Executive Business Briefing

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

Earnings dive at Exxon Mobil

IRVING, Texas, April 23 (UPI) -- Exxon Mobil Corp., the world's largest publicly traded oil company, said its first-quarter net income fell due to a weak refining business and lower crude and natural gas prices.

Exxon Mobil said its net income dropped to $2.09 billion, or 30 cents a diluted share, from a record $5 billion, or 71 cents a diluted share during the same period last year.

Excluding special items, Exxon Mobil's earning fell to 31 cents a diluted share, the third consecutive quarter the oil company has seen profits drop after a string of record-breaking results.

Analysts on Wall Street had expected the oil giant to post a net income of 39 cents a share, according to Thomson Financial/First Call.

Revenue fell to $43.53 billion from $57.30 billion a year ago.

Capital and exploration expenditures rose 18 percent to $2.97 billion in the quarter from $2.52 billion last year.

Chairman Lee R. Raymond said, "The reduction in earnings reflected weakened conditions in all business segments, including lower crude oil prices, a sharp decline in natural gas realizations, and significantly weaker refining and marketing margins.

"Ample inventories, weakened demand and rapidly rising raw materials costs created the worst downstream conditions since the mid-80s. Capital expenditures increased in line with higher full-year spending plans, consistent with a disciplined, long-term focus on investing for profitable growth," he said.

The company said compared with the fourth quarter of 2001, upstream earnings improved $339 million, reflecting an upward trend in crude oil prices. Liquids volumes were also higher as production from new operations more than offset OPEC quota restrictions and natural field decline. Gas volumes were up 3 percent reflecting higher production in Indonesia and seasonal demand patterns in Europe.

Downstream results fell $1.05 billion from the fourth quarter of 2001. Severely compressed industry refining and marketing margins were experienced worldwide and were the primary driver in the decline. Additionally, the absence of benefits from planned inventory reductions that occurred in the fourth quarter contributed to the decrease.

"Industry conditions have improved in both the upstream and downstream thus far in the second quarter. Oil prices have remained above first quarter levels and natural gas prices in North America have also improved. Early in the quarter, we have seen some recovery in most refining and marketing margins, although they remain at low levels, particularly in the Asia-Pacific region," Raymond said.

The company said its upstream earnings were $2.0 billion, a decrease of $1.80 billion from the record first quarter 2001 results.

Average realizations on crude oil sales were 20 percent lower than the prior year, and natural gas prices in North America fell about 70 percent from the historic highs reached during the same period last year.

Liquids production, excluding the impact of OPEC quota restrictions, was consistent with plans. Natural gas volumes were down 3 percent due to a reduction in weather related demand in Europe and also were consistent with plans.

"Although first-quarter earnings were negatively affected by declines in prices and margins, Exxon Mobil continued its vigorous pursuit of plans and programs to enhance shareholder value," Raymond said.

"Each of the businesses captured additional efficiencies in line with planned full-year targets. Asset management activities included the sale of coal operations in Colombia. Capital and exploration expenditures increased 18 percent, including a 28 percent increase in the upstream, laying the groundwork for future profitable production growth," Raymond added.

DuPont posts lower earnings

WILMINGTON, Del., April 23 (UPI) -- Chemical giant DuPont Co. reported lower first-quarter operating profits as soft industrial demand offset strong sales of early-season agricultural products and cost savings from job cuts.

The company said its first-quarter net income declined to $552 million, or 55 cents a share, from $567 million, or 54 cents a share during the same period a year earlier.

Profits per share rose as the average number of shares outstanding decreased 4 percent.

Dupont's fixed costs have fallen across the board, but the biggest saving has come from 5,500 job cuts, or 6 percent of its global work force, since last April, the company said earlier this month.

Analysts on Wall Street had expected the company to post a net income of 56 cents a share, according to tracking firm Thomson Financial/First Call.

DuPont said first-quarter results showed encouraging signs of volume momentum. Setting aside seasonal increases in the Agriculture and Nutrition segment, the remaining segments showed a 6 percent sequential volume increase in the United States.

U.S. increases were offset by declines in Asia and Latin America, resulting in sequentially flat worldwide volumes, DuPont said.

This was the first quarter since the economic downturn began that worldwide volumes did not decline sequentially for these businesses.

Consolidated sales declined 8 percent to $6.1 billion from $6.9 billion a year ago, reflecting 2 percent lower volume, a 2 percent negative impact from currency, and 4 percent lower local prices.

Charles O. Holliday, Jr., chairman and chief executive officer, said, "It is clear that the actions we took last year are beginning to pay off. We have removed costs from our company, focused on businesses where we can win, and increased our competitiveness in a way that is real and sustainable.

"During the first quarter, we also embarked on the next major step to increase shareholder value. We are aggressively targeting growth by aligning our businesses in five market and technology based platforms, while creating a Textiles and Interiors subsidiary that will be separated from the company by year-end 2003. Our leadership and employees are focused and determined to meet these goals," he said.

Looking ahead DuPont said it expects business conditions in the United States and possibly in Europe to continue to improve, bringing sequential volume increases in the second quarter to most of its businesses.

The company has not changed its view that a significant period of demand growth is needed to absorb capacity before pricing strengthens in the manufacturing sector.

Therefore, the company said it expects sequential volume momentum and year-over-year lower raw materials costs to benefit results. These positives will likely be mitigated by a continued strong dollar and difficult price environment.

Taking all of these factors into account, the company anticipates second quarter underlying earnings per share to show double-digit improvement versus the prior year and to be about equal to first quarter 2002 underlying earnings per share of 55 cents a share.

