Earnings: EBay, Netflix, ConocoPhillips, McDonald's, General Dynamics, Cingular

Earnings: EBay |Netflix | ConocoPhillips |McDonald's | General Dynamics | Cingular

EBay Profit Increases 24 Percent

SAN FRANCISCO - EBay Inc. (EBAY) reported Wednesday that fourth-quarter profit increased 24 percent from the same period last year, trouncing Wall Street estimates and prompting executives to raise estimates for the current quarter.

Thanks to scorching holiday sales — particularly in eBay's traditional strongholds of the United States, United Kingdom and Germany — the San Jose-based online auction company earned $349 million, or 25 cents per share, for the three months ended Dec. 31. It earned $279 million, or 20 cents per share in the year-ago period.

EBay shares increased $1.38, or nearly 5 percent, to close Wednesday at $30 on the Nasdaq Stock Market before the earnings report was released. It jumped to $33.05, up an additional 10.2 percent, in after-market trading.

"It was a very strong quarter capping a very strong year," eBay President and Chief Executive Meg Whitman said in a brief phone interview with The Associated Press when the results were released.

Fourth-quarter revenue totaled $1.72 billion, up 29 percent from $1.33 billion in the year-ago period.

Excluding charges unrelated to ongoing operations, eBay earned $431 million, or 31 cents per share, up nearly 27 percent from the same quarter last year, when eBay earned $340 million, or 24 cents per share.

On that basis, which does not comply with generally accepted accounting principles, eBay was expected to earn $402 million, or 28 cents per share, on sales of $1.67 billion, according to analysts polled by Thomson Financial.

During the holiday quarter, more than 81 million active eBay users exchanged $14.4 billion in goods, ranging from pricey real estate and computer servers to Pez dispensers and clothing.

Whitman said the company raised first-quarter 2007 sales guidance to a range of $1.67 billion to $1.72 billion. Excluding special items, eBay expects earnings per share to be in the range of 28 cents to 30 cents per share.

In 2006, eBay earned $1.13 billion, or 79 cents per share, up 4 percent from $1.08 billion, or 78 cents per share, in 2005. Excluding stock-based compensation costs and other expenses, eBay in 2006 earned $1.49 billion, or $1.05 per share, up nearly 24 percent from $1.2 billion, or 86 cents per share, a year earlier.

Annual revenue was $5.97 billion, up 31 percent from $4.55 billion in 2005. That's higher than the $5.96 billion from the most optimistic analysts polled by Thomson Financial. Overall, analysts expected eBay to earn $1.46 billion, or $1.02 per share, on sales of $5.91 billion.

Netflix 4Q Profit Beats Analyst Expectations

SAN FRANCISCO - Netflix (NFLIX) Inc.'s fourth-quarter profit surpassed analyst expectations as 654,000 more subscribers signed up for its online DVD rental service, but the customer growth lagged Blockbuster Inc.'s — a development that underscores the intensifying competition between the rivals.

Los Gatos-based Netflix said Wednesday that it earned $14.9 million, or 21 cents per share, during the final three months of 2006. That was down 61 percent from net income of $38.2 million, or 57 cents per share, in the prior year, but those results were pumped up by a $35 million windfall from taxes.

The most recent quarter's profit easily exceeded the average estimate of 15 cents per share among analysts polled by Thomson Financial.

Revenue for the period totaled $277.2 million, a 44 percent increase from $193 million in 2005.

With the performance, Netflix hit all the ambitious targets that management had established at 2006's outset.

The company attracted an additional 2.1 million subscribers during the entire year, bringing its customer count to 6.3 million through December. The growth translated into a full-year profit of $49.1 million, or 71 cents per share, a 17 percent increase from $42 million, or 64 cents per share, in 2005. Revenue for 2006 climbed 46 percent to $997 million.

Despite the company's continued progress, many investors remain skeptical about Netflix's staying power because of the twin threats posed by stiffening competition from Blockbuster and an anticipated expansion of video available for delivery over the Internet.

