Posted on Wed, Apr. 16, 2003 HARRY R. WEBER Associated Press

ATLANTA - Investors ignored Coca-Cola's solid first-quarter earnings Wednesday, dumping shares amid concerns about the company's business abroad. Some pleaded with executives to address their high pay, union strife in Colombia and human rights abuses in China.

The world's largest beverage maker said it earned $835 million, or 34 cents a share, in the three months ending March 31, compared with a loss of 8 cents a share, or $194 million, in the same year-ago period.

Excluding one-time items - an accounting change related to goodwill, a charge for job cuts and a gain from a litigation settlement - Coke earned 37 cents per share in the first quarter, equal to what analysts surveyed by Thomson First Call were expecting.

Revenue in the quarter was $4.49 billion, a 10 percent jump from the $4.08 billion that Atlanta-based Coke made in the same January-March period a year ago.

But shares of Coke fell $2.85, or more than 6 percent, to $39.68 in afternoon trading on the New York Stock Exchange. Analysts said investors are worried about the company's growth and increasing anti-American sentiment cutting into its international business because of the war in Iraq.

In Houston, at the Atlanta-based company's annual meeting, shareholders charged that Coke has not done enough to deal with abuses suffered by employees of its independent bottlers who work in other countries. Some also said they were concerned with the millions in compensation earned by chief executive Doug Daft at a time when the company laid off workers.

Daft said Coke and its bottlers have not abused or condoned abuse of trade unions in Colombia and the company has worked hard to deal with human rights issues in China. As for his pay, he said that's up to the compensation committee, not him.

"If the company doesn't deliver and he doesn't deliver, he doesn't get paid," Coke lawyer Deval Patrick told shareholders at the meeting.

Eight shareholder proposals dealing with workers' rights, executive pay and other issues were voted on and rejected. Four board proposals - the election of new directors, the appointment of an independent auditor and changes to the company's stock option and long-term incentive plans - passed.

Coke generates 80 percent of its operating income from other countries. Troubles in the Persian Gulf and Asia will likely weigh on the company's results in the future and help explain Coke's falling share price Wednesday, analysts said.

"International concerns weigh on management," said Todd Stender, an analyst with Crowell, Weedon and Co. in Los Angeles. "Couple that with talk of boycotts overseas really makes people anxious. These are still lingering issues."

Bryan Spillane, an analyst with Bank of America Securities in New York, said Coke has seemed to weather the storm so far, but its volume growth in the quarter was lighter than he expected.

"It's a lousy environment," Spillane said. "Going forward, is the operating environment going to improve? Coke has sort of moved in the right direction, but it's been a sort of nonlinear recovery."

Coke saw strong growth in the quarter in China, the Philippines, India and Thailand, but declines in Japan, Venezuela, Europe and the Middle East.

In Venezuela, the company's operations were shut down during the national strike in January and February.

The biggest decline abroad for Coke was in Germany, where unit case volume dropped 10 percent due to a new deposit law on nonreturnable packages, such as beer or soda cans. The January change resulted in major retailers pulling nonreturnable packages, Coke said.

In North America, unit case growth for the quarter was 3 percent. That includes 2 percent growth in trademark Coca-Cola.

Non-carbonated beverages also posted solid gains for Coke, led by 22 percent growth in Dasani, 16 percent growth in Powerade and double-digit growth from Minute Maid Lemonades.

"We're confident that we will see improving trends in the remainder of the year," chief financial officer Gary Fayard said. "Specifically, we don't expect another strike in Venezuela. We don't expect to see another month like January in Germany."

The past year has seen significant changes at Coke.

Coke announced in December that it would no longer give quarterly earnings guidance, saying it distracts from its long-term goals. The same month, Coke hired a new president and chief operating officer, Steve Heyer, who has moved to streamline the company's management. Several executives were shifted to other assignments.

In January, Coke announced 1,000 layoffs, saying it was still working to make its North American operations more efficient.

On the Net: www.coca-cola.com

Wednesday, 04/16/03    |    Middle Tennessee News & Information By KEITH RUSSELL <a href=www.tennessean.com>tennessean.comStaff Writer

Six years ago, passing motorists would spot Wayne Sanderson tinkering with the electric power lines along Interstate 65 and report his suspicious activity to Nashville Electric Service officials.

