The fourth quarter ended on an upbeat note just two months ago for many of Orange County’s largest public companies. But it could end up seeming like years ago when those same companies start reporting results for the first quarter.
In recent weeks, several of the county’s largest public companies reported strong gains in sales and profits for the fourth quarter.
But many of those reports were coupled with warnings or cautious outlooks for the current quarter, as executives try to get a handle on what a slowing economy means for their businesses.
Not all are downbeat about the current quarter.
Some companies, including Western Digital Corp. and Apria Healthcare Group Inc., both of Lake Forest, recently upped their quarterly or yearly outlooks.
In all, about half a dozen of the biggest public companies are predicting good first-quarter profits. Still others have expressed mild caution.
A handful of others have been more direct. Santa Ana’s Advanced Medical Optics Inc. and Costa Mesa’s Ceradyne Inc. warned about the current quarter and announced layoffs to deal with slowdowns in their businesses.
Two hard-hit companies tied to the housing market,Irvine’s Standard Pacific Corp. and Newport Beach’s Downey Financial Corp.,haven’t offered guidance on the quarter. But analysts expect things to get worse before they get better for the two.
Santa Ana-based Ingram Micro Inc., the county’s largest publicly traded company with yearly sales of $35 billion, said in early February that it sees first-quarter profits coming in below Wall Street’s expectations.
Ingram, the top distributor of computer and other technology products, is seen as a bellwether for the industry as its quarterly results could reflect cost cutting by Corporate America.
The company’s two largest markets, North America and Europe, are showing weakness while Asia and Latin America continue to be stronger, the company said last month.
Ingram’s more cautious outlook was a change from the fourth quarter, when it beat Wall Street forecasts with earnings of $108 million, up 17% from a year earlier. Revenue grew 13% to $10 billion.
Allergan
Irvine-based Allergan Inc., a maker of eye and skin drugs and medical cosmetics, also offered a cautious take on the current quarter after beating expectations for the fourth quarter.
The company in late January said its first-quarter profits could come in below initial forecasts. That rattled Wall Street, which already was concerned about how Allergan’s sales of wrinkle removers and breast implants would hold up in a slowing economy.
But some analysts chalked up the warning as “under promising” and contend Allergan could deliver another strong quarter.
For the fourth quarter, Allergan beat expectations by earning $160.3 million, up 17.5% from a year earlier.
Last month, Advanced Medical Optics, a maker of contact lens solutions and eye surgery gear, lowered its 2008 outlook and outlined job cuts to offset what could be a slowdown in its business related to laser vision correction surgery.
The lowered outlook gives Advanced Medical room to beat its forecast if “things improve a little in the U.S.,” Chief Executive Jim Mazzo said.
Advanced Medical sells equipment for laser eye surgery and gets reoccurring revenue from related surgery kits and licensing fees from doctors.
The company plans to cut 4% of its workforce, or about 150 jobs, to save $10 million to $12 million a year.
Last week, military body armor maker Ceradyne also lowered its outlook for 2008 and announced job cuts.
Ceradyne joined a group of local companies in warning about future results, but its situation may be more unique due to its government customers. The company blamed its revision on delays in two government contracts.
The company, which employs 2,232 people including about 1,000 in the county, said it would lay off 234 people from the delay. About 120 layoffs of temporary workers came from Costa Mesa.
Bright Spots
Other companies are upbeat.
The county’s No. 3 public company by sales, disk drive maker Western Digital, expects a strong three months through March.
Last week, Western Digital upped its outlook for the current quarter from an already solid projection it offered in January.
The company now expects profits of $233 million to $246 million for the current quarter, up from $189 million to $202 million forecast in January.
Sales are seen coming in at $2 billion to $2.07 billion, versus January’s outlook of $2 billion.
The company said demand for its drives used in computers and consumer electronics is solid and supply is stable.
Western Digital also had a record December quarter, with earnings of $305 million,more than double that of a year earlier. Revenue rose 46% to $2.2 billion.
In February, Apria Healthcare Group upped its outlook for the year after beating fourth-quarter expectations.
Apria, which provides breathing treatments and other services to patients in their homes, expects earnings of $90 million to $94.5 million, ahead of Wall Street’s initial forecast of $84 million.
The company said revenue could be $2.17 billion to $2.2 billion, at least 33% higher than last year.
So-So Outlooks
Other companies have given stable outlooks.
Irvine-based chipmaker Broadcom Corp. said it expects to hold up through the first quarter.
After beating fourth-quarter expectations, the company said sales of its chips for Bluetooth cell phone headsets, switches for wireless networks, digital TVs and set-top boxes are holding up.
The company said its first-quarter revenue could be $975 million and $1 billion, in line with Wall Street expectations.
But profit margins could contract as it boosts production of its chips, the company said.
Broadcom also said it would cut down on research and development spending and work on turning its investments into profits.
It reported fourth-quarter earnings of $201 million, up 9% from a year earlier, excluding one-time charges. Revenue was up 11% to $11 billion.
Beckman Coulter Inc., the Fullerton-based maker of medical testing equipment, said it sees 2008 results in line with expectations.
For the year, it expects to see a profit of $219.6 million to $229 million, with revenue of $2.95 billion to $3.01 billion.
For the fourth quarter, Beckman posted a profit of $67.8 million, excluding charges. Revenue was up 11% to $789 million.
