CBS riding advertising recovery
Broadcasting giant CBS Corp. said Tuesday its second-quarter profit surged thanks to a rebound in local advertising spending, which is climbing back toward normal as the recession fades.
CBS’s net income was nearly 10 times the level of a year ago as cost-cutting helped profit and revenue rose 11 percent. The earnings beat expectations and shares were up 3.3 percent in after-hours trading.
The resurgence in ad spending was across the board, led by the automobile, telecommunications, retail, financial services and entertainment sectors. Local ad spending, which makes up about a fifth of CBS’s revenue, rose 17 percent from a year ago.
Net income in the three months ending June 30 hit $150.1 million, or 22 cents per share, up from $15.4 million, or 2 cents per share, a year ago. Revenue rose to $3.33 billion from $3.01 billion.
In other reports Tuesday:
• Anemic consumer spending in the U.S. was offset by strong international growth to help boost MasterCard Inc.’s second-quarter profit by 31 percent.
The gain topped Wall Street profit expectations, but fell short of the 38 percent leap in operating income posted by the company’s larger rival, Visa Inc., last week.
Net income rose to $458 million, or $3.49 per share, compared with $349 million, or $2.67 per share, a year ago.
• Wall Street is wondering if Dow Chemical Co. has been too optimistic in its profit forecasts after second-quarter results fell short of expectations.
The nation’s largest chemical maker said increased demand and higher prices for chemicals used in products ranging from consumer electronics to adhesives helped it swing to a profit from a year-ago loss.
But the results fell below the expectations of analysts. Dow earned $566 million, or 50 cents per share in the second quarter, after paying preferred dividends. That compares with a loss of $486 million, or 47 cents per share, a year earlier.
• Pfizer Inc. reported a 9 percent rise in second-quarter profit, trouncing Wall Street expectations as revenue jumped 58 percent due to favorable currency rates and its acquisition of fellow drugmaker Wyeth last October.
• Video game publisher Electronic Arts Inc. reported stronger results than it had forecast, boosted by solid sales of games such as “2010 FIFA World Cup South Africa,” “Scrabble” for Apple Inc.’s iPad and add-on content for older titles. The company said net income was $96 million, or 29 cents per share, in the fiscal first quarter, which ended in June. In the same period last year EA’s net loss was $234 million, or 72 cents per share.
• Luxury handbag maker Coach Inc.’s fourth-quarter net income rose 34 percent on brisk demand in North America and China, the company said. Coach said it plans to expand its men’s division and accelerate growth in China in its fiscal year that began last month. It has cut prices about 10 percent in North America as consumers cut their spending during the weak economy.
• Procter & Gamble Co. is betting that heavy advertising will draw budget-conscious households to new products, even those with higher prices, as it tries to build sales and market share in a tough economy.
The consumer products maker reported that net income fell 12 percent in its fourth quarter, largely because of company-record spending on marketing. Revenue rose 5 percent.
Smaller rival Clorox Co. also said more spending on promotions, and tough competition, took a bite out of fourth-quarter results. The maker of its namesake bleach and Glad trash bags said net income was nearly flat, even though revenue was up 1 percent.