Local companies making the grade

By John Loesing Acorn Staff Writer

Wall Street earnings season, which experts hoped would bring further proof that the recession is over, has left several local companies thinking positive.

Amgen, Countrywide, Cheesecake Factory and WellPoint all reported upbeat numbers for either earnings or revenue. The spotlight mainly was on Amgen as the Thousand Oaks-based biotech company reported a 47 percent increase in second-quarter profits.

Reported net income was $607 million vs. $412 million a year ago. Amgen is raising its 2003 full estimate of earnings per share by 5 cents to $1.85 to $1.95 from $1.80 to $1.90.

Driven by strong worldwide sales of Aranesp, the company’s new long-lasting anemia drug for both chronic kidney and chemotherapy patients, Amgen delivered record product sales of $2 billion for the quarter, a whopping increase of 72 percent.

Due to growing domestic and international sales, Amgen upped its 2003 forecast for Aranesp and Epogen to as much as $3.9 billion. The company had guided in the $3.4 to $3.6 billion range for the two drugs previously. Epogen, approved for kidney dialysis patients, is the Aranesp predecessor drug.

"We are pleased with our sales performance across all products, in particular, Aranesp," said Kevin Sharer, Amgen chairman and chief executive.

The arthritis drug Enbrel posted second quarter sales of $304 million, up 58 percent vs. a year earlier when Immunex owned the product.

The company expects in-line sales for Enbrel, but raised the outlook on Neupogen and its next generation drug Neulasta, which are used to prevent infections in patients undergoing chemotherapy.

The company also said it would file soon for U.S. regulatory approval of Cinacalcet, an experimental drug for limiting bone loss in dialysis patients.

WellPoint Health Networks, California’s biggest health insurer, also posted handsome second quarter gains. Profits were up 32 percent, beating Wall Street expectations.

Benefiting from higher membership and steeper premiums, the Thousand Oaks company reported earnings of $224.5 million, or $1.49 per share during the quarter, compared with $170 million or $1.12, a year ago.

Contributing to the growth were several factors. WellPoint added 800,000 customers with last month’s acquisition of Cobalt, the Blue Cross-Blue Shield insurer in Wisconsin. WellPoint is the parent company of Blue Cross of California. WellPoint also acquired the 275,000 customers of Golden West Dental and Vision.

"WellPoint’s continued focus on its business process resulted in another strong quarter," said David C. Colby, chief financial officer. "Our disciplined focus on pricing resulted in strong revenue growth and higher operating margins." Company revenues exceeded $4.9 billion, up 15 percent from the second quarter of 2002.

WellPoint boosted its forecast for the full year, to between $5.60 and $5.65 per share from previous guidance of $5.50.

For the Cheesecake Factory, Inc. of Calabasas, the proof is in the pudding.

The restaurant chain announced a 16 percent gain in second-quarter earnings from $13.2 million, or 26 cents a share, in 2002, compared to a record $15.3 million, or 30 cents a share, this year.

"We were pleased with our solid financial results for the second quarter," said David Overton, chairman and chief executive. "Our restaurant operators did a commendable job of managing controllable costs and expenses during the second quarter, as did our bakery production operations."

The company’s bakery production facility in Calabasas produces baked desserts and other products for the restaurants and for other foodservice operators, retailers and distributors.

Cheesecake Factory was on target to open as many as 14 restaurants for the year. It currently has 63 restaurants in 20 states.

Falling mortgage rates continued to translate into higher profits for the lending companies.

Countrywide Financial Corp. of Calabasas, the third biggest U.S. mortgage lender, reported second quarter earnings of $383 million, or $2.74 a share, in the quarter compared to $191 million, or $1.48 a share, a year earlier. But the 85 percent gain wasn’t enough to beat Thomson Financial First Call’s estimate of $2.84.

Revenue jumped 74 percent to $1.74 billion from $997.4 million and Countrywide now expects full-year earnings of between $13 and $15 a share, higher than its April prediction of between $10 and $11 a share.

The company also increased its dividend by a penny, from 13 cents to 14 cents.

"The past two-and-a-half years have been a remarkable time for the mortgage industry and 2003 is on track to break all prior records," said Anthony Mozilo, chairman and chief executive.

The recent quarter marked the company’s ninth consecutive quarter of record earnings, Mozilo said.

While Wachovia and Keefe Bruyette upgraded Countrywide stock, Jeffries and Co. gave it a downgrade from buy to hold.

Interest rates aren’t expected to go much lower, some analysts say, cooling the rush to refinance home mortgages.