Texaco Latest Oil Firm to See Big Profit

Texaco Inc., the No. 3 U.S. oil company, said Thursday that its earnings rose 39% in the first quarter, making it the latest oil company to show big profits from lofty crude and natural gas prices.

Texaco, which is being acquired by Chevron Corp., said operating income rose to $836 million, or $1.54 a share, well above analysts’ mean estimate of $1.49 a share. In the year-ago period, it earned $602 million, or $1.10 a share.

Analysts’ estimates had ranged from $1.40 to $1.59, according to First Call/Thomson Financial.

Overall revenue grew 25% to $14.1 billion, Texaco said.

Texaco, along with other major oil companies, benefited from high crude oil and natural gas prices, which helped its exploration and production--or upstream--business turn in higher profit.

“Propelled by strong worldwide crude oil and U.S. natural gas prices, our upstream results were their highest ever,� said Chairman and Chief Executive Glenn Tilton, who took over the job from Peter Bijur earlier this year.

The company said U.S. upstream income jumped 63% to $589 million. Internationally, because of a 3% drop in combined oil and gas production, income slipped 17% to $243 million.

Texaco’s strong exploration and production results followed those of Exxon Mobil Corp., Conoco Inc. and Unocal Corp., all of which posted hefty upstream profits for the quarter.

Tilton called the company’s downstream results mixed as refining margins on fuels such as gasoline rose along the U.S. East and Gulf coasts. Profit margins on the retail end of the business remained razor-thin.

Shares of White Plains, N.Y.-based Texaco rose $1.44 to close at $73 on the New York Stock Exchange.

At a Glance

Other earnings, excluding one-time gains or charges unless noted, include:

* American International Group Inc.’s first-quarter earnings grew 15% to $1.57 billion, or 67 cents a share, a penny better than forecasts, as it raised prices on business and auto policies and increased sales of life insurance and annuities. Revenue rose 11.6% to $12.2 billion.

* Bausch & Lomb Inc. said its operating earnings dropped 74% to $6.2 million, or 12 cents a share, as analysts expected, and reduced its forecasts for the full year. Sales were up just 1% to $412.2 million as sales in the U.S. declined 15%. Sales of contact lenses were flat and lens-care products sales fell 7%. The pharmaceutical unit’s revenue grew 10%.

* B.F. Goodrich Co.’s profit increased 4.7% to $80 million, or 76 cents a share, a penny better than forecasts, led by higher aerospace sales. Revenue was up 10% to $1.18 billion.

* Drugstore.com Inc. said its first-quarter operating loss narrowed to $21.8 million, or 33 cents a share, from $38.9 million, or 86 cents, better than the 35-cent loss analysts expected, as sales grew 44% to $32.8 million.

* HealthSouth Corp., operator of more than 2,000 rehabilitation and outpatient surgery centers, said its first-quarter profit rose 15% to $75.3 million, or 19 cents a share, matching forecasts, as revenue grew 7% to $1.09 billion.

* Reebok International Ltd. said first-quarter profit rose 30% to $41.2 million, or 68 cents a share, on virtually flat sales of $770 million, with help from cost-cutting. The results beat analysts’ expectations by 4 cents.

* Starbucks Corp. said profit rose 38% in its fiscal second quarter to $32.2 million, or 8 cents a share, but warned that sales this year would be less than forecast because consumers are reducing spending. Revenue rose 24% to $629.3 million. The latest results got a boost as Starbucks raised prices for its coffee. Sales at stores open at least a year rose 6%, less that the year-ago quarter’s 10% gain.

* Western Digital Corp. said its loss from operations shrank to $3.4 million, or 2 cents a share, in its fiscal third quarter from $22.6 million, or 17 cents, a year ago, because of cost cutting and better inventory management. Revenue rose 3.3% to $533.4 million.

* WorldCom Inc. said its profit from operations fell 42% to $686 million, or 24 cents a share, in its first quarter as weakness in its MCI long-distance telephone business offset surging data sales. Revenue edged up 1.1% to $9.72 billion. The company also reiterated its growth forecast for the full year.

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Earnings Reports

A sampling of companies reporting quarterly earnings Thursday, ranked by year-over-year earnings-per-share (EPS) growth, compiled by First Call/Thomson Financial.

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Analysts’ % above/ Year- Year- Ticker est. Actua below ago over-year Company symbol EPS EPS estimate qtr. % change Skechers SKX $0.35 $0.45 29% $0.19 137% Apache APA 2.13 2.15 1 0.96 124 Avaya AV 0.23 0.25 9 0.13 92 Peregrine PRGN 0.16 0.16 0 0.09 78 Bergen Brunswig BBC 0.20 0.21 5 0.13 62 Alza AZA 0.22 0.23 5 0.15 53 KeySpan KSE 1.50 1.61 7 1.22 32 Thermo Electron TMO 0.19 0.21 11 0.16 31 Fidelity National FNF 0.53 0.57 8 0.45 27 Corning GLW 0.28 0.29 4 0.23 26 Cardinal Health CAH 0.56 0.56 0 0.47 19 Alberto- Culver ACV 0.44 0.45 2 0.40 13 Applied Biosystems ABI 0.26 0.27 4 0.26 4 Union Pacific UNP 0.72 0.72 0 0.74 --3 Southern SO 0.23 0.26 13 0.37 --30 Clear Channel CCU --0.45 --0.53 NM --0.12 NM

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Notes: NM = not meaningful.

Year--over--year growth and percentage changes are based on earnings--per--share figures and may differ from percentage changes based on total profit.

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