www.quicken.com Thursday, January 30, 2003 03:38 PM ET  Printer-friendly version   The Wall Street Journal Online

The economy is slowing, Iraq fears are growing, and profits are eroding.

That bearish refrain echoed on Wall Street again Thursday, making for another lousy trading day as a weak gross domestic product report, jobless figures and news of a massive loss at AOL Time Warner threw more water on the market.

Meanwhile, a coalition of European states said they'd throw their weight behind the U.S. in its effort to force Iraq to disarm, highlighting anew the immediacy of conflict.

The Dow Jones Industrial Average was off by about 114 points by late afternoon, while the Nasdaq composite lost 27 points.

Before the start of trading, the Commerce Department released its first estimate of growth in the fourth quarter, which showed a marked slowdown from the third quarter. Gross domestic product, the total value of all goods and services produced in the economy, advanced 0.7%, compared with growth at a 4% annual rate in the third quarter.

Economists had forecast an increase of 0.6%. For the full year, GDP grew 2.4%, compared with 0.3% in 2001. While the results weren't spectacular, the market showed a muted reaction, and some even found encouragement in the details despite the weak headline number.

"This is something of a relief -- a negative number, with its attendant unpleasant optics, was possible," said Ian Shepherdson, chief U.S. economist for High Frequency Economics. "The big surprise here is that ... spending on equipment and software rose at a 5% pace. This is the third straight gain ... it is very encouraging to see spending rise given the third-quarter drop in business confidence."

Meanwhile, initial jobless claims for the week ended Jan. 25 rose 14,000, compared with a rise of 18,000 in the earlier week, the Labor Department said. Economists had forecast a smaller increase, of 4,000.

After the close of trading Wednesday, AOL Time Warner posted a 2002 loss of $ 98.7 billion -- the widest annual corporate loss in history -- after taking a fourth-quarter charge of $45.5 billion, mostly to write down the value of its troubled America Online unit. The write-down was more than twice what Wall Street had anticipated.

Its shares tumbled 14%. The company also announced the resignation of Ted Turner as vice chairman, the latest in an exodus of senior executives.

Aside from AOL's news, equities traders are focusing on several major companies reporting earnings early Thursday. Among them, Exxon Mobil reported a 53% jump in net income as concerns over unrest in Venezuela and war in Iraq lifted oil and gas prices and gave a considerable boost to the company's revenue. Its shares, which have shown strength of late, lost 1.2%.

AstraZeneca said its fourth-quarter profit fell 41% as the company put aside $ 350 million to cover a likely legal settlement. But sales at the Anglo-Swiss pharmaceutical company rose 12%. Its shares were up 4%.

Dow component Walt Disney is scheduled to report its financial results after the close of trading Thursday. Its shares were down 4.2%.

After a rocky beginning Wednesday, the market turned higher to post a second straight day of gains. Traders got some help from a decision by Federal Reserve policy makers to leave target interest rates unchanged, and by the Fed's reassuring comment that, once geopolitical risks lift, the economy should improve. The Dow industrials, off almost 144 points early in the day, finished up 21.87. The Nasdaq Composite Index, dominated by tech stocks, gained 1.18%.

In major U.S. market action Thursday:

Stocks were weak. On the Big Board, where 1.20 billion shares traded, 2,093 stocks fell and 1,165 rose. On the Nasdaq, where 1.15 billion shares changed hands, 2,175 stocks declined and 1,031 advanced.

Bonds were higher. The 10-year Treasury note gained about 3/8 point, or $3.75 for each $1,000 invested. The yield, which moves inversely to price, fell to 3.98%. The 30-year bond was up more than 1/2 point to yield 4.87%.

The dollar was stronger. It traded at 119.19 yen, compared with 118.32 yen late Wednesday in New York, while the euro fell against the dollar to $1.0803 from $1.0841.

www.forbes.com Reuters, 01.30.03, 2:33 PM (The following statement was released by the rating agency)

NEW YORK, Jan 30 - The fourth quarter continued to be a time for reflection and planning, as continued strength in oil and natural gas prices failed to create much ratings activity, according to a report published today by Standard & Poor's Ratings Services.

For refiners, the fourth quarter offered a little reprieve from an otherwise forgettable year, as margins improved in December due to a drop in distillate inventories--especially gasoline--and the prospect for further tightening as refineries in Venezuela were closed. (But, the improvement vanished in January.)

"Companies in the service sector, aside from seismic services and a couple of other exceptions, continued to successfully weather the decline in drilling activity, while many of the larger exploration and production companies seem to be maintaining conservative capital budgets despite the strength of commodity prices," said Standard & Poor's credit analyst Paul Harvey.

This position begs important questions regarding the depth and quality of the industry's North American natural gas prospect inventory and the potential for a sustained bout of above-normal prices. The majority of rating actions resulted from the failure of companies to improve or maintain adequate capital structures for their rating.

The report, titled "Fourth-Quarter 2002 Global Oil & Gas Ratings Round-Up," is available on RatingsDirect, Standard & Poor's Web-based credit research and analysis system. Members of the media may obtain copies of the full report by contacting Gregg Stein at (1) 212-438-1730 or by E-mail at gregg_stein@standardandpoors.com.

