Markets & Finance

AOL Plans to Restate Results


After the market close Wednesday, America Online (AOL) reportedly said it will restate results for the quarter ended September 2000 through the quarter ended June 2002. The move will reduce advertising and commerce revenue by about $190 million, and lower earnings before interest, taxes, depreciation, and amortization (EBITDA) by about $97 million, according to the Wall Street Journal. The media giant reported third-quarter revenue increased 6% to $10 billion, in line with its projection, and EBITDA fell 1% to $2.2 billion, in line with its forecast, according to news reports.

Telecom services stocks fell after Bear Stearns downgraded SBC Communications (SBC) to peer perform from outperform. Morgan Stanley downgraded SBC, Verizon (V), and BellSouth (BLS) to equal-weight from overweight.

Vivendi Universal (V) shares were lower on news reports that it is in talks with Lagardere Group to sell its European and Latin America publishing units of Vivendi Universal Publishing on basis of 1.25 billion euro enterprise value.

Eli Lilly (LLY) posted $0.68 vs. $0.66 third-quarter earnings per share on a 3% sales drop on lower Prozac sales due to generic competition. The drug giant cut its guidance to $0.68-$0.70 fourth-quarter earnings per share, and $2.55-$2.57 for 2002, citing the need to make investments in business.

Dental software systems company PracticeWorks (PRWK) posted $0.11 third-quarter earnings per share vs. a $0.93 loss on a 30% revenue rise, and warned of lower fourth-quarter earnings per share of $0.07. AG Edwards downgraded to sell. Jefferies downgrades to hold.

Metro One Telecom (MTON) says Sprint PCS (PCS) , which recently represented about 32% of Metro One's revenue, gave notice it will not sign a new contract with Metro One. JP Morgan reportedly downgraded to underweight. S&P keeps avoid.

Flowserve (FLS) shares fell after CS First Boston downgraded to neutral from outperform. Yesterday the company posted third quarter earnings.

Moody's (MCO) shares slumped after it reported third-quarter EPS of $0.43, vs. $0.31 a year ago, on 30% revenue rise (including KMV). The company ses mid-20%s 2002 revenue growth, but expects 2003 revenue growth to be substantially lower. S&P reaffirms buy ranking.

Silicon Labs (SLAB) posted $0.18 third-quarter earnings per share vs. a $0.01 loss on a sharp revenue rise, and sees about a 10% fourth-quarter sequential revenue rise. Needham downgraded to hold; CE Unterberg reportedly downgraded.

Johnson & Johnson's (JNJ) Cordis unit says the FDA voted in favor of FDA approval with conditions, for the company's drug-eluting coronary stent. CIBC World downgraded; S&P reiterates accumulate.

Reebok (RBK) posted $0.81 vs. $0.66 third-quarter earnings per share on 7.6% higher net sales, and reaffirmed the $0.23-$0.25 fourth-quarter earnings per share forecast.

P.F. Chang's (PFCB) posted $0.17 vs. $0.14 third-quarter earnings per share on a 33% revenue rise, and raised the $419 million 2002 revenue forecast to $421 million. The chain restaurant also maintains its $0.24 fourth quarter, $0.80 2002, and $1.02 2003 earnings per share estimates.

Forest Labs (FRX) announced that certain executive officers have filed notifications of contemplated sales of shares in accordance with Rule 144 promulgated by the SEC.

DuPont (DD) posted better than expected $0.40 vs. $0.12 third-quarter (underlying) earnings per share despite a 2.8% sales drop, and maintains its forecast for underlying fourth-quarter earnings per share about triple those of prior year, and $2.00 2002 earnings per share.

According to The Wall Street Journal, Aetna will end its contract with Express Scripts (ESRX), and will make one or more acquisitions to be able to handle its entire $4 billion prescription-drug business in-house. Separately, Express Scripts posted $0.68 third-quarter earnings per share on a 44% revenue rise.

Xerox (XRX) posted $0.05 third-quarter earnings per share vs. a $0.05 loss as higher margins and lower costs offset a 6.4% revenue drop. Analysts expected a mean average of $0.02 earnings per share.

KLA-Tencor (KLAC) posted better-than-expected $0.26 vs. $0.44 first quarter earnings per share on a 25% revenue decline. Prudential and CS First Boston cut their estimates.

PEC Solutions (PECS) posted $0.25 vs. $0.13 third-quarter earnings per share on an 83% revenue rise, and sees $0.18-$0.20 fourth-quarter earnings per share on $50 million to $52 million revenues, and $0.73-$0.75 2002 earnings per share on $184 million to $186 million revenues. PEC sees $0.85-$0.95 2003 earnings per share on $240 million to $260 million revenues. CIBC World ups estimates.

Websense (WBSN) posted $0.18 vs. $0.08 third-quarter earnings per share on a 68% revenue rise, and sees $0.19-$0.20 fourth-quarter earnings per share on 10%-12% sequential revenue growth. CS First Boston raised estimates.

Overture Services (OVER) posted $0.28 vs. $0.15 third-quarter earnings per share on a sharp revenue rise, and sees $0.23 fourth-quarter earnings per share on $190 million revenue, and $0.90-$1.05 2003 earnings per share. S&P keeps hold.

Business Objects (BOBJ) posted $0.12 (excluding acquisition costs) vs. $0.15 third-quarter earnings per ADS despite an 11% revenue rise, and sees $0.15-$0.20 fourth quarter earnings per ADS on revenue of $118 million to $124 million.


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