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Calpine's Profit Down, but Progress Reported

November 06, 2002|Nancy Rivera Brooks | Times Staff Writer

Calpine Corp. reported a 50% drop in third-quarter earnings Tuesday because of depressed electricity prices and a shriveled trading business.

The San Jose power plant builder posted third-quarter net income of $161.3 million, or 36 cents a share, down from $320.8 million, or 88 cents a share in the same quarter last year. Not counting one-time gains on the sale of discontinued operations and charges from the cancellation of power plant projects, Calpine would have earned $170.9 million, or 38 cents a share, in the third quarter.

Revenue for the quarter slipped to $2.49 billion from $2.52 billion.

Although third-quarter income was sharply lower than analysts had expected Calpine to earn, it was close to the diminished expectations generated in recent months as the energy-trading industry disintegrated after Enron Corp.'s collapse and a series of trading and accounting scandals. The average Calpine earnings estimate of analysts survey by Thomson First Call was 40 cents a share.

In addition, Calpine reported that cash is building again in the business and that the company is making progress in asset sales and debt-refinancing talks. Calpine, which owns 75 power plants, said it benefited from the relatively low cost of operating its new facilities and from long-term energy contracts, which help insulate the company from rock-bottom power prices.

"It was a good quarter," Calpine Chief Executive Peter Cartwright said in a morning conference call. "In spite of low electricity prices, we have continued to operate profitably."

Analysts and investors were cheered by these rare nuggets of good news in a battered sector, causing Calpine's stock to rise 19 cents, or 7.3%, to $2.79 on the New York Stock Exchange.

Calpine's earnings "were not a disaster, and that has been a virtue lately," said Christopher Ellinghaus, an analyst with Williams Capital Group.

Calpine executives said the company has been cutting costs aggressively, including layoffs of nearly 400 employees, or about 10% of its work force.

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