Earnings: Apple Inc. | JPMorgan | American Airlines | Southwest Airlines |

Apple Reports Record 1Q Profit

SAN JOSE, Calif. -- Apple Inc. on Wednesday posted a record profit in its fiscal first quarter, beating Wall estimates as earnings rose 78 percent amid strong holiday sales of its iPod music players and Macintosh computers.

During the final three months of 2006, the Cupertino-based company Apple said it earned $1 billion, or $1.14 per share, compared to $565 million, or 65 cents a share, in the year-ago period.

Revenue for the quarter hit a record, reaching $7.1 billion, up 24 percent from $5.7 billion the previous year.

Analysts, on average, were expecting earnings of 78 cents per share on sales of $6.42 billion, according to a Thomson Financial poll.

"This one was for the record books," Apple's chief financial officer Peter Oppenheimer said in an interview.

Apple shipped 1.6 million Macs and more than 21 million iPods during the quarter, representing a growth of 28 percent and 50 percent respectively from the year-ago holiday season.

Shares of Apple closed down $2.15 at $94.95 on the Nasdaq Stock Market as the tech stocks in general tumbled. In extended trading following its report, Apple shares fell another 19 cents.

JPMorgan Earnings Up 68 Percent

NEW YORK - (AP) - Fourth-quarter earnings at JPMorgan Chase & Co. (JPM) soared 68 percent on strong investment banking growth and a gain from the sale of the bank's corporate trust business.

But credit quality weakened somewhat, as it has at other major banks, suggesting that both commercial and individual customers are having more trouble keeping up with their bills.

The New York-based bank, the nation's third largest, said Wednesday that net income was $4.53 billion, or $1.26 a share, in the October-December period, up from $2.7 billion, or 76 cents a share, a year earlier.

Excluding the $622 million after-tax gain on the sale of its trust business, net income was $3.9 billion, or $1.09 a share.

That was well ahead of the 95 cents projected by analysts surveyed by Thomson Financial.

Revenue was $16.05 billion, slightly above the analysts' expectation, and 19 percent ahead of the $13.48 billion reported in the fourth quarter of 2005.

Despite the strong showing, JPMorgan Chase shares fell 11 cents to $48.28 in morning trading on the New York Stock Exchange.

Analysts saw it as a solid quarter for the bank. Glenn Schorr of UBS Equities called it a "good quarter" and said the 2007 outlook "was modestly better than expected." Sandler O'Neill analysts called it "a solid beat" with especially strong performance in investment banking and asset management.

On Tuesday, San Francisco-based Wells Fargo & Co., the nation's fifth largest bank, reported a 13 percent increase in fourth-quarter earnings, while U.S. Bancorp of Minneapolis, Minn., eked out an improvement.

But credit losses increased at both banks, and some analysts believe the weakening housing market and slowing economy could worsen credit quality in coming quarters.

New York-based Citigroup Inc. (C), the nation's largest bank, reports its earnings on Friday. No. 2 Bank of America Corp. (BAC), which is based in Charlotte, N.C., reports earnings next week.

JPMorgan Chase's Chief Executive Officer Jamie Dimon, who also assumed the role of chairman at the start of the year, told analysts in a conference call that he was pleased with the bank's performance.

"All of our six businesses have been getting stronger almost every quarter," he said.

Dimon also said the integration process was going well with the bank branches it obtained from the Bank of New York in exchange for its corporate trust operations.

He cautioned, however, that he expects to see higher loan delinquencies and losses in coming quarters, adding that "we've been warning you about that over time." He noted that credit quality was unusually stellar after the change in the nation's bankruptcy laws in the fall of 2005 suppressed filings.

Dimon predicted continued consolidation among regional banks, but said it was "hard to say" if JPMorgan Chase would consider acquiring a major institution because prices are so high.

He added that because the bank has accumulated a lot of capital, it "will think about increasing the dividend later this year."

JPMorgan's strongest fourth-quarter performance came from the investment bank, where net income grew 51 percent to $1 billion in the October-December period from $667 million a year earlier on record revenue. Chief Financial Officer Michael Cavanaugh said the investment bank did especially well in boosting fee revenue from corporate finance activities and merger and acquisition advice as well as in garnering better market results. Still, the provision for credit losses in this division rose to $63 million from $7 million in the third quarter.

