American Express Will End Quarter With Small Profit

Sat., July 20, 1996

From Staff And Wire Reports

American Express Co. is expected to report its fourth-quarter per-share earnings rose 14 percent, as growth at the company’s asset management unit offset lackluster results at its credit card business, analysts said.

Wall Street forecasts the travel and finance company’s earnings will be 92 cents a share, based on the average estimate of 11 analysts surveyed by IBES International Inc.

Last year in the second quarter, American Express earned 81 cents a share. Earnings figures are expected Monday, probably after the stock market closes.

American Express dropped 75 cents to $41.36-1/2 in trading Friday.

“We’re not expecting anything gangbusters,” said Sanford C. Bernstein & Co. analyst Moshe Orenbuch. The company’s TRS (Travel and Related Services) business, which includes its charge and credit card businesses, is growing more slowly, probably a little less than 8 percent, he said.

Rising personal bankruptcies and delinquency rates that are at a 15-year high have made credit quality a paramount issue for banks and credit card companies this earnings season.

“There’s lots of competition and loss rates are rising pretty sharply” in the credit card business overall, said PaineWebber Inc. analyst Gary Gordon.

But Orenbuch said American Express’ charge card should have better credit quality this quarter, although “I don’t think Optima’s going to be improving yet,” he said, referring to the company’s credit card. TRS growth will be slower mainly because the division has been spending less on marketing, he said.

Some stocks that moved substantially or traded heavily Friday.

NYSE

Consolidated Freightways, up $2.50 at $20.50.

The transportation company’s second quarter profit of $11.5 million, or 24 cents per share, was well above analysts estimates. Consolidated, parent of Emery Worldwide and other shipping operations, had revenues of $1.4 billion for the period, up 6.1 percent from the same quarter last year.

NASDAQ

Sun Microsystems, down $3.43-3/4 at $55.

The company reported a 34 percent increase in its fourth-quarter profit before acquisition-related charges, helped by a 22 percent jump in sales of its computers. Sun’s shares had rallied into Thursday’s close in anticipation of a strong report, but the profit of $122.3 million, or 62 cents per share, was even with or only barely higher than most forecasts.

Netscape Communications, down $3.50 at $53.

The Internet software developer earned just $5.8 million in the second quarter, excluding one-time expenses for acquisitions, as sales continued to grow strongly. The pre-charge profit of 7 cents a share, reported late Thursday, was slightly higher than expectations, but the stock had surged 9 percent in Thursday’s Nasdaq rally. Revenue was $75 million, up 36 percent from $55 million in the first quarter.

Iomega, down $5.50 at $22.50.

The disk drive maker earned $14.1 million in the second-quarter on sales that were more than five times better than a year ago. Iomega’s profit, announced late Thursday afternoon, amounted to 11 cents per share, which narrowly beat forecasts and compared with a 2-cent loss in the same period last year. Second-quarter revenue totaled $283.6 million.

Amgen, up 87-1/2 cents at $56.25.

The biotech leader’s second-quarter profits rose 30 percent thanks to higher sales of its two major drugs and a licensing payment from an overseas partner. Amgen’s profit of $178.7 million, or 64 cents per share, exceeded analyst expectations.

Vantive, up $8.12-1/2 at $38.12-1/2.

Hambrecht & Quist upgraded its rating on the stock, citing Thursday’s strong second earnings report by the interactive-software company, the Dow Jones News Service reported.

, DataTimes

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