Closing Market Report

Star-Bulletin news services

Tuesday, April 23, 2002

Mixed earnings reports
ignite another selloff

By Amy Baldwin
Associated Press

NEW YORK >> A series of earnings disappointments from the likes of DuPont, Exxon Mobil and Earthlink reinforced investors' fears of a prolonged business slump today, prompting them to sell stocks and send the Dow industrials to their lowest close in eight weeks.

"Investors still lack a catalyst to get the market going. Investors still appear to be somewhat in a state of indifference and uncertainty regarding earnings numbers," said Alan Ackerman, executive vice president of Fahnestock & Co.

The Dow closed down 47.19, or 0.5 percent, at 10,089.24. The last time the Dow was lower was Feb. 22 when it stood at 9,968.15.

The market's broader indicators also stumbled. The Nasdaq composite index fell 28.38, or 1.6 percent, to 1,730.30, and the Standard & Poor's 500 index declined 6.87, or 0.6 percent, to 1,100.96.

Decliners narrowly outnumbered advancers 16 to 15 on the New York Stock Exchange, with 1,608 down, 1,573 up and 194 unchanged. Volume was 1.31 billion shares..

The NYSE composite index fell 1.75 to 584.30, the American Stock Exchange composite index gained 3.12 to 924.70 and the Russell 2000 index, which tracks the performance of smaller company stocks, slipped 0.64 to 510.29.

The Treasury's 2-year note slipped 1/32 to 100 1832; its yield rose 2 basis points to 3.32 percent. The 10-year note rose 2/32 to 97 2532; its yield fell 1 basis point to 5.17 percent. The 30-year bond gained 18 to 95 2932; its yield lost 1 basis point to 5.66 percent.

A big factor weighing on stocks, analysts said, is investors' increasing concern that the market is poised to suffer a third straight losing year.

"Investor confidence is down. ... We are two years in this bear market. People's patience is being tested," said Thomas F. Lydon, president of Global Trends Investments in Newport Beach, Calif. "If you look back, usually the best time for the stock market is November through May, and now we are through that."

With few companies sounding upbeat about the second quarter or 2002 overall, investors' hopes for a turnaround in the second half of the year are dimming. And now that most of the biggest companies -- those whose results are most likely to move the market -- have released earnings, there's not much chance for an earnings-inspired rally.

Among today's losers, Dow industrial DuPont fell $1.51 to $44.84 after missing first-quarter earnings expectations by a penny a share.

Exxon Mobil, also a Dow stock, declined 50 cents to $41.35 on first-quarter profits that were 8 cents a share shy of analysts' estimates.

While first-quarter results have come in about as the market expected, investors are disappointed the most by corporate outlooks, which remain bleak.

Prospects of poor results weighed on certain stocks today, including Earthlink, which tumbled $1.58 to $7.95 after lowering its second-quarter and yearly forecasts. The company also posted a first-quarter loss that was 2 cents wider than Wall Street had expected.

And, Ericsson fell 25 cents to $2.49, the day after announcing it was cutting up to 17,000 jobs, about 20 percent of its work force, and warning that it won't be profitable this year.

Today's earnings-related winners included Gillette, which rose $1.47 to $36.32 after beating forecasts by 2 cents. Lockheed Martin climbed $3.08 to $62.20 on earnings that surpassed estimates by 3 cents.

Meanwhile, telecommunications company Verizon Communications reported a first-quarter loss of $500 million, blaming the shortfall on a tough economy and a $2.5 billion writedown for soured investments.

Verizon, the No. 1 local telephone provider, also cut its earnings outlook for the rest of 2002, saying it doesn't expect to gain from a U.S. economic turnaround until 2003.

Verizon's first-quarter loss was the equivalent of 18 cents a share, compared with a profit of $1.6 billion, or 58 cents, a year ago.

After the market closed, Inc. said its first-quarter net loss shrank and beat Wall Street expectations as the online megastore saw sales rise a better-than-expected 21 percent.

Amazon posted a net loss of $23 million, or 6 cents a share, compared with a net loss of $234 million or 66 cents a share, a year earlier.

Revenues grew 21 percent to $847 million from $700 million a year earlier.

Amazon was expected to lose from 7 to 12 cents a share on revenue of about $805 million, according to Wall Street tracking firm Thomson Financial/ First Call. Amazon's own guidance was for an operating loss of between $16 million and breakeven on sales of between $775 million and $825 million.

Also after the market, Expedia Inc., the online travel firm, said it had a profit in the first quarter compared to a year-earlier loss, beating Wall Street estimates thanks to strong sales in its vacation and hotel packages.

Expedia reported adjusted income of $28.4 million, or 46 cents a share, compared to a loss of $17.6 million, or 37 cents a share, a year-earlier. The company changed its calendar to a fiscal year in February after its deal closed with USA Networks, which bought a controlling stake in the company.

Revenues more than doubled to $116 million, exceeding Wall Street forecasts and Expedia's prediction earlier this year of revenues of about $87 million for the quarter.

Wall Street analysts, on average, had expected the company to post earnings of 26 cents a share and revenue of $87.63 million, according to Thomson Financial/First Call.

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