DaimlerChrysler reported an unexpected decline in profit for the second quarter as competition forced it to boost discounts on Chrysler vehicles and costs mounted for its Smart mini-car.
The auto maker, Europe's largest industrial company, said earnings excluding one-time charges slipped 0.3% to $1.58 billion, or $1.53 a share, well below forecasts of $2 a share.
Especially disappointing were lackluster earnings from U.S. car and light-truck operations, the auto maker's single largest unit. The Chrysler arm's operating earnings rose 1.4%, less than its 9.6% increase in sales.
The German-American company said results were weakened by currency losses and German tax law changes that raised its tax rate.
The maker of Mercedes-Benz and Chrysler cars said that "increasingly intensifying competition" pinched margins and will keep full-year growth in profit from operations at about 6%. This comes even as second-quarter revenue rose 10% to $38.5 billion.
The disappointing results sent DaimlerChrylser shares down $7.44 to close at $77.56 on the New York Stock Exchange.
At a Glance
Other earnings, excluding one-time gains and charges unless noted:
TELECOMMUNICATIONS
* AT&T Corp. said its profit from operations rose 8% to $1.59 billion, or 49 cents a share, in the first full quarter that reflects its ambitious foray into cable TV with the purchase of Tele-Communications Inc. Analysts were expecting earnings of 48 cents at the nation's largest long-distance company, according to First Call Corp. Sales rose 6.7% to $15.82 billion, with wire services revenue up 42.4%. TCI accounted for only about 0.3 percentage points of AT&T's sales increase.
* MCI WorldCom, the No. 2 long-distance company, said its net income nearly tripled to $857 million, or 44 cents a share, from a pro forma $287 million, or 16 cents, matching estimates. Sales rose 16% to $8.1 billion, with Internet, international and data services accounting for 76% of the growth.
* Frontier Corp., the long-distance phone company being acquired by Global Crossing Ltd., said its profit from operations declined 19% to $37.2 million, or 21 cents a share, as it reduced rates amid tough competition. The results beat estimates by a penny. Sales edged down to $646.8 million from $648.3 million.
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