www.msnbc.com By John W. Schoen MSNBC

March 10 — If, like most investors, you’re hoping for a strong rebound in corporate profits this quarter, it looks like you’ll have to wait at least another three months. Of the more than 700 companies that have already tipped their hand by “pre-announcing” profits, some 57 percent came up short of expectations. CEOs have a lot of things to blame this quarter on, from high energy prices to an unusually cold winter. But expect “war worries” to be the most popular excuse.          CORPORATE hand-wringing about the possibility of war has sent Wall Street slashing earnings estimates sharply. At the beginning of the year, for example, analysts at Standard & Poor’s were expecting year-over-year profit gains of roughly 15 percent for the companies that make up the S&P 500. As of last week, that number had been pared to 9 percent.        Uncertainties about war have also scared both consumers and businesses into cutting spending, and that slowdown will clearly have an impact on corporate America’s bottom line. But analysts expect to hear “war worries” cited a lot this quarter — regardless of the real underlying problem.        “What happened after 9/11?” said Chris Wolfe, an equity strategist at J.P. Morgan. “Everyone blamed that, and you had a pass well into 2002. Now, it’s shifted to war with Iraq. If I don’t hear this 100 times on conference calls this quarter, I’ll be surprised.”        The trick for investors will be to sort out which companies have been legitimately hurt by war uncertainties and which ones are using it to hide other problems. One of the clearest cases will be profit reports from companies that use a lot of oil. Oil prices have shot up this quarter as cold weather raised demand and war worries stoked concerns about supplies.        “If your business is impacted by oil prices then Iraq is a legitimate excuse,” said Phil Dow, and equity strategist at RBC Dain Raucher. “But if it’s not, maybe it’s a hiding place.          Falling forecasts Profit forecasts having been moving lower since the beginning of the year. (Oper. profit year-over-year growth) Sector as of Jan.1 as of Feb.1 as of Mar. 7 Financials 7%   5%   4%   Technology 16%   15%   15%   Health Care 8%   6%   6%   Consumer Cycl 13%   15%   10%   Industrials 2%   -6%   -9%   Consumer Stpls 6%   3%   2%   Energy 90%   106%   143%   Comm Services 10%   3%   1%   Materials 58%    33%   5%   Utilities -16%   -19%   -28%   Transports 99%   -77%   -93%   S&P500 Total 11.7%   8.8%    7.3%  SOURCE:Thomson Financial/First Call        Manufacturing companies — including chemical companies that use oil as a raw material — have been most directly affected. Food processors and retailers, transportation companies and utilities have all seen their fuel bills skyrocket, potentially leaving a big hole in the bottom line.

Playing now: • Blue chips slide again • OPEC keeps quotas in check • ImClone founder fined $800,000       While some companies have been able to pass these costs in the form of a surcharge, others will be stuck with a big, unexpected fuel bill.         RETAIL STILL WEAK, DESPITE DUCT TAPE        War worries may have helped boost sales of duct tape and plastic sheeting, but retailers have already begun warning that sales have been weaker than expected. But war may have little to do with a consumer’s decision to skip the trip to the mall. In many parts of the country, a bitter cold winter — complete with repeat snow storms — kept consumers home. And rising layoffs — begun long before the world approached the brink of war — isn’t helping either, according to Sam Stovall at Standard & Poor’s.        “It’s eroding consumer confidence, and the focus is on not really spending a lot of money,” he said. “People are saying, ‘I’m worried about my job; I won’t be spending the money I thought I might maybe on discretionary items.”        Businesses are also still tight-fisted with their budgets for new equipment — in part due to uncertainty about the prospect of war. But Wolfe thinks war fears are only only part of the reason businesses are hunkering down.        “Companies have been paying down debt, buying back stock, and increasing dividends,” he said. “Until we have much more balance-sheet healing, I think the idea of an immediate flipover to reinvesting the company for growth — when we already have excess capacity — is just way, way early.”

