Deere & Co., the world's largest of maker of farm machinery, reported third-quarter earnings that missed Wall Street expectations and said rising raw materials costs will erode its profits later this year, pushing shares down more than 3 percent on Wednesday.
Deere profit rises, but stock takes hit
August 14, 2008 at 2:41AM
Quarterly profit rose 7 percent as high crop prices spurred stronger sales of tractors and harvesting equipment, but weaker sales of its consumer, construction and forestry equipment, coupled with higher costs of raw materials such as steel and rubber, hurt the company. It was the second straight quarter the Moline, Ill.-based company fell short of expectations.
Shares fell $2.25, or 3.2 percent, to close at $67.10 Wednesday.
Deere earned $575.2 million, or $1.32 per share, for the three months ended July 31, compared with $537.2 million, or $1.18 per share, in the same period last year.
But analysts surveyed by Thomson Reuters, on average, forecast profit of $1.36 per share on revenue of $7.23 billion. Those estimates often exclude one-time items.
Quarterly revenue rose 17 percent to $7.74 billion.
Lawrence De Maria, an analyst with Sterne, Agee & Leach, attributed the stock-price drop to the company "having to invest heavily to build out their overseas business" and because its construction and forestry business was weaker than expected.
Tribune Co. Tribune Co. plunged to a $4.53 billion loss in the second quarter after taking a $3.84 billion charge to write down the book value of its newspaper brands.
The charge comes a day after E.W. Scripps Co. took an $874 million write-down as sharp declines in ad revenue throughout the industry reduce the value of newspaper businesses.
Tribune, based in Chicago, earned $36.3 million in the year-ago second quarter. The company was taken private in December in an $8.2 billion buyout led by real estate mogul Sam Zell. It still reports results to comply with bondholder agreements because of its massive debt load.
Tribune's revenue fell 6 percent, to $1.11 billion, as newspaper advertising revenue slumped 15 percent. Classified advertising led the decline with a 26 percent drop, as real estate and employment ads contracted.
Ad revenue from the company's websites fell 4 percent, also because of lower classified revenues. Circulation revenue fell 2 percent, with the largest drops at its Chicago Tribune and Los Angeles Times papers.
Tribune said it repaid $807 million in principal in the quarter, using mostly the proceeds from the sale of Long Island daily Newsday to Cablevision Systems Corp. for more than $600 million. Its next principal payment, of $593 million, is due in June. In order to raise cash, Zell plans to sell the Chicago Cubs baseball team and its Wrigley Field stadium, which could fetch more than $1 billion.
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