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McDonald's 2nd-Quarter Earnings Drop 16%

July 25, 2001|From Associated Press; Bloomberg News

CHICAGO — McDonald's Corp. on Tuesday reported a 16% drop in profit, its third straight quarterly decline, as the burger giant's stock rose modestly on its latest assurance that beef safety fears are easing in Europe, its top international market.

Squeezed by weak foreign currencies and other concerns, McDonald's said it may close as many as 250 under-performing restaurants this quarter, primarily in emerging international markets. It stopped short, however, of trimming an ambitious expansion plan to open 1,500 restaurants worldwide this year.

The "mad-cow" and foot-and-mouth disease scare that has jarred Europe in recent months continues to make patrons there leery of beef, cutting into McDonald's sales and resulting in what Chairman and Chief Executive Jack Greenberg said was "a tough six months."

Net earnings for its second quarter were $440.9 million, or 34 cents a share, down from $525.9 million, or 39 cents, a year ago. That met expectations of Wall Street analysts polled by First Call/Thomson Financial, which were lowered last month after McDonald's warned of another earnings shortfall.

Sales were $10.24 billion, essentially flat from a year ago, as a result of new restaurants and the recent acquisition of Boston Market. Sales declined 2% in Europe, which accounts for nearly a quarter of company sales, and 0.8% in the U.S.

McDonald's shares rose 62 cents to close at $28.39 on the New York Stock Exchange.

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QLogic Corp., an Aliso Viejo designer of chips and circuit boards that link computers and data-storage systems, said first-quarter profit fell 2% as sales slowed amid a weakening U.S. economy.

Net income declined to $19.2 million, or 20 cents a share, from $19.6 million, or 21 cents, a year earlier. Revenue rose 17% to $89.9 million.

The company was expected to earn 23 cents a share for the quarter ended July 1, according to analysts surveyed by First Call/Thomson Financial.

QLogic shares fell $1.39 to $40.74 on Nasdaq before the earnings were released, then moved to as low as $37.35 in after-hours trading.

QLogic's products are used in computer data-storage networks to expand the distance between storage devices and to boost the speed at which information is shared. Companies are delaying purchases of computer equipment as their own sales slow and the need for data storage diminishes.

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

* Earle M. Jorgensen Co., a Brea metal distributor, reported first-quarter net income of $500,000, which included an expense of $1.9 million for excise tax imposed under an Internal Revenue Service settlement. Profit for last year's first quarter was $7.1 million. Revenue declined 11% to $238.7 million for the quarter ended June 28.

* Hines Horticulture Inc., an Irvine operator of commercial nurseries, posted net income for the second quarter of $22.1 million, or $1 a share, slightly lower than the $23.1 million, or $1.05 a share, recorded a year earlier. Sales increased 3% to $204.8 million.

* Westcorp Inc., an Irvine financial services company that owns Western Financial Bank and a majority stake in WFS Financial Inc., reported second-quarter earnings of $16.9 million, or 50 cents a share, down from $17.6 million, or 64 cents a share for last year's second quarter. Revenue grew 28% to $135 million.

* WFS Financial Inc., the publicly traded Irvine automobile finance subsidiary of Westcorp Inc., reported record net income of $19.5 million, or 63 cents a share, for the second quarter, 21% higher than the $16.1 million, or 57 cents a share, posted for the same period a year earlier. Revenue grew 32% to $117 million.

* Intersil Corp., an Irvine supplier of communications semiconductors and software, reported net income of $1.2 million, or 1 cent a share, for the second quarter, a drop from last year's second-quarter profit of $1.8 million, or 2 cents a share. Sales declined 14% to $118.3 million.

* Impac Mortgage Holdings, Inc., a Newport Beach real estate investment trust, reported that second-quarter net income climbed to $8 million, or 33 cents a share, contrasted with a net loss of $31.1 million, or $1.45 a share, for the same period last year. Revenue rose 27% to $42.5 million.

* Wireless technology developer Universal Electronics Inc. in Cypress posted second-quarter net income of $2.3 million, or 16 cents a share, a gain of 10% from $2.1 million, or 14 cents a share, a year earlier. Sales increased 3% to $29.1 million.

* TriZetto Group Inc., a Newport Beach information technology and services company for the health care industry, incurred a second-quarter net loss of $15 million, or 40 cents a share, compared with a net loss of $8.6 million, or 43 cents a share, for the 2000 second quarter. Revenue grew to $53.3 million from $17.8 million, spurred in part by acquisitions.

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