Southwest Airlines CEO resigns; profits down 54 percent

Southwest Airlines Co. chief executive James Parker stepped down Thursday, saying he was retiring for personal reasons. The company said he would immediately be replaced by chief financial officer Gary Kelly, who had previously been tapped as Parker’s eventual successor.

The surprise announcement came as the Dallas-based airlines reported a 54 percent drop in second-quarter profits, missing Wall Street targets amid higher expenses for fuel and labor.

Southwest chairman Herb Kelleher said in a statement that the board accepted Parker’s decision with “deep regret and profound gratitude” for Parker’s contributions to Southwest’s success.

Laura Wright, Southwest’s treasure and vice president of finance, will succeed Kelly as CFO, Kelleher said.

Southwest shares fell 31 cents to close at $14.75 Thursday on the New York Stock Exchange.

•Strong growth in computer hardware sales helped boost second-quarter profits nearly 17 percent at IBM Corp., beating Wall Street’s forecast for the technology bellwether Thursday.

From April through June, IBM earned $1.99 billion, or $1.16 per share, on revenue of $23.15 billion. In the same period last year, IBM made a net profit of $1.71 billion, or 97 cents per share, on revenue of $21.63 billion.

This time around, analysts surveyed by Thomson First Call were expecting IBM to show earnings of $1.12 per share and revenue of $23.35 billion.

IBM shares lost 11 cents to close at $84.02 on the New York Stock Exchange before the earnings report, down 9 percent for the year. In after-hours trading they gained 68 cents.

•PepsiCo Inc. reported a 12 percent surge in second quarter earnings Thursday, as strong overseas and beverage sales helped offset declines in its snack, cereal, rice and pasta businesses. The company said it would introduce more low-sugar, high-protein products to woo carb-conscious consumers.

The Purchase, N.Y.-based beverage and snack company earned $1.06 billion, or 61 cents per share, in the three months ending June 12, compared to $944 million, or 54 cents per share, in the year-ago period.

In trading Thursday, PepsiCo shares closed down $1.49, or 2.8 percent, at $51.92 on the New York Stock Exchange.

•Citigroup Inc. profits tumbled 73 percent in the second quarter, as a mammoth class-action settlement with WorldCom investors cut heavily into earnings at the nation’s largest financial institution.

Citigroup reported Thursday that it earned $1.14 billion, or 22 cents a share, for the April-June quarter, down sharply from $4.30 billion, or 83 cents a share, a year ago.

Citigroup’s stock fell 89 cents, or 2 percent, to close at $44.21 a share Thursday on the New York Stock Exchange.

•Wachovia Corp. posted a 21 percent increase in its second-quarter profits Thursday, earning $1.25 billion, or 95 cents a share, in the three-month period from gains in deposits, loans and fees.

Shares of Wachovia closed at $44.37, down 32 cents, Thursday on the New York Stock Exchange.

•Apple Computer Inc. shares surged more than 11 percent Thursday after the company announced that strong sales for its computers and “staggering” demand for iPod portable music players helped more than triple third-quarter profits.

Investors responded favorably. Apple shares gained $3.35 to close at $32.93 Thursday on the Nasdaq Stock Market.

•Nokia Corp. reported its profit rose 14 percent in the second quarter, but sales fell 5.7 percent, and it warned its future profitability remains threatened by increased competition, lower prices and a lack of popular new models. Its shares skidded more than 11 percent.

The world’s biggest mobile handset maker said Thursday it earned 712 million euros ($865 million) in the April-June period.