R.R. Donnelley & Sons Co., which has been struggling due to the sharp fall in printing activity, said Wednesday that first-quarter net income, excluding one-time items, fell 66 percent, to $9.5 million, or 8 cents a diluted share, from $28 million, or 23 cents a diluted share, a year ago.
The consensus estimate of analysts for the most recent quarter was 16 cents a share, according to Thomson Financial/First Call.
The company reported it took a one-time after-tax charge of $17 million, or 14 cents a share, to cover the cost of a restructuring program, but also said it had resolved a dispute with the Internal Revenue Service that allowed it to credit first-quarter results by $30 million, or 26 cents a share.
Revenue for the quarter fell 16 percent, to $1.1 billion from $1.3 billion.
Wall Street shrugged off the disappointing report, with shares of Donnelley closing down 11 cents, at $31.85, on the New York Stock Exchange. Tuesday, the stock reached a 52-week high of $32.10.
The fact that Donnelley doesn’t provide quarterly earnings guidance likely was part of the reason the stock didn’t tumble when the earnings didn’t meet analysts’ expectations.
George Nichols, an analyst with Morningtstar.com, said the market also was probably heartened by the company’s report that it is still on track to meet its full-year earnings estimate of $1.50 to $1.65 a share.
“This is the worst advertising recession since World War II,” Nichols said. “In the big scheme of things, one quarter doesn’t mean a whole lot. While recovery in the advertising and financial markets may be taking a little longer than expected, other companies heavily dependent on advertising, including Viacom, Fox and Disney, also are holding up quite well.”
Earlier this week, Donnelley announced that its board had decided to replace Andersen as the company’s independent auditor, awarding the job to Deloitte & Touche.
In other earnings news:
– Newell Rubbermaid Inc. said first-quarter results exceeded Wall Street expectations, even though the consumer-products conglomerate reported a $463.9 million net loss.
The loss, which amounts to $1.74 a share, was the result of a non-cash charge of $514.9 million reflecting a decline in the value of some of the company’s recent European acquisitions. A year ago, Newell Rubbermaid had net income of $38.4 million, or 14 cents a share.
Revenue slid to $1.59 billion from $1.61 billion, but would have risen if not for the bankruptcy of discount retailer Kmart Corp. and another customer, Chief Executive Joseph Galli told analysts during a conference call.
Excluding the non-cash charge and after-tax restructuring costs of $13.1 million, Newell Rubbermaid said earnings were 24 cents a share, 2 cents above analysts’ estimates, according to First Call.
The company, based in Freeport, Ill., said sales in its Rubbermaid home products and office products businesses each grew 5 percent. This helped offset sluggishness in its Graco unit, which includes swings, highchairs and strollers.
Galli expects positive sales growth the rest of the year, helped by new products. Newell Rubbermaid shares rose 78 cents, to $32.18, on the NYSE.
– Equity Residential Properties Trust said earnings dropped sharply during the first quarter because of fewer sales of apartment properties. But the Chicago-based real estate investment trust said funds from operations–a key measure of profitability for REITs that doesn’t include such transactions–beat expectations.
The REIT said net income fell 25.4 percent, to $100.9 million, or 28 cents a share, compared with $135.3 million, or 40 cents a share, a year ago. Gains on asset sales declined to $8.5 million from $41.8 million.
Yet the REIT’s funds from operations surpassed analysts’ expectations. Equity Residential reported FFO of $192.1 million, or 64 cents a share, compared with $192.2 million, or 65 cents a share, a year ago. The consensus Wall Street estimate for the most recent quarter was 62 cents a share.
Douglas Crocker II, chief executive of Equity Residential, whose chairman is financier Sam Zell, cautioned that occupancy levels of apartment buildings will not rebound until next year, with rent increases not kicking in until 2004.
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“We are currently receiving mixed signals concerning the depth and breadth of the recovery,” he said during a conference call with analysts.
The company slightly increased its occupancy level during the first quarter to 94.2 percent, up from 93.9 percent in the fourth quarter, said Louis Taylor, senior real estate analyst with Deutsche Banc Alex. Brown Inc. Revenue slipped to $516.2 million from $521.9 million a year ago.
Equity Residential stock gained 60 cents, to $28.80, on the NYSE.
– Divine, Inc. reported a first-quarter net loss of $70.9 million, compared with $65.6 million a year ago, but an acquisition binge helped increase its revenue nearly 1,400 percent. Its loss amounted to 16 cents a share, compared with 49 cents a share a year ago, because the number of shares more than tripled during its buying spree.
Revenue was $146 million, up from $9.8 million a year ago. Divine recently signed agreements to acquire customer relationship management company Delano Technology Corp. and consulting firm Viant Corp., adding two more deals to its recent buying binge.
Chief Financial Officer Michael Cullinane said he expects those two deals to bring in $90 million in annual revenue. He also said the company has cut $45 million in annual expenses so far this year. The report came out after the close of trading.
– General Growth Properties Inc. reported first-quarter net income of $31.4 million, or 51 cents a share, up from $20.6 million, or 39 cents a share, a year ago. The Chicago-based company, which owns interests in or manages 142 shopping malls in 39 states, said its funds from operations jumped to $94.4 million from $77 million. Occupancies in its malls was virtually flat at 89.1 percent. The report came out after the close of trading.