       About the only sector that you won’t hear blaming lower profits on war is the oil sector, where the rise in oil prices has helped fuel a sharp rise in profits. Analysts surveyed by Thomson Financial/First Call are looking for industry profits to jump 143 percent in the first quarter compared to last year.        Some analysts argue that the profit shortfall just means a rebound will be delayed until later in the year. But most concede the outlook for the second quarter depends a lot on what happens to energy prices. The big concern is that any major interruption in oil production would cause crude prices to move even higher than current inflated levels. But barring any major destruction of oil production in the region, Saudi Arabia has pledged to make up any shortfall from Iraq or other oil producers.        “They’re putting a lot into storage right now,” said Ed Silliere, a trader at Energy Merchant Corp. “They’ve got some 15 million barrels in storage in Saudi Arabia waiting to move onto the market if, in fact, we have a war. They’ve got some 20 million barrels reportedly somewhere in the Caribbean waiting to hit the market if this occurs. So if we do see a war, I’m not sure you’re going to see a big spike unless something really strange happens.”        Still, it’s unlikely oil prices will fall sharply as they did following the outbreak of the Gulf War in 1991. That’s because the recent run-up in prices was driven by more than war worries. A two-month shutdown of production in Venezuela cut into crude oil supplies while and this winter’s bitter cold weather stoked demand for heating oil and natural gas. Analysts say it could be months before supply shortages are eased — war or no war.   Get the latest earnings news •  Nokia warns on sales •  Kroger reports higher earnings •  Heinz quarterly earnings lower •  Deutsche Telekom posts huge loss •  Bristol-Myers restates earnings        

www.riyadhdaily.com.sa Vienna [AFP]......... OPEC oil ministers were arriving in Vienna Monday for a crucial meeting of the 11-nation cartel to discuss possible production increases if case of shortalls on the world market if the United States attacks Iraq. Key oil producers Venezuela and Algeria said they believed the Organization of Petroleum Exporting Countries had enough room for manoeuvre to avoid a supply shortage in the event of war. But UAE oil minister Obaid Al-Nasseri said Monday that it would be difficult for the oil cartel to increase production as it is already at almost full capacity. "I think everybody is producing almost about" full capacity, Al-Nasseri told reporters upon arriving in Vienna. Crude prices have skyrocketed since January because of fears of a war on Iraq, which has the world’s second-largest proven oil reserves, and a general strike in Venezuela, which crippled production there at the start of the year. Some fields in Iraq neighbor Kuwait are also being closed. Oil prices were higher in quiet trading Monday in Singapore. "We are expecting crude to strengthen to 38.56 (US) dollars a barrel in two days," said a trader at Refco Singapore Pte Ltd. New York’s light sweet crude for April delivery was at 38.05 dollars in Asian trade Monday, up from 37.78 dollars on Friday. All eyes were on Iraq and oil supplies from the Middle East, the trader said. Algerian Energy Minister Chakib Khelil said in Vienna that OPEC was in a position to put an additional four million barrels per day (bpd) of crude on the market. When added to the predicted two-million-bpd drop in demand expected in the second quarter of the year, this meant the cartel had six million bpd to play with to stabilize the markets, he said. "There is substantial supply, in particular for the second quarter, when demand will fall by two million (bpd)," Khelil told reporters when he arrived in Vienna. "We have the capacity to add four (million bpd) and so we have six million (in total). So that’s plenty," he said. Oil markets and oil consumers have grown concerned whether the cartel has enough available capacity to avoid possible upsets to global oil supply. The US Department of Energy estimates that OPEC countries excluding Iraq and Venezuela hold between 2.1 and 2.5 mln bpd of excess oil production capacity that could be brought online. "This is the second-lowest spare capacity level in the past three decades, trailing only the low reached in 1991 after the loss of Iraqi and Kuwaiti production," it said in a study published last Thursday. Venezuelan Oil Minister Rafael Ramirez told reporters in Vienna his country’s crude oil output should return to its customary level by the end of March, which would help stabilize the global oil market. "At the moment Venezuela is at 2.65 million bpd and we’re returing to our total production and exports," Ramirez said. He said Venezuela, a founding member of OPEC, would be back to its output quota of 2.918 million bpd "at the end of this month. A source close to OPEC said on Friday the oil cartel was working on a "contingency plan" to provide for shortages on the market if the United States and Britain attacked Iraq. He said OPEC ministers would on Tuesday "see what measures are needed to offset a shortage if there is a military strike in Iraq." He said the oil ministers would decide, in case of war, what to do with the four million bpd OPEC has in excess capacity. OPEC agreed in January to raise its combined output ceiling by 6.5 percent to 24.5 million bpd to try to cool feverish world oil markets.

