By the OGJ Online Staff
HOUSTON, Sept. 27, 2001 — Chicago’s Exelon Corp. Thursday cut its 2001 earnings target and said 450 jobs will be eliminated due to economic and market weakness and volatile energy markets.
The company said it now expects third quarter earnings of $1.10-$1.20/share, down from previous estimates of $1.35-$1.80. Exelon said full-year earnings guidance is being reduced to $4.30 -$4.45/share. Exelon shares were down 16.15% to $42.30 in mid-day trading on the New York Stock Exchange.
The company said pro forma earnings in 2000’s third quarter, assuming the company was formed Jan. 1, 2000, were $1.27/share. Exelon was formed last year when Philadelphia Electric Co.’s parent company acquired Chicago’s Commonwealth Edison.
Co-CEO Corbin A. McNeill said the company has instituted cost-containment efforts to address the economic weaknesses in the third quarter, but “the revenue impact of recent events cannot yet be quantified.”
Exelon blamed cooler weather for the volatility in energy prices and said a drop in telecommunications stock had hurt its investments. In addition, the company recorded an increase in its reserves for litigation of $14 million in the quarter.
However, it reported the nuclear fleet has operated above target with a 96% capacity factor through Aug. 31. The company said energy delivery operations have provided improved reliability with below-budget expenditures, and merger-related savings of $148 million are still on target this year.
Exelon reported it will take a $48 million charge for severance associated with anticipated layoffs. As a result of these additional position eliminations, operating costs will be lower going forward, the company said. In the third quarter, Exelon anticipated it will take a $36 million write-down of its investment in Corvis, a telecommunications equipment manufacturer.
Margins have been reduced due to the fall-off in telecommunications infrastructure build-out across the country, it said. The downturn has also limited new investment opportunities, Exelon said.
Exelon said it expected to release third quarter results before the financial markets open Oct. 23.