Best Buy Co., the nation's top consumer electronics retailer, said a slowing economy and continued weakness in sales of desktop computers resulted in a 24 percent first-quarter earnings decline. Best Buy reported Tuesday that it earned $55 million, or 26 cents a share, in the quarter ended June 2, compared with $72 million, or 34 cents a share, a year earlier -- before the company's purchase of Musicland Inc. The results beat the 23 cents a share consensus estimate of analysts surveyed by Thomson Financial/First Call. Including the Musicland data in the 2000 quarter for comparison, Best Buy earnings dropped 15 percent from $65 million, or 31 cents a share. The inclusion of results from Musicland, where sales are normally slower in the first half of the year, reduced earnings by about 6 cents a share, Best Buy said. First-quarter sales were up nearly 10 percent to $3.70 billion, from $3.37 billion for Best Buy and Musicland combined in the first quarter of 2000. The sales increase reflects the addition of 69 stores in the past year, bringing Best Buy's store total to 430, as well as the inclusion of 1,300 Musicland stores, including Sam Goody, Media Play, On Cue and Suncoast. Sales at Best Buy stores open at least a year, known as same-store sales, dropped just over 3 percent. Same-store sales for Musicland declined about 6 percent.
United Airlines, citing a weakening U.S. economy, announced Tuesday it expects to post a double-digit decline in revenue in the second quarter. To deal with the effects of the decline, UAL Corp., parent of the world's second-largest air carrier, announced several cost reduction plans, including reducing capital spending plans, accelerating the retirement of its Boeing 727 aircraft fleet and converting operations at several airports to United Express. Company officials say the moves are expected to save about $300 million. Earlier this year, United announced an effort to cut costs by $200 million, including unspecified job cuts and doing away with some frills in its on-board service. Because of unresolved labor disputes with its mechanics and flight attendants, in addition to the breadth and length of the U.S. economic slowdown and the cost of fuel, United cannot give specific estimates on its second quarter results, officials said.
Tellabs Inc., the troubled telecommunications giant, warned Tuesday that second-quarter sales will fall 35 percent to 40 percent below expectations as demand for equipment continues to plummet. The statement, which came after markets closed, was the latest evidence of major struggles in the once high-flying telecoms industry. Tellabs now projects sales for the quarter of $500 million, down from previous estimates of $780 million to $820 million, and says earnings per share will just break even, excluding restructuring and other charges. Analysts surveyed by Thomson Financial/First Call had estimated earnings of 29 cents a share, down from 39 cents a year ago. Tellabs, which employs about 8,000 people, designs and builds optical networking, broadband access and switching equipment. It reported revenues of $3.4 billion last year, vaulting it into the Fortune 500 list of America's largest companies at No. 479.
Oracle Corp., the world's second largest software maker, posted fourth-quarter earnings of $855 million, or 15 cents per share, beating analysts' lowered expectations. Still, Oracle's net income for the quarter dropped 83 percent because of a hefty $6.5 billion investment gain recorded in the year-ago period, the company said. The consensus estimate among analysts polled by Thomson Financial/First Call for this period had previously been revised from 17 cents to 14 cents per share amid rising concerns that Redwood Shores-based Oracle had lost its sales edge to lower-priced rivals such as Microsoft Corp. and IBM. The latest quarter -- coming during what traditionally is the company's busiest sales season -- represented an 8 percent decrease from the same period last year when Oracle earned $926 million excluding investment gains, or a split-adjusted 15 cents per share. Including investment gains, Oracle earned $4.91 billion, or 82 cents per share, in its fiscal 2000 fourth quarter. Oracle's revenues for the three months ended May 31 totaled $3.26 billion, slightly below Thomson Financial/First Call's analyst consensus estimate of $3.4 billion. In the year-ago period, Oracle had $3.37 billion in revenue.