boston.com By Bruce Stanley, Associated Press, 3/10/2003 17:37

VIENNA, Austria (AP) OPEC will increase its oil production and possibly even suspend its current output quotas to keep the world supplied with ample supplies of crude in the event of a war with Iraq, the group's president said Monday.

Members of the Organization of Petroleum Exporting Countries can pump an additional 3-4 million barrels of fresh oil a day, and they are prepared to exhaust this spare production capacity if a war seriously disrupts exports from the Persian Gulf, said OPEC President Abdullah bin Hamad Al-Attiyah.

OPEC's secretary general and oil ministers from Iran, Algeria and Venezuela played down the possibility that the group might suspend its output ceiling, currently set at 24.5 million barrels a day. Al-Attiyah indicated he favors a greater degree of flexibility, without actually endorsing a temporary suspension.

''OPEC will do the most it can to avoid any shock in the market,'' he told reporters ahead of a policy meeting Tuesday at OPEC headquarters in Vienna, Austria.

OPEC, which pumps about a third of the world's crude, is already exceeding its target as members cash in on prices that have soared to 12-year highs amid fears of a war-induced supply shortage from Iraq.

A conflict would almost certainly disrupt Iraq's daily shipments of 2 million barrels, but at least one OPEC member the United Arab Emirates expressed doubts about the group's ability to cover a larger shortfall if fighting spreads beyond Iraq's borders.

''OPEC should not be blamed,'' Al-Attiyah said as he arrived at a Vienna hotel. ''We will do whatever we can, but this is in accordance to our capacity. When we reach a level that we cannot exceed, then we cannot do anything.''

Al-Attiyah said the market was already well supplied with crude. Saudi Arabia's oil minister Ali Naimi, speaking to reporters upon his arrival at a different hotel, agreed but gave no further details.

However, the United Arab Emirates' oil minister, Obaid bin Saif Al-Nasseri, warned it would be ''very difficult'' for OPEC to pump enough oil to cover a simultaneous shortfall in crude exports from Iraq and northern Kuwait.

Kuwait, which hosts most of the U.S. troops that are poised to attack Iraq, has said that in the event of war it would shut down its northern oil fields as a precaution against a possible Iraqi counterstrike. Such a step would reduce Kuwait's output by around 700,000 barrels a day, or about a third of its current production.

Al-Nasseri's comments suggested that the United States and other major oil-importing countries would need to rely on their own strategic petroleum reserves as a cushion against a serious disruption in supply.

The United States and other major importing countries want OPEC to maximize production if a war threatens supplies and causes prices to spike. U.S. Energy Secretary Spencer Abraham, due in Vienna Tuesday on separate business, said in London that he might meet here with oil ministers from leading OPEC producers. Al-Attiyah said Abraham had so far not requested to meet with him.

Some analysts have suggested that large importing countries and OPEC two often opposing camps might be trying to coordinate an increase in OPEC output with a release of crude from importers' strategic reserves in an effort to head off a war-induced disruption.

Despite Al-Attiyah's claim that OPEC has ''3-4 million barrels'' in daily spare capacity, it was not clear how much higher the cartel could go in satisfying U.S. demands. Al-Nasseri said the United Arab Emirates' capacity of about 2.5 million barrels a day was already ''about full.'' Aside from Saudi Arabia and perhaps Nigeria, most other OPEC members are already believed to be producing at their limits.

