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Intel sees 2015 revenue up in mid single digits

SANTA CLARA, Calif.– Intel Corp. projected more growth next year, as an improving personal computer market and newer bets pay off for the big chip maker.

The company, which reported 8% revenue growth in the third quarter, said revenue would grow in 2015 by percentages in the “mid single digits.”

Intel, which released several projections at an annual meeting with analysts here Thursday, predicted that its closely watched gross profit margin would contract somewhat. The company had projected the figure at about 64% in the fourth quarter; it put the figure Thursday for all of 2015 at 62%, plus or minus two percentage points.

The company put total spending for 2015 at about $20 billion, with spending as a percentage of revenue down. It put capital spending at $10.5 billion.

Intel also said it would boost its dividend by six cents a share on an annual basis, bringing the total payout to 96 cents a share.

The company’s stock jumped on the projection. Shares recently traded at $35.38, up 3%.

Intel’s projection was issued following presentations by executives including Andy Bryant, Intel’s chairman, and Brian Krzanich, its chief executive. Both vowed to reduce the steep operating losses recently posted by a unit that produces chips for mobile devices. In the fourth quarter, that group posted a loss of $1 billion on revenue of just $1 million.

Mr. Bryant said the red ink was viewed as a necessary outcome of Intel being late to providing chips for tablet computers. Mr. Krzanich has vowed to put Intel chips in more than 40 million tablets in 2014, a goal that forced the company to give costly subsidies to hardware makers.

“This is the price you pay for sitting on the sidelines for a number of years and then fighting your way back into a market,” Mr. Bryant said. “We will improve this. We will get back in.”

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Perry Ellis earnings hurt by shipping delays

Perry Ellis International Inc. said delays in shipping at West Coast ports hurt its third-quarter results, as the struggling clothing company continues to be beset by pressures to explore a buyout.

Though the company’s loss narrowed, sales dropped and results missed expectations.

The company’s shipping snaufus echo issues faced by Ann Inc., which owns the Ann Taylor and Loft stores, and other apparel companies this fall.

The twin ports at Los Angeles and Long Beach handle the lion’s share of imports from Asia arriving at the West Coast. But they have been hit by labor and equipment issues, and the troubles are adding weeks to deliveries during the peak season for imports as retailers stock up ahead of the holidays.

Beyond those pressures, The Wall Street Journal reported last week that Sequential Brands Group approached Perry Ellis about a possible takeover in light of the Florida-based company’s difficulty remaining competitive. The company has said it is running a review of its brands and plants to exit low-growth businesses.

Perry Ellis, which became popular in the 1990s, is more recently seen as a dusty brand in the fashion community, especially compared with other brands that emerged around that time.

Meanwhile, Legion Partners LLC and the pension-fund giant California State Teachers’ Retirement System, or Calstrs, made public this week a letter they had sent a letter to the company’s board a month ago, urging it to run a formal sales process. Together, they own about 6.3% of the company.

In all, Perry Ellis posted a loss for the quarter ended Nov. 1 of $437,000, or three cents a share, narrowing from a year-earlier loss of $3 million, or 20 cents a share. Excluding special items, earnings rose to 3 cents a share from a loss of 15 cents the year before.

Sales dropped 5% to $211 million from $222 million the year earlier.

Analysts had expected a profit of 6 cents on revenue of $215 million, according to Thomson Reuters.

In the most recent quarter, increases in the accessories and international segments offset planned reductions in the Perry Ellis and Rafaella collection sportswear. In addition, there was strength in the Original Penguin brand and the Callaway golf brand.

The company backed its guidance for the year.

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Target beats own estimates with surprise profit

Target Corp. posted a surprise increase in third-quarter profit as sales in the U.S. topped the company’s own expectations, a promising start to the tenure of new Chief Executive Brian Cornell who’s trying to restore luster to the big-box retailer.

Target’s profit rose 3.1% in the period as sales at established U.S. stores rose 1.2%, ahead of the company’s August projection of same-store sales rising up to 1%. Target saw strong results at the beginning and end of the period, with shoppers spending during the back-to-school season and in the weeks before Halloween.

Target is trying to dig itself out of a multiyear funk, as shoppers visited the retailer less often because of uninspiring merchandise and fewer new products. Shopping habits changed, too, as more people found they could easily make their purchases online, cutting into visits made to retailers like Target.

Mr. Cornell is leading the turnaround. Hired from PepsiCo Inc. this summer, he has pledged to focus on critical categories like fashion, furniture, baby items and beauty products that Target hopes can help it stand out.

Target’s results come a week after the rival big-box chain Wal-Mart Stores Inc. reported a surprising sales increase for its third-quarter, as shoppers had more cash to spend because of lower gas prices.

Yet like Wal-Mart, Target continues to face the challenge of fewer shoppers coming into their stores. The number of shopper transactions in the U.S. fell 0.4% in the third quarter, marking eight straight periods of declines.

