The September 11th attack
Third-quarter earnings expected to take major hits
Bloomberg News Service
NEW YORK — U.S. companies are slashing profit estimates and investors and analysts say that third-quarter earnings may be as much as 50 percent lower than expected after the Sept. 11 terrorist attacks.
The following is a list of companies that have announced job cuts since the Sept. 11 terrorist attacks on New Yorkâs World Trade Center and the Pentagon in Washington: American Airlines parent AMR Corp.: 20,000 jobs. America West Airlines parent America West Holdings Corp.: 2,000 jobs and 20 percent of its flights. Amtran Inc.: 1,500 employees, or about 19 percent of its work force. Applied Materials Inc.: 2,000 jobs, or about 10 percent of the work force of the biggest manufacturer of semiconductor equipment. Boeing Co.: 30,000 employees. British Airways Plc: 7,000 jobs and 10 percent of its flights. Continental Airlines Inc.: 12,000 workers and 20 percent of its flights. Eastman Kodak Co.: Undisclosed number of employees. Frontier Airlines Inc.: 440 employees and cutting unknown number of flights. Johnson Controls Inc.: 392 jobs. Lyondell Chemical Co.: 120 jobs. MAN AG, Germany's No. 2 truck maker: 370 jobs. Mesa Air Group Inc.: More than 700 employees, and a 10 percent pay cut for most other workers over the next 90 days. Mesaba Airlines parent Mesaba Holdings Inc.: Undisclosed number of jobs. Midwest Express Holdings Inc.: 450 jobs and 15 percent of its flights. Minolta Co.: 2,500 jobs. Northwest Airlines Corp.: Considering layoffs as U.S. airlines review flight schedules. Spirit Airlines Inc.: 800 employees. United Airlines parent UAL Corp.: 20,000 employees. US Airways Group Inc.: 11,000 workers and 23 percent of flights. Virgin Atlantic Airways Ltd.: 1,200 jobs Visteon Corp.: 2,000 workers. - Bloomberg News Service
Airlines and insurers, the first to forecast lower profits, have been joined by companies such as Viacom Inc., Charles Schwab Corp. and Ford Motor Co. The domestic slump is being aggravated by a slowdown overseas, hurting U.S. businesses from Adobe Systems Inc. to Eastman Kodak Co. Both reduced quarterly forecasts today.
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Firms cut jobs
"Corporate profits are going to be hammered harder than we thought," said Louis Navellier, money manager with Navellier & Associates.
Analysts had forecast a 14.8 percent decline in third-quarter earnings for Standard & Poor's 500 index companies before the Sept. 11 attacks, said Chuck Hill, research director at Thomson Financial/First Call, which tracks corporate earnings estimates. He expects the forecast to show a 21 percent decline once analysts revise their projections. Fourth-quarter results may also decline more than forecast, he said.
Almost 10 percent of the S&P 500 Stock index — 47 companies — are forecast to report losses for the third-quarter, First Call said, up from 20 companies in the year-earlier period.
"We've only begun to see a whole lot of downgrading," Hill said. "Analysts are just starting to calculate how much business was disrupted."
Before the attacks, analysts had forecast a fourth-quarter earnings decline of 2.7 percent, Hill said. Now the odds are that the decline will be at least 10 percent. Some 33 companies in the S&P 500 were forecast to lose money in the fourth quarter, according to First Call. That number also will rise, Hill said.
Edward Yardeni, of Deutsche Banc Alex. Brown Inc., joined several other analysts in paring earnings forecasts for the rest of the year. Last he reduced his 2001 operating earnings forecast for companies in the S&P 500 by 11 percent.
"Consumer confidence is bound to tumble over the rest of the month," he said, listing a host of reasons why the earnings shortfall will accelerate. "Retail sales are bound to suffer. Industrial production has been severely disrupted by parts shortages caused by the halt in air transport. Job losses are likely to mount quickly."
