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Executive Business Briefing

Jan. 31, 2002 at 10:17 AM   |   Comments

Here is a look at more of Thursday's top business stories:


Verizon posts $2 billion loss

NEW YORK, Jan. 31 (UPI) -- Verizon Communications Inc., the nation's largest local telephone company, said it posted a fourth quarter net loss of $2.0 billion, or 75 cents a share including charges and other items, compared with a net income of $1.9 billion, or 70 cents a share during the same period a year earlier.

Excluding the charges, Verizon posted a net income of $2.1 billion, or 77 cents a share.

Analysts on Wall Street had expected the company to post a net income of 77 cents a share, according to Thomson Financial/First Call.

Verizon, which previously said it cut 7,000 jobs in the fourth quarter, said its fourth quarter revenue rose 1 percent to $17 billion from $16.9 billion a year ago.

"In Verizon's first full year of operation, we have repeatedly demonstrated the strength of the GTE and Bell Atlantic merger," said Co-Chief Executive Officer Charles Lee.

"We achieved solid results for the quarter and for the year despite the continuing downturn in the economy," he said.

Verizon also said it anticipates 2002 earnings of $3.20 to $3.30 a share with revenue growth of 3 percent to 5 percent.

Analysts currently expect the company to post a profit of $3.25 a share for 2002, according to Thomson Financial/First Call.

The company slashed 16,000 jobs in 2001, bringing its total headcount down to 247,000. Cost-cutting in the Domestic Telecom unit, including overtime reductions and hiring contractors, eliminated the equivalent of an additional 13,000 jobs.

Verizon reported a 59 percent increase in long-distance customers in the full year, with about 40 percent of those coming from New York, Massachusetts and Pennsylvania.

Capital expenditures are expected to be $15 billion to $16 billion.

The Domestic Telecom unit trimmed cash expenses by 4.6 percent to $6 billion in the quarter compared with a year earlier. Total operating expenses were down 2.3 percent.

Domestic Telecom decreased its adjusted cash expenses over the prior-year period. In the fourth quarter, the unit's adjusted cash expenses were down 4.6 percent to $6.0 billion from $6.3 billion in the fourth quarter 2000, and the unit's total operating expenses were down 2.3 percent to $8.4 billion from $8.6 billion.

Verizon President and Co-Chief Executive Officer Ivan Seidenberg said, "Verizon's focus is on operational execution. In 2001, we moved early and aggressively to head off the effects of the economy with cost-reduction efforts.

"At the same time, we had the management discipline and skilled workforce to respond effectively to Sept. 11, remain focused on operational metrics, and accelerate our merger integration and transition efforts. The solid foundation we built in 2001 will lead to continued quality growth and continued customer-service improvements in 2002," Seidenberg added.


Credit Suisse Group sees loss

ZURICH, Jan. 31 (UPI) -- Credit Suisse Group said it expects to post a fourth quarter loss as its investment bank cut costs and settled a share selling investigation.

Switzerland's second-largest bank said it expects to post a loss of $468 million for the final quarter of 2001.

Its investment banking unit Credit Suisse First Boston will report a fourth quarter net loss of about $1 billion, reflecting restructuring charges, losses in Argentina and exposure to bankrupt U.S. energy-trading group Enron.

Credit Suisse First Boston also settled a case brought by the Securities and Exchange Commission and the National Association of Securities Dealers for mishandling new stock offerings. The company paid $100 million to close the matter.

Credit Suisse First Boston's biggest single cost was $745 million to pay for the cost of shedding 2,500 employees. Other costs included $213 million for Argentina and $126 million for Enron.

The problems at Credit Suisse First Boston, battling to regain momentum six months after appointing Wall Street veteran John Mack as chief executive, led CS to bring forward the statement.

CS released the figures early to warn investors of higher-than-expected costs and provisions.


McLeodUSA files bankruptcy

CEDAR RAPIDS, Iowa, Jan. 31 (UPI) -- McLeodUSA Inc. said it has filed bankruptcy with a reorganization plan supported by its bondholders that will erase about $3 billion in debt.

McLeodUSA, which is one of the nation's largest independent competitive local exchange carriers, said its pre-negotiated plan of reorganization was filed in the United States Bankruptcy Court for the District of Delaware.

The Chapter 11 case includes only the parent company, McLeodUSA Inc.

None of the operating subsidiaries, which include McLeodUSA Telecommunications, McLeodUSA Publishing and Illinois Consolidated Telephone Company are part of the bankruptcy proceeding.

The bankruptcy filing marks the latest meltdown in the telecommunications sector, which has been rattled by the bankruptcy of Global Crossing Ltd.

The filing, which will not disrupt service, customers or employees, is similar to the restructuring announced in December.

Under the pre-negotiated reorganization plan, McLeodUSA's bondholders will receive up to $670 million in cash, $175 million of preferred stock convertible into 15 percent of the reorganized company's common stock, as warrants to purchase an additional 6 percent of the company's stock.

The company said an ad hoc committee of bondholders, which holds 23 percent of its bonds, voted unanimously in favor of the plan, which will eliminate $3.0 billion of bond debt.

The company's plan also has the support of investors holding about 45 percent of its preferred shares, including funds managed by investment firm Forstmann Little & Co.


Earnings rise at Procter & Gamble

CINCINNATI, Jan. 31 (UPI) -- Procter & Gamble said its second quarter net income for the period ended Dec. 31 rose to $1.45 billion, or $1.03 a share excluding a restructuring charge, from an operating income of $1.4 billion, or 97 cents a share during the same period a year earlier.

Analysts on Wall Street had expected P&G to post a net income of $1.02 a share, according to Thomson Financial/First Call.

Including a $146 million restructuring charge for job cuts and other streamlining moves, Procter & Gamble said it posted a net income of $1.3 billion, or 93 cents a share, up from $1.2 billion, or 84 cents a share a year earlier.

Revenue rose 2 percent to $10.4 billion from $10.2 billion a year ago, the maker of Pampers disposable diapers, Tide laundry detergent and other popular products said.

P&G said its second quarter results were driven by operating margins, which rose 0.9 percentage point, and core gross margins, which grew 1.8 percentage points, reflecting lower manufacturing and labor costs.

"We are seeing clear improvement in our results, and we're pleased to have met our commitments once again," said Chief Executive Officer A.G. Lafley.

"We're continuing our unyielding focus on delivering better consumer value on our brands, building core categories, reducing the company's cost structure and improving our cash flow," Lafley added.

P&G also said it anticipates earnings per share growth in the high single-digits in percentage for the third quarter and that sales would grow in the mid-single digits from a year earlier, though unfavorable currency transactions are expected to drive them down 2-3 percent.

The company also said it's comfortable with earlier guidance for full fiscal-year earnings.

The company expects volume growth in the third quarter to be up in the high single digits in percentage. Excluding Clairol, which P&G acquired late last year, volume growth is expected to be about the same level as the second quarter.


© 2002 United Press International, Inc. All Rights Reserved. Any reproduction, republication, redistribution and/or modification of any UPI content is expressly prohibited without UPI's prior written consent.
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