Amazon profits slump

Amazon.com Inc. said Tuesday that second-quarter earnings plunged nearly 58 percent as the online retailer focused on giving customers cheap or free shipping deals and investing in new technologies.

Amazon.com shares fell more than 12 percent in after-hours trading as the company also said it planned to invest heavily in its new toy sales strategy and cut prices on many products.

The latest spending plans left some wondering when the investments would pay off.

“In some respects it’s kind of one thing after another,” said Dan Geiman, an analyst with McAdams Wright Ragen.

But analyst Bob Toomey with E.K. Riley Advisors said the hefty investments are consistent with how Amazon.com operates.

“People who follow the stock closely know or should know that Amazon’s strategy is and has been to be investing in the business for the long term,” he said.

•Wood products giant Weyerhaeuser Co. said Tuesday its second-quarter earnings fell 25 percent in part because of a slowing U.S. housing market.

But the Federal Way-based company still beat Wall Street’s expectations, as it benefited from improvements in its paper products business.

Net income fell to $314 million, or $1.26 per share, in the three months ended June 25, from $420 million, or $1.71 per share, in the year-ago quarter, when results were boosted by a one-time net gain of 37 cents per share.

The latest period also included one-time charges of 9 cents related to restructuring and the closure of some facilities. The company also recorded a one-time tax benefit of 19 cents. Without those items, Weyerhaeuser would have earned $1.16 per share for the quarter.

Sales for the quarter slipped to $5.69 billion from $5.71 billion a year ago.

•AT&T Inc., soon to become the nation’s largest phone company, said Tuesday its second-quarter profit climbed 81 percent, driven by Cingular Wireless and cost-cutting that included the elimination of 3,600 jobs.

In addition to topping Wall Street forecasts, AT&T also raised its profit-margin projections for the rest of the year, boosting the company’s stock price more than 4 percent to a 52-week high.

The San Antonio-based company, known as SBC Communications Inc. until it acquired AT&T Corp. late last year, said it earned $1.81 billion, or 46 cents per share, in the three months ended June 30. That compared with $1 billion, or 30 cents per share, a year earlier.

•McDonald’s Corp. posted its strongest quarterly results Tuesday since beginning a recovery more than three years ago, boosted by resurgent European restaurants that contributed to a 57 percent jump in profit.

Higher breakfast sales, led by recently introduced premium coffee, kept momentum going in the United States — still McDonald’s largest market, with more than 40 percent of its restaurants. The company cited increased customer visits and said there’s no discernible shift toward its dollar menu, which would have been a warning sign to analysts wary for signs of an economic slowdown.

•Server and software maker Sun Microsystems posted a loss in its fiscal fourth quarter as restructuring, acquisition and stock-based compensation costs absorbed revenue that grew 29 percent.

The Santa Clara-based company lost $301 million, or 9 cents a share for the three months ended June 30, compared with net income of $50 million, or a penny per share, in the same quarter of last year. Sales rose to $3.83 billion, from $2.97 billion.

Sun’s results included a number of one-time items, including $228 million for restructuring, $86 million for acquisitions and $63 million for stock compensation, the company said Tuesday.

They were offset by income of $54 million in a legal settlement and an $8 million tax benefit.

Excluding one-time items, Sun would have broken even on a per-share basis.

•UPS Inc. shares plunged Tuesday by their biggest one-day margin ever after the world’s largest shipping carrier reported a second-quarter profit that missed Wall Street expectations and warned its earnings growth for the year will be at the low end of its forecast.

Hurt by high fuel, rail, health care and pension costs, the Atlanta-based company said it earned $1.06 billion, or 97 cents a share, for the three months ended June 30, a 7.6 percent increase from the profit of $986 million, or 88 cents a share, for the same period a year ago.

Analysts surveyed by Thomson Financial were expecting earnings of $1 a share.

Revenue in the quarter rose 15.2 percent to $11.74 billion, up from $10.19 billion a year earlier. Analysts expected UPS to post quarterly revenue of $11.6 billion.

Shares of UPS fell $8.20, or 10.3 percent, to close at $71.80 in heavy trading on the New York Stock Exchange, toward the lower end of its 52-week range of $66.75 to $83.99.

That’s the biggest one-day stock drop since UPS went public on Nov. 10, 1999.