Standard & Poor's will be hosting a seminar titled "Determining Corporate Credit Quality in a Volatile Environment," on Feb. 2-4, 2003, at the Grand Floridian Resort & Spa, Orlando, Fla. Standard & Poor's senior analysts and invited industry leaders from the corporate, banking, and investment communities will discuss trends and current issues related to corporate credit quality. For complete seminar details and registration, please call (1) 212-438-2800, or visit www.standardandpoors.com/events/CRS. You may also send an E-mail to seminars@standardandpoors.com.

abcnews.go.com — By Nigel Stephenson

LONDON (Reuters) - Stocks and the dollar rose on Thursday as Washington prepared to launch a last diplomatic push to persuade Iraq to disarm and the Federal Reserve sought to soothe nerves over the U.S. economy.

Safe haven gold and government debt prices eased after U.S. officials heralded an uptick in the diplomatic tempo ahead of Secretary of State Colin Powell's February 5 presentation to the Security Council of intelligence on Iraq's alleged arms programs.

U.S. stocks looked set to open flat but world crude prices stayed strong as the oil market brushed off the U.S. diplomatic initiative as unlikely to avert conflict.

The dollar edged off three year lows after the Fed left interest rates unchanged at a four-decade low on Wednesday and said the U.S. economy should pick up as war fears lift.

Some traders cited a letter of solidarity with the Bush administration, signed by eight European prime ministers and published in several newspapers, as contributing to the more positive mood.

"People were looking for an excuse to buy and this (the allies' support) represents a moderate improvement for the U.S.," said Paul Meggyesi, currency analyst at JP Morgan.

The euro was last trading around $1.0745, up 0.8 percent from its New York close. The greenback hit a three-year low beyond $1.09 on Monday. The U.S. currency was up nearly half a percent on the yen at 118.94.

European stocks rose, led by gains in insurers, and U.S. futures indicated Wall Street was set to open modestly higher.

"The fear and uncertainty over a possible conflict will soon be over," said Roger Hornett, chief executive and global strategist at Gilissen Securities.

The FTSE Eurotop 300 index <.FTEU3> of pan-European blue chips was up 1.97 percent while the narrower DJ Euro STOXX 50 <.STOXX50E> index was up 1.77 percent, off the day's highs.

Insurers bounced from a four-month low hit on Wednesday on worries over the impact of tumbling share prices.

However, some money managers cautioned the downward trend, which saw nine consecutive days of losses, was still intact.

"Last week we had huge declines in equity markets and therefore some upward correction is inevitable, but we asset managers take a more medium-term view and we continue to underweight equities," said Joerg Kraemer, a strategist at Invesco Asset Management in Frankfurt.

U.S. SHARES SEEN FLAT

U.S. shares, which rallied on Wednesday after the Fed's decision, were expected to open flat.

Markets were also looking to U.S. fourth-quarter growth data due at 1330 GMT for more clues to the state of the economy. Economists forecast a subdued 0.7 percent annual growth rate after 4.0 percent in the previous three months.

Tokyo shares closed lower as institutions, spooked by the threat of war, sold blue chips. The Nikkei <.N225> ended down 0.17 percent, just above a two-decade low hit last November. The broader TOPIX <.TOPX> index dipped 0.07 percent.

Oil prices held firm. Brent crude for March delivery was down eight cents at $30.94 a barrel. U.S. light crude , which rose three percent on Wednesday on a big drop in U.S. winter heating oil stocks, was down six cents at $33.57 a barrel.

"Washington says that the current flurry of international diplomatic activity is a window of opportunity to avert war. We see it as an attempt to build an international coalition to back the U.S. position and that war is inevitable," said Lawrence Eagles at GNI-Man Financial.

The threat of war in the Gulf, which supplies 40 percent of world crude exports, and a strike in Venezuela, have pushed up prices 35 percent since late November.

Safe-haven government bond prices fell. The yield on the two-year German Schatz <EU2YT=RR>, which moves in the opposite direction to the price, was up 1.6 basis points at 2.62 percent. It touched a 3-1/2 year low of 2.54 percent last week. The 10-year Bund <EU10YT=RR> was yielding 4.09 percent, up 3.4 basis points.

story.news.yahoo.com Thu Jan 30, 9:22 AM ET

FORT LAUDERDALE (Reuters) - America Online Latin AmericaInc. (Nasdaq:AOLAC - news), which offers Internet services in Mexico, Argentina and Brazil, said on Thursday it is no longer in conditional listing on the Nasdaq SmallCap Market, having met minimum capitalization requirements.

The company, backed by media giant AOL Time Warner Inc. (NYSE:AOL - news) and Venezuela's Cisneros Group, said it will trade once again under the AOLA (NasdaqNM:AOLA - news) symbol when markets open on Thursday.

Nasdaq requires $35 million in market capitalization for the company to list its Class A common stock, AOL Latin America said.

Earlier this month, stock conversion by the two main shareholders of the company helped to boost its capitalization levels and gained it a six-month extension to comply with the $1 minimum bid price requirement for the Class A stock.