Blockbuster looms as the bigger concern right now. After starting slowly in online DVD rentals, the Dallas-based company appears to be gaining momentum with a recently introduced twist that allows subscribers to return movies to the store instead of sending back through the mail.

The promotion helped Blockbuster add 700,000 new subscribers during the quarter to increase its online customer base to about 2.2 million.

ConocoPhillips Earnings Fall On Dip In Oil Prices

NEW YORK (Reuters) - ConocoPhillips (COP) the No. 3 U.S. oil company, said Wednesday fourth-quarter earnings fell 13 percent on lower gas prices and refining margins, but beat recently reduced Wall Street expectations.

The company also said it expects its oil and gas production to drop in the first quarter from fourth quarter levels.

Net income in the quarter fell to $3.20 billion, or $1.91 a share, from $3.68 billion, or $2.61 a share, in 2005.

Excluding about 17 cents per share in charges, the company earned about $2.08 a share. On that basis, the average forecast of analysts polled by Reuters Estimates was $1.99 a share.

But analysts had been expecting earnings of around $2.18 a share before lowering their estimates after the company announced weaker-than-projected production for the quarter.

"I think the street was too bearish on the downstream operations," said Mercantile Trust energy analyst Gene Pisasale, using the industry term to refer to the company's refining and marketing operations.

"If you look at the numbers, year-over-year the street was expecting them to be down 27 percent and margins weren't down nearly that much," he said.

Revenue in the quarter fell to $41.5 billion from $51.3 billion in the year-earlier quarter.

Houston-based ConocoPhillips said it produced 2.49 million barrels of oil equivalent per day (boepd) in the quarter, including about 440,000 boepd from its stake in Russia's Lukoil.

The price the company received for its crude oil in the quarter was $55.10, up from $53.05 in the year earlier quarter. Its average gas price fell to $6.12 per thousand cubic feet, down from $7.94 per thousand cubic feet in 2005.

It said it expects first-quarter production to slip from those levels, hurt by downtime in the North Sea, OPEC production quota reductions in Venezuela and Libya, and other factors.

The company said that the currently announced quotas, if carried through until the end of the quarter, will hurt first-quarter production by about 30,000 boepd.

ConocoPhillips said its refineries operated at about 94 percent of capacity in the quarter. It expects its refineries to also run in the mid-90 percent range in the first quarter.

U.S. oil prices fell sharply toward the end of the third quarter and spent much of the fourth quarter hovering around $60 a barrel, roughly in line with year-earlier prices. U.S. crude has again dropped sharply in the first quarter, trading at around $55 a barrel.

Shares of ConocoPhillips rose 50 cents, or 0.8, to $65.47 in early trading versus a slight drop in the Chicago Board Options Exchange's oil index.

Since the end of the third quarter, ConocoPhillips shares are up about 9.8 percent, outperforming the CBOE oil index, which rose about 7.6 percent in the same period.

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McDonald's Profit More Than Doubles

CHICAGO - (AP) -McDonald's Corp. (MCD), the world's largest fast-food chain, said Wednesday that its fourth-quarter profit more than doubled, thanks in large part to the spinoff of a burrito chain and strong sales in Europe.

The restaurant company earned $1.2 billion, or $1 a share, in the quarter ending Dec. 31, up from $608.5 million, or 48 cents a share, during the year-ago period.

McDonald's revenue climbed 11 percent to $5.6 billion, from $5.01 billion during the year-ago period.

Even without the gain from the spinoff of the Mexican-style eatery Chipotle, McDonald's said its income from continuing operations climbed to $761.2 million, up 26 percent from $604.8 million last year.

The Oak Brook, Ill.-based company said the gain on the Chipotle spinoff added 39 cents per share to its results.

On average, analysts surveyed by Thomson Financial forecast quarterly income of 61 cents per share and revenue of $5.7 billion. The estimates typically exclude one-time items.

"McDonald's is delivering the strongest business results in 30 years," CEO Jim Skinner said in a statement. "... Our strategic focus on serving customers an effective balance of new menu items, premium products and everyday value in convenient, contemporary locations continued to drive results."

