NEW YORK, April 15 (UPI) -- Here is a look at more of Monday's top business stories:
Corning expects smaller loss, plans to cut staff
CORNING, N.Y., April 15 (UPI) -- Corning Inc., the world's largest maker of fiber-optic cable, said it expects to post a first-quarter net loss smaller than Wall Street is expecting.
But, Corning also said it plans to bring its costs and operations more in line with its near-term market outlook and will cut its workforce, close plants and will also consider divesting several small businesses, investments or equity companies as part of a restructuring.
The company also said its President and Chief Executive John Loose, 60, will retire on April 25 and Chairman James Houghton, 66, will assume the CEO title.
At the same time, Wendell Weeks, 42, head of Corning's optical business, will become the president and chief operating officer and Chief Financial Officer James Flaws will become the vice chairman.
Corning said it expects to lose about 10 cents a share in the first quarter.
Analysts on Wall Street were expecting Corning to post a loss of 17 cents, according to Thomson Financial/First Call.
The company also said it expects sales of about $900 million, compared with Wall Street expectations of $941 million.
Corning will report its first quarter results next Monday.
The company said it would also take additional cost-cutting actions because of the continued spending slump in the telecom industry that will result in pretax restructuring charges in the range of $600 million over the second and third quarters.
It did not give details of the actions, but anticipates they will include job cuts, plant closures, elimination of some research and development facilities, spending cuts and possible divestitures of several small business or investments.
James B. Flaws, chief financial officer, said. "Although sales were slightly below our guidance for the quarter, we are encouraged that the sequential rate of decline for the quarter slowed substantially vs. the declines experienced in the second half of 2001. Although our telecommunications results remain weak, we are seeing improved results in a number of our information display and advanced materials businesses. Our liquidity remains excellent with over $1.8 billion in cash and short-term investments at the end of the first quarter.
"As the year began, we felt we were approaching bottom in the telecommunications sector. Our first quarter performance suggests that has happened. Although our sales are close to our expectations, we are continuing to see lowered capital spending announcements by telecommunications carriers," Flaws said.
"As a result of the carriers' announcements, we believe we must move ahead with additional actions now. The restructuring actions we must take will be difficult. They will hurt our people and they will hurt our communities, but they are necessary to protect the future of our company and return us to profitability in 2003," Flaws said.
Wendell P. Weeks, president of Corning Optical Communications, said, "Although Corning has lost revenue during this market recession, we have not lost market share. We remain convinced that we have positioned Corning in the right industries and for long-term growth. The telecommunications revolution is as real as the industrial revolution. Bandwidth demand is growing, it never stopped growing. When this industry re-emerges, Corning will be the leader of a select group of companies positioned to take advantage of the growth."
Providian to sell $2.6 billion in risk assets
SAN FRANCISCO, April 15 (UPI) -- Credit card company Providian Financial Corp. has agreed to sell about $2.6 billion in higher risk assets to two limited liability companies formed by affiliates of Goldman Sachs & Co. Citigroup Inc.'s Salomon Smith Barney, CardWorks Inc., and CompuCredit Corp.
Last November, the financial services company put its international credit-card businesses in Argentina and the United Kingdom up for sale and said it was pursuing the sale of $3 billion in high-risk credit-card receivables.
Providian prospered in recent years by lending to borrowers with limited or risky credit histories. But as the economy soured, growing numbers of Providian's customers stopped paying their bills.
Providian said the purchasers plan to finance the acquisition through a securitization.
Providian's Providian National Bank will hold an interest in the securitized assets valued at about $155 million, and the parent company will also retain an option to purchase up to 15 percent of the equity in the limited liability companies.
The transaction, expected to close in May, includes about 1.7 million credit card accounts.
Under the terms of the deal, Providian will continue to service the portfolio for up to 12 months.
Providian says it currently holds substantial capital and reserves against the assets in the portfolio.
"These agreements mark another important step in our restructuring effort," said Providian Chief Executive Officer Joseph Saunders.
"Assuming successful completion, these transactions will reduce our credit risk profile, improve our ability to focus on the middle and prime sectors, create opportunities to reduce our expense base, and further strengthen our liquidity position," he said.
