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Ford reports 3rd-quarter profit

Also, Motorola up, Continental Airlines down

DEARBORN, Mich. — Buoyed again by strong results at its financial services arm, Ford Motor Co. swung to a profit of $266 million in the third quarter even though the loss at its worldwide automotive operations widened, and its market share in the key U.S. market fell by more than a percentage point.

The nation's second biggest auto company raised its full-year earnings guidance slightly on Tuesday, primarily because of better-than-expected results at the financial business, Ford Motor Credit Co.

Ford earned 15 cents a share in the July-September quarter compared with a loss of $25 million, or 1 cent a share, a year ago.

Excluding special items, Ford's third-quarter earnings amounted to $537 million, or 28 cents a share, compared with a profit of $278 million, or 15 cents a share, a year ago.

The latest results doubled the consensus estimate of 14 cents from Wall Street analysts surveyed by Thomson First Call.

Third-quarter revenue rose to $39 billion from $36.7 billion a year ago.

Don Leclair, Ford's chief financial officer, said the company remained on track to deliver a 2004 milestone of $1 billion in automotive pretax profits, excluding special items.

"Our results show continued strong performance in financial services and continuing improvement in North American revenue, even though the market remains difficult," Leclair said.

On the New York Stock Exchange, Ford shares fell 46 cents, or 3.4 percent, to close at $12.93. It traded above $16 a share in June but is still above its 52-week low of $11.37 last October.

Lower North American vehicle production hampered Ford's automotive business as it tried to offset inflated inventories, but overall results were lifted by net income of $734 million at Ford Motor Credit, up from $504 million a year ago.

The strong performance in financial services fit a familiar pattern from previous quarters.

The same was true last week for General Motors Corp., the world's largest automaker, where financial services accounted for the bulk of its $440 million third-quarter profit.

Several other prominent national companies posted mixed earnings Tuesday.

Motorola

Motorola Inc., the largest U.S. cell phone maker, more than quadrupled its third-quarter earnings to $479 million thanks largely to new handsets that boosted its sales by 26 percent.

The results reported Tuesday slightly outpaced analysts' expectations and marked a third consecutive quarter of strong sales and profit gains for the company, based in Schaumburg, Ill. But its stock fell sharply in after-hours trading amid investor concerns about slowing growth in the fourth quarter.

Net earnings for the July-through-September quarter were $479 million, or 20 cents per share, compared with $116 million, or 5 cents per share, a year earlier. That was a penny per share better than the consensus estimate of analysts surveyed by Thomson First Call.

Revenues were $8.62 billion, up from $6.83 billion a year ago and about what Wall Street anticipated.

Motorola shares closed 3 cents higher at $18.75 before the report was released but traded as much as 5 percent lower in extended-hours activity after the company said sales growth would slow to 16 percent to 20 percent in the fourth quarter.

Deutsche Banc Securities analyst Brian Modoff called Motorola's fourth-quarter estimate — pegging sales at between $9.3 billion and $9.6 billion and earnings at 23 cents to 26 cents — "mildly disappointing" even though analysts' consensus estimate fell within both ranges.

"People were looking for a little upside there," he said.

Continental Airlines

Continental Airlines Inc. reported a $16 million third-quarter loss on Tuesday and said it expects to report losses in 2004 and in 2005 unless conditions improve.

The nation's fifth-largest airline said high fuel prices and government regulation contributed to its quarterly loss of 24 cents per share.

Excluding $22 million in special charges related to retirement of leased MD-80 aircraft, the Houston-based airline earned $6 million, or 8 cents per share, for the three months ending Sept. 30. That compared favorably to the mean estimate of a 17-cent per share loss expected by analysts surveyed by Thomson First Call.

A year ago, the company earned $133 million, or $1.83 per share, in the same quarter.

Gordon Bethune, Continental Airlines chairman and chief executive, praised the airline's performance amid difficult conditions, but said the situation is serious.

"We simply cannot continue to lose money," Bethune said Tuesday during a conference call with investors. "The road ahead doesn't look all that easy."

However, Bethune said the airline is "nimble enough and prepared enough to survive."

Investors appeared skeptical. Continental's B shares fell 52 cents, or 6 percent, to close at $8.19 on the New York Stock Exchange — toward the lower end of their 52-week range of $7.80 to $19.97.