Today, that initial tinkering has the former Nashville Tech electrical engineering professor helping lead an Alabama company on the cusp of delivering high-speed Internet service directly over electric power lines.

The technology has long been considered a sort of Holy Grail — a ''third'' wire that could expand broadband service into rural areas where cable and digital subscriber line, or DSL, providers don't reach.

Among the concept's biggest fans is Michael Powell, the chairman of the Federal Communications Commission.

''This is within striking distance of being the third major broadband pipe into the home,'' Powell was quoted as saying last week at a demonstration of the technology in Maryland.

And Sanderson's PowerComm, based in Huntsville, Ala., is right in the thick of it. Earlier this year, the company began its first field test, a project to offer broadband service at speeds similar to DSL along power lines to a small residential subdivision in Cullman, Ala.

Oversimplified, Internet traffic is sent along the power lines using parts of the electromagnetic spectrum not used for other purposes, such as radio and TV signals. The content, whether it's a piece of data, video or a phone call, then makes its way to a PowerComm customer using a modem. Eventually, the company expects to be able to allow a customer to connect to the Internet by literally plugging into a wall outlet.

If all goes well, PowerComm hopes to launch service in northern Alabama and other Southeastern communities served by the Tennessee Valley Authority. Utilities could either offer the service directly to customers, or partner with an existing Internet service provider.

Initial monthly service in Cullman is expected to cost about $30, but PowerComm officials believe they may eventually get that down to $20.

No Middle Tennessee utilities are close to offering the service, but some are interested to see how the field tests pan out. Larry Kirk, general manager at Murfreesboro Electric, recently sat in on a presentation Sanderson made to the local chapter of the Institute of Electrical and Electronics Engineers.

''That's an issue we're very interested in,'' Kirk said. ''Hopefully they can get it perfected.''

NES officials are also watching the developments with interest, though the utility has no active plans to get into the broadband business.

''We're certainly interested in it from an NES standpoint, both for our customers' use and our own internal use,'' said Leonard Leech, chief engineer for NES.

Leech added that NES wasn't necessarily inclined to use its power grid to get into the Internet business.

Rather, the utility is interested in being an ''enabler'' by helping spread broadband service to areas where it isn't available.

''We'd like to make sure that whatever needs to happen as far as economic development, that we appropriately use our infrastructure to the maximum advantage of citizens.''

Leech has actually been a longtime supporter of Sanderson and PowerComm, which was started after Sanderson, a Nashville native, was laid off from his job in the mid-1990s as an engineer at telecommunications equipment maker Motorola. He was teaching at Nashville Tech but was interested in doing something more.

''Motorola downsized, and I decided to do something more entrepreneurial,'' Sanderson recalled.

Finding a way to deliver broadband over power lines intrigued him. The concept had been tried in the early 1990s in Europe but never took off.

Sanderson called Leech and received the utility's blessing to work on the project using the local power grid.

Subsequent testing was conducting on power lines in Sanderson's hometown of Fayetteville, Tenn.

In 2001, Sanderson partnered with Steve Turner, a former colleague at Motorola, to found PowerComm.

While starting in small Cullman, about a three-hour drive from Nashville, Turner believes the potential for offering broadband over power lines is literally global in scale. As proof, Turner notes PowerComm has already been contacted by utilities in China, Malaysia, Venezuela, India, Ukraine and the Czech Republic.

''The market is so huge,'' said Turner, PowerComm's president and chief executive officer, ''and there is a relatively small number of people who are finding a way to do this.''

The technology also has non-consumer uses, ranging from allowing utilities to electronically read meters to helping protect the homeland from terrorist threats. Already, Turner said PowerComm is working to deploy video cameras attached to power lines that can help customers keep an eye on critical infrastructure, such as hydroelectric dams.

Despite the opportunities, longtime observers of efforts to introduce high-speed Internet services on power lines say a dose of caution is in order. Not the least of which is that companies still must prove the technology actually works.

''I definitely think power line has the potential to be very revolutionary, but it is technology that is still relatively unproven,'' said Seth Libby, an analyst with the Yankee Group research firm.