While closure of the transaction will result in a loss of $240 million for Providian, the deal should also result in an improvement in Providian National Bank's risk-based capital ratios by removing higher risk-weighted assets from its balance sheet.
In February, Providian reported a fourth quarter loss of $481.2 million, which included charges of more than $1 billion, largely to clean up its troubled credit-card business.
At the end of 2001, Providian had total credit card loans of $32.7 billion.
In a separate release, CompuCredit noted it agreed to purchase about $1.3 billion in credit card assets from Providian, in conjunction with affiliates of Goldman Sachs & Co. and Salomon Smith Barney.
Eaton posts lower results
CLEVELAND, April 15 (UPI) -- Industrial products manufacturer Eaton Corp. said its first quarter net income before unusual items fell to $66 million, or 93 cents a share, from $73 million, or $1.05 a share during the same period a year earlier.
The maker of fluid power systems, auto components and industrial controls said sales declined 13 percent to $1.72 billion from $1.98 billion a year ago.
In January, Eaton forecast earnings of 85 cents to 95 cents a share charges from cost-cutting measures.
Analysts on Wall Street had expected the company to post a net income of 86 cents a share, according to Thomson Financial/First Call.
Alexander M. Cutler, chairman and chief executive officer, said, "Eaton's first quarter earnings are in line with our expectations. Our end markets remain depressed, much as we had anticipated. In this period of weak end market demand, our improving results demonstrate the effectiveness of our aggressive actions to resize the corporation.
"We remain convinced that the restructuring actions taken during 2001 and in the first quarter of this year will deliver $130 million of savings in 2002. We also continue to benefit from the broad implementation of the Eaton Business System, with results evident in the continued reduction in working capital and capital expenditure levels that have contributed to a further strengthening of our balance sheet," he said.
Looking ahead, Cutler said, "We are maintaining our full-year operating earnings guidance of $4.25 to $4.50 per share. We anticipate that second quarter operating earnings per share will be in the $1.15 to $1.25 range. Eaton will remain significantly cash flow positive in 2002."
Earnings rise at Northern Trust
CHICAGO, April 15 (UPI) -- Northern Trust Corp., which manages money for companies and wealthy individuals, said its first-quarter net income rose to $127.6 million, or 56 cents a diluted share, from $127.2 million, or 55 cents a share during the same period a year earlier.
Analysts on Wall Street had expected the company to post a net income of 57 cents a share, according to Thomson Financial/First Call.
Revenues of $552.6 million were essentially unchanged from $551.5 million in last year's first quarter.
Trust fees were $316.4 million in the quarter, up 4 percent compared to $305.2 million in the first quarter of last year. Trust fees represented 57 percent of total first quarter revenues.
William A. Osborn, chairman and chief executive officer, said, "Although the equity markets exhibited continued weakness during the quarter and the economic environment remained a difficult one, we were pleased to report an increase in our quarterly earnings.
"This was achieved by our continued aggressive management of expenses, which were flat compared to last year. Revenue growth also was flat, with a 4 percent increase in trust fees offset by weakness in foreign exchange trading results. Trust assets under administration totaled $1.72 trillion, an increase of 4 percent since March 2001, and assets under management grew modestly to $337.7 billion. We continue to be successful in attracting new business in our targeted markets and remain confident that revenue growth trends will rebound as the economy and markets improve," Osborn added.
Earnings rise at Ethan Allen
DANBURY, Conn., April 15 (UPI) -- Ethan Allen Interiors Inc., the home furnishings maker and retailer, said its third-quarter net income for the period ended March 31 rose 15 percent to $23 million, or 58 cents a share, from $20.0 million, or 50 cents a share during the same period a year earlier.
Analysts on Wall Street had expected the company to post a net income of 57 cents a share, according to Thomson Financial/First Call.
Net sales fell to $227.9 million from $233.8 million a year ago. Sales at stores open at least a year fell by 8.7 percent.
Looking ahead, the company forecast fourth quarter earnings to be at or slightly below Wall Street's current estimates.
For the fourth quarter, Ethan Allen projected earnings to range from 56 cents to 60 cents a share, which compares with a First Call estimate range of 57 cents to 61 cents.