For the year, McDonald's said it earned $3.5 billion, or $2.83 per share, a 36 increase from last year. For 2006, the company had $21.6 billion in revenue.

Skinner said the company will invest nearly $2 billion this year to open 800 new restaurants and improve existing locations.

McDonald's shares fell 35 cents to $44.50 in pre-marketing trading.

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General Dynamics Slightly Below Views

NEW YORK (Reuters) - General Dynamics Corp. (GD) reported fourth-quarter earnings rose slightly less than expected Wednesday, due to lower profit margins in its army vehicle and shipbuilding units, sending its shares down sharply.

The No. 4 U.S. defense contractor, like rivals Lockheed Martin Corp., Raytheon Co. and Boeing Co. (BA), is enjoying a boom in military and commercial aircraft spending, but last October chief executive Nicholas Chabraja warned analysts against expecting a "blow-away" quarter due to shrinking margins in some areas.

Its shares fell more than 3 percent in early trading, after hitting an all-time high on Tuesday.

"We suspect that the market was expecting more given the recent share-price strength, which has coincided with a torrent of positive newsflow on the defense budget and the 'surge' in Iraq," said Bank of America analyst Robert Stallard in a research note.

The company, which makes Abrams tanks and Stryker combat vehicles for the U.S. Army as well as Gulfstream jets, reported net profit of $408 million, or $1 per share, compared with $406 million, or $1 per share, a year earlier.

Excluding charges related to the expected sale of its coal-mining business, the company reported profit from continuing operations of $1.13 per share. On that basis, analysts' average forecast was $1.14, according to Reuters Estimates.

Sales rose 13 percent to $6.5 billion. Analysts had expected $6.62 billion.

Its shares fell $2.77 to $78.12 on the New York Stock Exchange. They are still up about 40 percent from a year ago, hitting an all-time high of $81.28 on Tuesday, as investors anticipate greater profits from building and repairing army vehicles being used in Iraq and Afghanistan.

The Falls Church, Virginia-based company is also expected to benefit further from last year's purchase of Anteon International Corp., which makes secure network systems for U.S. intelligence agencies, and the continuing boom in business jet sales lifting its Gulfstream unit.

General Dynamics' overall profit margin rose to 10.8 percent in the quarter from 10.6 percent in the 2005 fourth quarter. But margins declined slightly in its combat systems and marine systems units, which respectively include its armored vehicle and shipbuilding operations.

The company's Gulfstream unit delivered 30 jets in the quarter, compared with 24 a year ago. It took orders for 159 jets in 2006, up from 124 the year before.

The total year-end value of work on its books for which government funds have already been set aside — known as funded backlog — rose 14 percent to $32.7 billion from the end of 2005.

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Cingular Profit Surges, Nearly Quadruples

SAN ANTONIO - (AP) - Cingular Wireless LLC, the nation's largest cell phone provider, said Wednesday its fourth-quarter profit nearly quadrupled, boosted by customer growth during the winter holidays.

Cingular said it earned $782 million during the fourth quarter, compared with $204 million in the same quarter of 2005. The company reported revenue of $9.8 billion, up 10 percent from $8.8 billion in the same period of 2005.

The company, which was rebranded under the AT&T Inc. (T) name last week, was a joint venture of Atlanta-based BellSouth Corp. and AT&T before AT&T completed its $86 billion purchase of BellSouth last month. The wireless company will report earnings as part of the parent company in future quarters.

The wireless unit's growth in the fourth quarter was driven in part by a net increase of 2.4 million customers during the holiday quarter, typically the heaviest selling season for cell phones.

Company executives had previously said that Cingular's churn rate — the percent of customers who switch to other carriers — could increase from new lows. But in the fourth quarter, the churn rate was 1.5 percent, the same as in the third quarter and lower than the 1.9 percent it reported in the year-ago quarter.

"Our last quarter as a joint venture operating under the Cingular name was our best ever on a variety of fronts," said Stan Sigman, the company's president and CEO.

For the year, the company's net income was $2.5 billion, compared to $333 million in 2005.

Shares of AT&T gained 1 cent to $25.29 in morning trading on the New York Stock Exchange.

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