OPEC heavyweight Saudi Arabia, which by some estimates is pumping at a rate of 9 million barrels a day, could raise its output to 9.5 million barrels a day within a month and 10.5 million barrels a day within three months.

Yet, not all of OPEC's extra capacity is likely to be available right away. Al-Attiyah's figure for OPEC's production potential appeared to include Venezuela's nominal capacity of 2.35 million barrels a day, yet Venezuelan exports are still recovering from a crippling strike and analysts have suggested it could be months before that country resumed pumping at its earlier levels.

OPEC raised its output target by 6.5 percent in January, in an unsuccessful effort to keep a lid on rising prices. Prices for U.S. light, sweet crude have since reached a post-1991 peak of $39.99.

April contracts of U.S. crude fell 51 cents to close at $37.27 a barrel. Brent crude futures for April delivery closed 35 cents lower at $33.75 in London.

Several OPEC oil ministers attributed high prices to war hysteria and argued that there is plenty of oil to meet demand. Iran's Oil Minister Bijan Namdar Zangeneh warned Monday that OPEC shouldn't take any decision that would look appear to support a U.S. invasion of Iraq, Iran's state-run IRNA news agency reported.

www.voanews.com Melanie Sully Vienna 10 Mar 2003, 18:29 UTC

OPEC headquarters, ViennaMembers of the Organization of Petroleum Exporting Countries meeting Tuesday in Vienna are expected to work on contingency plans for how to respond to a war against Iraq.

The 11 members of OPEC are to consider suspending quotas and expanding production to compensate for any shortfall caused by military action against Iraq.

Saudi Arabia is already pumping above official production quotas, and says it has spare capacity if supplies are disrupted.

The United Arab Emirates said, however, that it would be difficult for OPEC to cover any oil shortage, since it is already producing at about full capacity.

The Indonesian delegation is opposed to any increase in production quotas.

Venezuela has not fully recovered from unrest that crippled its oil industry. And the loss of Iraq's crude exports would remove about two million barrels per day from the world market.

Analyst Helmut Pfeffer from the Raiffeisen Zentralbank in Vienna says that global production is already stretched.

"There are not too many countries that can deliver more than they are delivering now, neither OPEC countries nor non-OPEC countries," he said. "And one country that we've been relying on as a spare supplier is Russia. But its problem is of limited export capacity from its pipeline system. So there is not so much oil they can deliver, like pressing a button."

OPEC ministers agreed two months ago to increase production targets by 6.5 percent to 24.5 million barrels per day.

The cartel has a target price range of between $22-28 per barrel. But oil prices have soared to post-Gulf war record levels of almost $40 per barrel.

Melanie Sully Vienna 10 Mar 2003, 18:29 UTC

OPEC headquarters, ViennaMembers of the Organization of Petroleum Exporting Countries meeting Tuesday in Vienna are expected to work on contingency plans for how to respond to a war against Iraq.

The 11 members of OPEC are to consider suspending quotas and expanding production to compensate for any shortfall caused by military action against Iraq.

Saudi Arabia is already pumping above official production quotas, and says it has spare capacity if supplies are disrupted.

The United Arab Emirates said, however, that it would be difficult for OPEC to cover any oil shortage, since it is already producing at about full capacity.

The Indonesian delegation is opposed to any increase in production quotas.

Venezuela has not fully recovered from unrest that crippled its oil industry. And the loss of Iraq's crude exports would remove about two million barrels per day from the world market.

Analyst Helmut Pfeffer from the Raiffeisen Zentralbank in Vienna says that global production is already stretched.

"There are not too many countries that can deliver more than they are delivering now, neither OPEC countries nor non-OPEC countries," he said. "And one country that we've been relying on as a spare supplier is Russia. But its problem is of limited export capacity from its pipeline system. So there is not so much oil they can deliver, like pressing a button."

OPEC ministers agreed two months ago to increase production targets by 6.5 percent to 24.5 million barrels per day.

The cartel has a target price range of between $22-28 per barrel. But oil prices have soared to post-Gulf war record levels of almost $40 per barrel.