CORPORATE PERFORMANCE 1999 REVIEW: 2ND QUARTER --- Profits Beat Forecasts In Rebound
Corporate earnings have come roaring back so fast that it would seem the business environment can't get much betteryet some signs suggest profits won't weaken anytime soon.</br></br>Second-quarter earnings of major U.S. companies blew past analysts' estimates. Setting aside the effect of cable-TV provider MediaOne Group's extraordinary gain last year of about $24.5 billion, income at the 654 companies that make up the U.S. part of the Dow Jones Global Indexes rose 37% in the second quarter from a year earlier. MediaOne's gain, from its separation from U S West, skews the year-to-year comparison; including the gain, net income was up 5%.</br></br>Other one-time events, such as writeoffs and gains from the sale of affiliates, and easy comparisons against year-earlier results weakened by restructuring charges boosted the companies' net income. But even operating income, which excludes such items, rose 15% from the second quarter of last year, according to calculations done by First Call/Thomson Financial for The Wall Street Journal.</br></br>In the 1999 first quarter, net income was down 6%, while operating income rose 9.6%. Analysts who wondered early this year if the rebound in first-quarter operating profits was a fluke now know for sure that it wasn't; business is better for a broad swath of corporate America.</br></br>"The bottom line is that business is good and we expect it to continue for a while," says Chuck Hill, director of research at First Call, which tracks corporate earnings. "We're in a period of accelerating earnings growth that will peak out in the third quarter, but we still expect earnings to stay strong."