In retail financial services, revenue increased but net income declined to $718 million in the fourth quarter from $803 million a year earlier. Results reflected a loss on a mortgage loan portfolio, acquisition of the Bank of New York consumer business and absence of an insurance business that was sold in July 2006, the bank said.

Provisions for credit losses rose to $262 million in the quarter from $158 million a year earlier.

In card services, net income more than doubled to $719 million from $302 million a year earlier. The provision for credit losses of $1.28 billion was down from a year earlier but slightly higher than the $1.27 billion of the third quarter.

For the year, JPMorgan Chase reported net income of $14.44 billion, or $4.04 a share, up from $8.48 billion, or $2.38 a share in 2005. Revenue was $61.4 billion, up from $53.7 billion in 2005.

American Airlines Parent Posts First Profit Since September 11

DALLAS - (AP) - AMR Corp. (AMR), parent of American Airlines, said Wednesday it swung to a fourth-quarter profit, aided by a cheaper fuel bill, and reported its first annual profit since before the 2001 terrorist attacks.

AMR, also the parent of regional carrier American Eagle, reported a quarterly profit of $17 million, or 7 cents per share, compared with a prior-year loss of $600 million, or $3.46 per share. Revenue grew to $5.4 billion from $5.17 billion.

Wall Street, on average, had been expecting a quarterly loss of 13 cents per share on revenue of $5.5 billion, according to a Thomson Financial poll of analysts.

The company had warned investors last month that higher maintenance expenses and weather-related flight cancellations in November and December would hurt quarterly results.

But the company reported its aircraft fuel expenses fell in the fourth quarter to $1.45 billion from $1.59 billion, as overall operating expenses fell 6 percent to $5.21 billion.

For the full year, AMR reported earnings of $231 million, or 98 cents per share, compared with a prior-year loss of $857 million, or $5.18 per share.

"By producing a fourth quarter and full year profit for the first time since 2000, the people of American Airlines made 2006 a proud milestone in our ongoing turnaround," AMR Chairman and CEO Gerard Arpey said in a statement.

AMR shares rose 17 cents in premarket trading to $40.40, after closing Tuesday at $40.23 on the New York Stock Exchange.

Southwest Earnings Decline

DALLAS - (AP) - Low-cost carrier Southwest Airlines Co. (LUV) said Wednesday its fourth-quarter profit declined 19 percent from a year ago as fuel prices and security costs increased, but operating profit rose on strong revenue growth to meet Wall Street expectations.

Net income fell to $57 million, or 7 cents per share, in the three months ended Dec. 31 from $70 million, or 9 cents per share, a year ago Excluding special items, the airline posted profit of $96 million, or 12 cents per share, up from $81 million, or 10 cents per share, last year.

Revenue grew 15 percent to $2.28 billion from $1.99 billion in the year-ago period.

The results were in line with analysts' consensus estimates, according to a poll by Thomson Financial.

"Despite growing capacity 10 percent, and the lingering effects of the August London terrorist threat and related carryon restrictions, we achieved a record fourth-quarter load factor of 70.2 percent at healthy yields, which resulted in a steady unit revenue growth rate of 4.2 percent," said Gary C. Kelly, Southwest CEO. "Based upon our traffic and bookings to date, we expect 2007 first quarter year-over-year unit revenue growth to remain steady."

The company said hedged jet fuel cost per gallon increased almost 30 percent during the quarter.

Southwest said it is benefiting from the recent decline in energy prices and is now completely hedged for the first quarter of 2007, capped at an average crude-equivalent price of about $50 per barrel.

"We are very excited about 2007 and are well-positioned to respond to airline industry changes and consolidation," added Kelly. "We have significant growth opportunities with or without consolidation and currently plan to add 37 aircraft in 2007 for an estimated eight percent available seat mile increase. These deliveries will bring our fleet to 518 Boeing 737s by the end of 2007."

Southwest said the outlook for this year is "favorable," and the company predicts it will exceed its 15 percent growth target for operating earnings per share.

But its shares fell 44 cents, or 2.7 percent, to $16.13 in morning trdaing on the New York Stock Exchange. They have traded in a 52-week range of $14.61 to $18.20.