor Cingular Wireless.

Analysts had expected the company to lose subscribers as Sprint has struggled with incorporating Nextel into its network, adjusted its marketing and strengthened its credit requirements to drop lower-margin subscribers.

"In the third quarter we took some actions to improve the quality of the customers coming into our business, and this is constraining our near-term growth," said Gary Forsee, the company's chief executive. "At the same time, we have taken a number of actions we believe will improve our top-line growth performance over time."

Churn for the quarter, which measures the percentage of leaving the network, increased during the quarter to 2.4 percent from 2.1 percent during the second quarter.

Average revenue per user declined 5.5 percent to $61, although the company said it saw revenue from data services, such as high-speed Internet and downloads of games and ringtones, increase to $7.75 per user from $7.25 during the second quarter.

Wireless revenues increased 47 percent to $9.1 billion from $6.2 billion while long-distance revenue declined 6 percent to $1.63 billion from $1.74 billion.

Sprint said that while long-distance voice revenue fell 9 percent it was partially offset by a 26 percent increase in Internet phone revenues.

The company said it still expects full-year revenues of $41 billion to $41.5 billion and adjusted operating income before depreciation and amortization of $12.6 billion to $12.9 billion.

Analysts expect earnings of $1.29 per share on revenues of $41.52 billion.

Kellogg Beats Wall Street Views

LOS ANGELES (Reuters) - Kellogg Co. (K), the No. 1 maker of breakfast cereal, Thursday reported a 2.5 percent rise in quarterly earnings that handily beat Wall Street estimates as strong sales helped offset higher commodity prices.

The maker of products including Frosted Flakes cereal and Keebler cookies also raised its 2006 earnings forecast, citing strength in the first nine months of the year.

Third-quarter net income rose to $281.1 million, or 70 cents per share, from $274.3 million, or 66 cents per share, a year ago. Analysts, on average, expected Kellogg to earn 65 cents per share, according to Reuters Estimates.

Like many U.S. food makers, Kellogg has been hit hard by soaring energy, grain and sugar costs. Last month, the company raised prices on some cereals 2 percent to help offset the increased expenses.

But revenue rose 7.6 percent to $2.82 billion, well above analysts' expectations of about $2.75 billion, according to Reuters Estimates.

Cereal sales in North America were up 3 percent, on top of an 11 percent rise in the same period last year.

D.A. Davidson analyst Tim Ramey said he had been expecting cereal sales to drop because of the difficult comparison against last year.

"That's a good year-on-year rate of change given the performance last year," said Ramey, who has a "buy" rating on Kellogg shares and owns none. "It was a very solid sales performance across the board."

Kellogg now expects earnings of $2.48 to $2.50 a share for the year, compared with its previous forecast of $2.45 to $2.49 per share. The prior view included up to 30 cents of increased costs on fuel, energy and commodities as well as 15 cents of what Kellogg called "up-front" costs, or restructuring expenses.

For 2007, the company forecast $2.67 to $2.72 a share, with sales up in the low single digits on a percentage basis.

Analysts looked for $2.51 a share for 2006, and $2.74 in 2007, according to Reuters Estimates.

Earlier this week, Kellogg said its president and chief operating officer, David Mackay, will become chief executive as of Dec. 31. He replaces Jim Jenness, who will continue as chairman.

Kellogg shares were up 13 cents at $49.77 in early trading on the New York Stock Exchange. The stock has gained 15 percent so far this year, compared with a 10 percent rise in the Standard & Poor's Packaged Foods index.

Bristol-Myers Squibb Earnings Plunge On Plavix Troubles

NEW YORK (Reuters) - Bristol-Myers Squibb Co. (BMY ) Thursday said third-quarter earnings plunged as sales of anti-clotting drug Plavix were hurt by a cheaper generic, but the results beat Wall Street forecasts and the company raised its full-year profit outlook.

"Bristol's results were superficially better than expected and they did raise their guidance for the year, but the real issue is how well the company will do in 2007 and they didn't give any more clarity on that," said Deutsche Bank analyst Barbara Ryan.

Ryan said Bristol-Myers, which fired Chief Executive Officer Peter Dolan last month after failed company efforts to delay the Plavix generic, could become prey to a takeover if it does not "solidly recover" from declining earnings and other serious problems.

New York-based Bristol earned $338 million, or 17 cents per share, from continuing operations, compared with $964 million, or 49 cents per share, in the year-ago quarter.

Excluding special items, the company earned 22 cents per share. Analysts, on average, expected 20 cents, according to Reuters Estimates.

Quarterly sales fell 13 percent to $4.15 billion as Plavix, the company's longtime biggest product, was mauled by competition from a cheaper generic introduced in August by privately held Canadian drugmaker Apotex Inc.

Plavix, used to prevent blood clots that can trigger heart attacks, was the world's second-biggest medicine with global annual sales of $6 billion, before the generic arrived.

The company boosted its full-year profit forecast to between $1.02 and $1.07 per share, excluding special items, from its earlier prediction of no less than 95 cents per share. Even so, the new forecast represents a decline of at least 25 percent from last year.

Bristol-Myers on Aug. 31 secured a federal court injunction that prevents Apotex from selling any more of its product in the United States. But it said huge supplies of the generic already delivered by Apotex are expected to "continue to satisfy a significant majority of prescription demand" through the end of the year.

Bristol-Myers said quarterly global revenue from Plavix, which the company sells in partnership with Sanofi-Aventis , fell 36 percent to $630 million. U.S. sales of the drug plunged 43 percent to $474 million.

Deutsche Bank's Ryan said Plavix sales, although battered, were better than she expected, and that sales of most other company medicines were in line with her forecasts.

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