For most companies, the results would spell a bad quarter: Bank One Corp.’s earnings in the first quarter were down from the year before, deposits shrank and loans barely grew.
But for Chicago-based Bank One, it was the best quarter since Chief Executive Jamie Dimon arrived a year ago.
After a series of disappointments–including a $1.9 billion charge in last year’s second quarter and $1.6 billion in special charges and funds set aside to cover increasing loan losses in the fourth quarter, both of which led to quarterly net losses–the company reported first-quarter net income of $679 million, or 58 cents a diluted share.
Investors were relieved by the relatively calm quarter, which saw net income fall 1 percent from a year earlier but meet analysts’ expectations. Shares rose 98 cents, or nearly 3 percent, to $36.39, on the New York Stock Exchange.
Details from the quarter were a mixture of good and bad news, but Dimon perked up investors when he said the banking company’s costs probably will improve if the economy does not worsen.
He said in an interview that it is the first time he has been pleased with a quarter since he took over the nation’s fifth-largest bank last March, although, “I wouldn’t put it in the super-happy category.”
To employees, Dimon was more upbeat. “Bank One is back,” he said in a mass voice-mail Tuesday morning. “Keep on watching. We now have the capability to do whatever we want with this company.”
Some analysts were not as enthused about the results.
Problem loans would have been substantially worse if Bank One had not sold $599 million in commercial loans, said Ariel Schochet, a bank analyst at Highline Capital Management LLC, a New York-based hedge fund.
Others pointed to a decline in deposits and in average outstanding credit card balances as signs that the company lacks momentum.
“Right now it’s a show-me story, where the price of the stock already assumes that you get shown everything,” Schochet said.
He and others who say the stock is trading higher than it should say Dimon is the reason.
“He continues to do what he does, which is convince everybody that they’re on the right track, and I believe that they are,” said Nancy Bush, a bank analyst at Ryan, Beck & Co. in Livingston, N.J. “It’s just that this may take a very long time.”
In other earnings news:
– Caterpillar Inc., its profits under pressure from what it called “continued difficult business conditions around the world,” said first-quarter earnings fell 37 percent–just below Wall Street’s expectations–on a 2.2 percent drop in revenue.
The Peoria-based heavy-equipment giant reported net income of $162 million, or 47 cents a diluted share, down from the year-earlier quarter’s $258 million, or 73 cents a share. Revenue slipped to $4.81 billion from $4.92 billion. The consensus of analyst expectations was 48 cents a share, according to First Call/Thomson Financial.
The U.S. economy’s slide has pinched Caterpillar in several ways. Truck manufacturers, who were buying the company’s heavy diesel engines at a rapid clip a year ago, went from a boom into a steep cyclical decline in the second half of 2000; operating profit at Caterpillar’s engine group tumbled 59 percent, to $63 million, thanks in part to the dropoff in sales to the truck sector.
The slowdown in the domestic building sector has crimped profit margins for Caterpillar’s big-ticket construction equipment. At Cat’s flagship machinery group, sales were flat at $2.96 billion, but operating profit slid 9 percent, to $215 million.
Caterpillar, which said it anticipates a pickup in the U.S. economy in the year’s second half, noted that demand for construction equipment and oil- and gas-related equipment has been strengthening of late. On Tuesday, the company reaffirmed a forecast it first issued in January, in which it projected flat full-year sales and a 5 percent to 10 percent decline in earnings.
Caterpillar shares dropped $1, or 2.1 percent, to $45.75 on the NYSE.
– FMC Corp., hurt by big onetime charges, reported a hefty first-quarter loss.
The Chicago-based machinery and chemicals company had a net loss of $26.5 million, or 86 cents a diluted share, compared with net income in the year-earlier quarter of $32.8 million, or $1.05 a share. The latest quarter was burdened with a total of $44.7 million in after-tax charges, the bulk of which are related to the company’s pending plan to split into two separate companies; excluding those charges, FMC’s first-quarter earnings fell 45 percent, to $18.2 million, or 57 cents a share.
That figure exceeded by a penny the consensus estimate of analysts, according to First Call/Thomson Financial.
FMC’s revenue, reflecting lower sales both for its chemicals group and its machinery operations, fell 13 percent, to $876.6 million from $1 billion.
FMC shares rose $2.80, or 4 percent, to $73.13 on the NYSE.
– Shares of Oakbrook Terrace-based education company DeVry Inc. jumped after it reported that net income for its fiscal third quarter, ended March 31, climbed 21 percent, to $16.04 million, or 23 cents a diluted share, beating analyst expectations by a penny a share.
A year earlier, DeVry had net income of $13.30 million, or 19 cents per share.
Revenue rose nearly 15 percent, to $149.2 million from $130.1 million, with tuition revenue up 17 percent from the year-earlier quarter.
For the nine months, net income rose 22 percent, to $43.92 million, or 62 cents a share, from $35.99 million, or 51 cents a share, a year earlier. Revenue climbed nearly 14 percent, to $435 million from $382 million.
DeVry shares rose $4.05, or 14.1 percent, to $32.75 on the NYSE.
– Arthur J. Gallagher & Co., helped by strengthening insurance-industry conditions and some valuable tax benefits, reported a 39 percent jump in first-quarter earnings.
The Itasca-based insurance brokerage said net income was $23.46 million, or 27 cents a diluted share, up from $16.82 million, or 20 cents a share, a year earlier, when fewer shares were outstanding. Revenue rose 17 percent, to $198.8 million from $169.2 million.
The results exceeded analysts’ consensus earnings expectations of 25 cents a share, according to First Call/Thomson Financial.
Gallagher said the brokerage commissions it earns continued to improve in the latest period, and income from investments was also solidly higher.
On a pretax basis, the company’s earnings were up 14 percent. But because of tax credits Gallagher earned through synthetic-fuel investments, the company’s income tax bill fell by $3 million, to $5.9 million.
Gallagher shares rose 64 cents, or 2.6 percent, to $25.68 on the NYSE.
– John Nuveen Co. said first-quarter net income rose 7 percent, to $27.96 million, or 82 cents a diluted share, from $26.11 million, or 78 cents a share, a year ago.
The Chicago-based investment firm met analysts’ expectations for the quarter and expanded net income despite the slowing economy and declining stock prices.
Assets under management grew to $61.3 billion from $60.0 billion a year earlier, as net equity and fixed-income sales and slight increases in fixed-income asset values offset falling stock valuations. Assets under management, however, slipped from $62 billion at the end of 2000.
Revenue slid 7 percent, to $85.7 million from $92.5 million. Gross sales were $3.8 billion, up 20 from a year earlier.
Nuveen shares were unchanged at $54.70 on the NYSE.
