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J.P. Morgan's Quarterly Profit Plummets 69%

October 20, 1998|From Times Wire Services

J.P. Morgan & Co. said its third-quarter earnings plunged a greater-than-expected 69% to $122 million, or 58 cents a share, as slumping worldwide markets hurt trading revenue.

Analysts were expecting 81 cents a share. But Morgan stock, already battered in anticipation of bad results, rose $3.38 to close at $92.88 on the New York Stock Exchange on optimism that the worst is over at the U.S.' fourth-largest bank.

Investors were also pleased that Morgan said it would exceed its previously announced cost savings target of $300 million to $500 million per year in 1999. This will include deeper job cuts than the 5% reduction it already announced, Morgan said.

It also said it had reduced its loans to emerging markets, cutting lending to Asia by more than 50% and dropping Latin American exposures by 40% from year-end 1997 levels.

Revenue fell 32% to $1.3 billion in the latest quarter. Net interest revenue fell 30%. Non-interest revenue fell 28%, dragged down by an 82% drop in trading revenue to $119 million. Morgan lost $130 million on Russian trading account provisions, less than expected.

Separately, Bank of New York Co. said its third-quarter earnings rose 10% to $301 million, or 39 cents a share, meeting estimates. Fees from securities processing rose 28%, driving non-interest income up 13%. Net interest income fell 13% because of the bank's sale of a $4-billion credit card portfolio to Chase Manhattan Corp.

At a Glance

Other earnings, excluding one-time gains and charges unless noted:

* Ben & Jerry's Homemade Inc.'s third-quarter earnings rose 14% to $2.89 million, or 39 cents a share, beating expectations of 33 cents, as the ice cream maker's sales soared 29% to $64.6 million.

* Gulfstream Aerospace Corp. said third-quarter earnings rose 85% to $64.7 million, or 86 cents a diluted share, beating estimates by 5 cents, on strong demand for its business jet aircraft and improved productivity. Revenue rose 35% to $626.2 million.

* Lear Corp. said it third-quarter earnings fell 39% to $21.6 million, or 32 cents a share, in line with reduced estimates, because of lost sales from summer strikes at General Motors Corp. Sales rose 19% to $1.95 billion. The auto parts company also said it plans to take a fourth-quarter charge of about $125 million for a restructuring of international operations. It told analysts to lower their 1999 estimates from an average of $4.01 a share to about $3.60.

* McDonald's Corp. said third-quarter profit rose 7.4% to $482.2 million, or 69 cents a share, in line with estimates, as it boosted sales and profit in the U.S. and weathered economic slumps in major markets overseas.

* Tupperware Corp. said its fiscal fourth-quarter earnings will be down as much as 25% because of weak sales in Asia and Latin America, as it reported a third-quarter loss of $6.5 million, or 11 cents a share, compared with $3.4 million, or 6 cents, a year ago. Analysts had expected a loss of 12 cents. Tupperware said revenue fell 14% to $217.4 million.

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Earnings Watch

A sampling of companies reporting quarterly earnings Monday, ranked by year-over-year growth, and companies due to report today, ranked by analysts' forecast change in earnings per share (EPS) from the year-ago quarter, compiled by First Call:

Reporting Monday

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Pct. above/ 1997 Ticker Consensus Actual below 3rd-qtr. Company symbol EPS EPS estimate EPS % growth Peco Energy PE $0.76 $1.20 +58% $0.69 Warner-Lambert WLA 0.34 0.35 +3 0.24 FirstEnergy FE 0.70 0.71 +1 0.61 Equifax EFX 0.37 0.37 0 0.32 +16 Northern Trust NTRS 0.77 0.78 +1 0.70 Unicom UCM 1.09 1.22 +12 1.11 Summit Bancorp SUB 0.68 0.67 -1 0.61 McDonald 3/8s MCD 0.69 0.69 0 0.63 GTE GTE 0.84 0.85 +1 0.79 Rohm & Haas ROH 0.51 0.50 -2 0.48 Southern SO 0.75 0.74 -1 0.72 Public Serv. Ent. PEG 0.79 0.78 -1 0.76 Sherwin-Williams SHW 0.57 0.58 +2 0.57 Brunswick BC 0.46 0.46 0 0.46 Corning GLW 0.38 0.44 +16 0.45 -2 Cooper Tire CTB 0.41 0.39 -5 0.40 Lincoln National LNC 1.30 1.11 -15 1.20 Morton Intl. MII 0.36 0.36 0 0.39 Tupperware TUP -0.12 -0.11 NM* 0.06

Year- over-year Company symbol Peco Energy +74% Warner-Lambert +46 FirstEnergy +16 Equifax EFX Northern Trust +11 Unicom +10 Summit Bancorp +10 McDonald 3/8s +10 GTE +8 Rohm & Haas +4 Southern +3 Public Serv. Ent. +3 Sherwin-Williams +2 Brunswick 0 Corning GLW Cooper Tire -3 Lincoln National -7 Morton Intl. -8 Tupperware NM*

*--*

Reporting Today

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Ticker Consensus Year-ago Company symbol EPS estimate quarter pct. chg. EMC EMC $0.36 $0.25 Southwest Airlines LUV 0.37 0.27 Microsoft MSFT 0.49 0.36 Honeywell HON 1.13 0.92 Schering-Plough SGP 0.57 0.48 +19 BellSouth BLS 0.82 0.71 IBM IBM 1.53 1.35 Bristol-Myers Squibb BMY 0.95 0.84 Mellon Bank MEL 0.82 0.73 American Home Products AHP 0.46 0.42 Philip Morris MO 0.83 0.76 Johnson Controls JCI 1.07 1.00 Raytheon RTNB 0.86 0.89 ITT Industries IIN 0.43 0.45 Sprint FON 0.45 0.49 Chase Manhattan CMB 0.77 1.13 -32 Texas Instruments TXN 0.28 0.60 Citigroup CCI 0.29 2.19

Predicted Company symbol EMC +44% Southwest Airlines +37 Microsoft +36 Honeywell +23 Schering-Plough SGP BellSouth +15 IBM +13 Bristol-Myers Squibb +13 Mellon Bank +12 American Home Products +10 Philip Morris +9 Johnson Controls +7 Raytheon -3 ITT Industries -4 Sprint -8 Chase Manhattan CMB Texas Instruments -53 Citigroup -87

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* NM = not meaningful. A loss in any period makes percentage change not calculable.

Note: For more information via the Internet, check http://www.firstcall.com.

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