The shares closed at 52 cents on Wednesday. In the past year, they have ranged from 17 cents to $3.16.

www.upi.com From the Business & Economics Desk Published 1/30/2003 11:12 AM View printer-friendly version

NEW YORK, Jan. 30 (UPI) -- Here is a look at more of Thursday's top business stories:

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Boeing earnings fall before charges

CHICAGO, Jan. 30 (UPI) -- Boeing Co., the world's largest aircraft maker, said its fourth-quarter net income surged to $590 million, or 73 cents a diluted share, from $100 million, or 12 cents a share during the same period a year earlier.

Excluding Sept. 11-related charges of $622 million in the 2001 fourth quarter, and current charges, Boeing said its net income fell in the latest quarter to $571 million, or 71 cents a share, from an operating profit of $722 million, or 90 cents a share a year earlier.

Analysts on Wall Street had expected Boeing to post a net income of 71 cents a share before special items, according to Thomson First Call.

Revenue declined to $13.7 billion from $15.7 billion during the fourth quarter of 2001.

Phil Condit, chairman and chief executive officer, said, "In 2002 several of our businesses successfully confronted the severe downturn in commercial aviation, while our Integrated Defense Systems business established itself as a market leader in integrated battlespace solutions and homeland security."

Boeing said its operating earnings were down as a result of decreased commercial airplane deliveries, increased customer financing charges and higher commercial satellite production costs.

The company said its Commercial Airplanes division during 2002 moved aggressively to resize operations and remain profitable. Since September 2001 employment has been reduced by approximately 30,000 people (including Shared Services personnel) and airplane production rates cut in half.

Boeing noted Commercial Airplanes profitably managed through the unprecedented disruption in commercial aviation markets that followed the events of Sept. 11.

In 2002, annual deliveries of commercial airplanes decreased 28 percent and revenues fell 19 percent. The impact of reduced revenues was significantly offset by strong operating performance. Segment, or unit cost, operating margins for the year excluding non-recurring items were 10 percent, just below the 10.1 percent achieved in 2001.

On a program accounting basis, Commercial Airplanes' operating earnings totaled $2 billion, resulting in a 7.1 percent margin in 2002.

This compares to earnings of $1.9 billion in 2001, which include $908 million of non-recurring charges related to the events of Sept. 11. When these charges are added back, Commercial Airplanes earnings calculated on a program accounting basis in 2001 totaled $2.8 billion, resulting in an 8 percent margin.

Fourth quarter deliveries of commercial airplanes decreased 40 percent and revenues fell 32 percent.

Boeing said Commercial Airplanes received 67 gross orders during the quarter and 251 for the year from a broad cross-section of customers. Contractual backlog at quarter-end totaled $68.2 billion compared with $75.9 billion at the end of 2001.

Looking ahead, Boeing also projected it would earn $1.90 to $2.10 a share for the full year 2003 and $2.10 to $2.30 a share in 2004.

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Earnings rise at Exxon Mobil

IRVING, Texas, Jan. 30 (UPI) -- Exxon Mobil Corp., the world's largest publicly traded oil company, said its fourth-quarter net income was lifted by sharply higher oil and gas prices.

The oil giant reported its fourth-quarter net income climbed to $4.09 billion, or 60 cents a share, from $2.68 billion, or 39 cents a share during the same period a year ago.

Excluding special items, the Exxon Mobil reported earnings per share of 56 cents. Analysts on Wall Street had expected the company to post a net income of 50 cents a share, according to Thomson First Call.

Revenue jumped to $56.2 billion from $47.7 billion a year ago.

Exxon Mobil said its upstream exploration and production results rose to $3 billion, up $1.27 billion from a year-ago, helped by crude oil prices that rallied more than 40 percent in the last three months of 2002 from the year before.

The increase in crude prices was driven by fears of a potential war in Iraq, a strike in Venezuela -- the world's fifth-largest exporter of oil -- and increasing U.S. demand for petroleum products during a frigid winter.

Downstream, or refining and marketing, earnings fell to $821 million, down $198 million from the year before, reflecting weaker industrywide conditions. Refiners struggled through last year as high inventories of refined products such as jet fuel and gasoline hurt refining margins.

The company, which is a component of the Dow Jones industrial average, said capital spending rose to $4.03 billion in the fourth quarter from $3.86 billion a year earlier.

On an oil-equivalent basis, production increased 1 percent excluding the effect of OPEC quota restrictions. Liquids production, excluding the effect of OPEC quota restrictions, remained flat during the quarter as new production in Canada, Angola and Equatorial Guinea was offset by natural field decline.

Exxon said natural gas volumes rose 3 percent in the quarter in light of higher European demand and the return to full production levels at Arun in Indonesia.

Chairman Lee R. Raymond said, "ExxonMobil's fourth quarter 2002 net income of $4.09 billion was up $1.45 billion or 55 percent from third quarter 2002 and represents the corporation's highest net income since the second quarter of 2001."

The company said its chemicals earnings fell by $277 million compared with the third quarter due to weaker worldwide margins.

"Corporate and financing expenses of $109 million increased $68 million mainly due to the absence of favorable foreign exchange impacts," Raymond said.