"We have placed our emphasis on growth in large markets with unmet needs where customers have a willingness to reward our strengths -- creative solutions based on scientific know-how and innovation," said Holliday.

"Across the company, our people are committed to drive growth and improve productivity. We are on the right track," Holliday added.

Earnings jump 26 percent at Monsanto

ST. LOUIS, April 23 (UPI) -- Agricultural company Monsanto Co. said its first-quarter net income before special items jumped 26 percent to $86 million, or 33 cents a share, from $68 million, or 26 cents a share during the same period last year.

Analysts on Wall Street had expected the company to posts a net income of 31 cents a share, according to Thomson Financial/First Call.

Sales declined 7 percent to $1.2 billion.

The company said the effect of foreign currency exchange rates, particularly the euro and the Brazilian real, negatively affected sales in the quarter by approximately 2 percent.

Sales of seeds and traits jumped 17 percent, but were more than offset by lower sales of Roundup herbicide.

Hendrik A. Verfaillie, president and chief executive officer, said, "Our first quarter results reflect the ongoing transformation of Monsanto.

"We saw greater contribution from our technology-based solutions delivered through our seeds and traits business, while sales of our traditional crop protection products in the first quarter were lower," he said.

"We're well-positioned with all our products as we enter the 2002 planting season in the Northern Hemisphere. The second quarter is the peak quarter for our Roundup herbicide business in North America, and we expect to preserve our market position as we enter the second year following expiration of our U.S. patent for Roundup," Verfaillie said.

The company said sales for the Seeds and Genomics segment increased to $585 million for the first quarter.

The increase was led by strong demand for Monsanto's Roundup Ready technology and YieldGard corn traits. Roughly half of the increase in trait revenues resulted from a shift in royalty sales for Roundup Ready corn and soybeans and YieldGard corn traits to the first quarter from the second quarter, the company said.

In the Agricultural Productivity segment, sales and volumes of Roundup decreased worldwide.

The lower average selling prices for Roundup were primarily the result of a shift to lower-priced products in the United States, Monsanto said.

Looking ahead, Monsanto said it expects earnings per share in 2002 to be in the range of $2.23 to $2.27, compared with $1.80 a year earlier.

The company noted the guidance includes the benefit resulting from the company's adoption of a new accounting standard. This accounting standard eliminates goodwill amortization and is expected to add 40 cents per share to Monsanto's annual earnings.

Second quarter earnings per share is expected to be in the range of $1.40 to $1.45, compared with $1.60 a share last year.

Verizon Communications posts loss

NEW YORK, April 23 (UPI) -- Verizon Communications, the nation's largest local telephone company, said it posted a first-quarter net loss of $500 million, or 18 cents a share, compared with a net income $1.6 billion, or 58 cents a share during the same period last year.

Verizon said its latest results included charges totaling $2.5 billion, or 90 cents a share.

The charges reflect a change in accounting for intangible assets, as well as the declining value of some investments such as CANTV in Venezuela, CTI Holdings in Argentina, and Metromedia Fiber Network Inc. in the United States.

Excluding these one-time items, Verizon's first-quarter profits were flat, at $1.97 billion, or 72 cents a share.

Analysts on Wall Street had expected Verizon to post earnings of 72 cents a share, according to Thomson Financial/First Call.

First quarter adjusted operating revenues declined to $16.4 billion from $16.5 billion a year ago and operating expenses declined to $12.5 billion from $12.6 billion.

Revenue in Verizon's core local telephone dropped 4.1 percent to $10.5 billion as the number of access lines in service fell 2.7 percent.

Wireless service revenue for the quarter grew nearly 9 percent to $4.1 billion, with wireless revenue up more than 8 percent to $4.4 billion.

Data Services revenue grew to more than $1.8 billion, driven by 10.4 percent increase in data transport services. Verizon added 150,000 high-speed Digital Subscriber Line subscribers in the first quarter, for a total of 1.35 million DSL customers.

Ivan Seidenberg, Verizon chief executive officer, said, "Due to the long-term strength of our business model, Verizon is uniquely positioned to mitigate the effects of technology substitution and competition that have produced an ongoing, anticipated shift in our traditional revenue base. Our investments in long distance, DSL and wireless are fueling customer growth and retention, and repositioning our sources of revenue for the future.

"We are also continuing to focus on product introductions and innovation, such as our recent, aggressive deployment of the Verizon Wireless Express Network, based on next-generation 1XRTT technology. Meanwhile, merger synergies have given us the advantage of being able to maintain our margins through sustainable cost-control measures," Seidenberg said.

Verizon said as it looks to the remainder of 2002, the length and depth of the economic slowdown will continue to have an overlay across all its businesses. The company does not anticipate any meaningful effects from an economic turnaround until 2003, and it has updated financial guidance accordingly.

Seidenberg said, "As the economy continues to be challenging, our focus will remain on the business fundamentals within our control. We have institutionalized cost reduction and productivity gains, and we continue to strengthen our cash flows by divesting non-strategic assets, re-aligning our debt portfolio and effectively managing our capital expense budget."

Verizon's debt-portfolio strategy includes a reduction in its overall debt and reduced levels of commercial paper.

During the quarter, Verizon said it reduced overall debt by $1.4 billion to $62.9 billion from $64.3 billion at year-end 2001.

Verizon also reduced commercial paper by $2.2 billion in the quarter, to $10.6 billion from $12.8 billion.

Verizon said it expects to post earnings per share for the full year in the range of $3.12 to $3.17, below its previous forecast of $3.20 to $3.30.

Revenue in 2002 will be flat, or up 1 percent, from the prior year. Verizon previously expected revenue to grow about 3 percent to 5 percent.