It is also struggling to salvage a botched expansion into Canada, where inventory issues have left shelves bare and prices have been criticized as too high. Sales at established stores rose just 1.6% in the third-quarter, as last year got a boost from fanfare surrounding new stores. But Target lost another $211 million in Canada this past quarter, bringing overall losses past the $2 billion mark since starting up there last year.

Overall, Target reported earnings for the quarter ended Nov. 1 of $352 million, or 55 cents a share, up from $341 million, or 54 cents a share, a year earlier. Excluding data breach expenses and other items, per-share earnings declined to 54 cents from 56 cents last year.

The profit topped Target’s August forecast for per-share earnings between 40 cents and 50 cents.

Sales rose 2.8% to $17.73 billion, topping the $17.56 billion expected by analysts polled by Thomson Reuters.

Margins fell to 29.5% from 30% a year earlier because of increased promotions.

Target tightened its earnings outlook and now expects per-share earnings of $3.15 to $3.25 for the full year, compared with a prior outlook for $3.10 to $3.30.

Target shares, up 1% over the past year, rose 3% in early trading to $69.55.

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Mallinckrodt sales boosted by product acquisitions

Mallinckrodt Pharmaceuticals PLC said growth in its specialty pharmaceuticals segment, driven mostly by acquisitions, led to a 45% jump in revenue in its September quarter.

The results beat expectations.

Mallinckrodt, like many other companies, has sought to grow through acquisitions. The pharmaceuticals company, which spun off from Covidien PLC, closed its $5.8 billion deal to buy Questcor Pharmaceuticals Inc. in August. It had earlier purchased pain-treatment company Cadance Pharmaceuticals Inc. for $1.3 billion in cash.

The results in the latest quarter were driven by two new injections added to the portfolio through these acquisitions, as well as continuing strength in the base specialty controlled substance generics portfolio.

For the fourth quarter ended Sept. 26, the company reported a loss of $352 million, or $4.14 a share, compared with a year-earlier profit of $33.5 million, or 58 cents a share.

But excluding restructuring charges and a write-down in the global medical imaging segment, the company posted earnings of $1.68 a share, compared with 98 cents a share a year earlier.

Revenue rose to $789 million from $545 million.

Analysts had recently projected $1.41 a share in earnings and $758 million in revenue, according to Thomson Reuters.

Revenue in Mallinckrodt’s specialty pharmaceuticals business rose 86% to $565 million. Sales in the medical imaging segment, however, declined 6.8% to $213 million.

For 2015, it predicts per-share earnings, excluding special items, will grow nearly 40% to $6.70 to $7.20 with revenue up nearly 50% to $3.65 billion to $3.75 billion. Analysts are calling for $6.78 a share on revenue of $3.7 billion.

Shares have soared 70% this year.

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Applied Materials earnings jump

Applied Materials Inc. said its October-quarter profit rose 58%, but the company expects earnings excluding items to be below analyst projections for the current quarter.

The company’s shares fell 3.2% to $21.91 in recent after-hours trading.

Applied Materials, based in Santa Clara, Calif., has a broad product line of machines used in processing silicon wafers to make computer chips. Applied also sells equipment used in making LCD displays and solar panels.

In September 2013, Applied announced plans to buy rival Tokyo Electron Ltd. in a deal valued at around $9.3 billion, which will create a company called Eteris. The transaction is still being reviewed by regulators, and Applied said in October it may close later than expected.

Applied’s results typically swing widely as chip makers react to demand by building or cutting production capacity.

For the period that ended Oct. 26, Applied reported net income of $290 million, or 23 cents a share, up from $183 million, or 15 cents a share, a year earlier. Revenue rose 14% to $2.26 billion.

Excluding acquisition-related charges and other items, Applied earned 27 cents a share.

The company had projected earnings excluding items of 25 cents to 29 cents on a sales increase of about 10% to 17%.

For the January quarter, the company expects earnings excluding items of 25 cents to 29 cents, while analysts polled by Thomson Reuters project 31 cents. Compared with the October quarter, it expects revenue to range from flat to a 5% increase. Analysts projected $2.38 billion.

The company said it completed a strong fiscal year that included improved margins, adding “we are making our largest gains in areas of the market that are growing the fastest, including etch and deposition, and we carry positive momentum into 2015.”

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Kohl’s profit drops 20%, misses expectations

Kohl’s Corp. said third-quarter earnings fell 20% as revenue edged down 1.6%.

Sales, excluding newly opened and closed locations, fell 1.8%.

Results missed analyst expectations, even after analysts adjusted forecasts downward after the company warned last month that its full-year earnings would hit the low end of its view due to weak October sales.

Retailers have been challenged by drops in store traffic and weak sales amid a variety of pressures. As a middle-market department store, Kohl’s, for its part, has been squeezed on the high end by Macy’s Inc. and on the lower end by Wal-Mart Stores Inc. and Target Corp., a trend that was exacerbated by the recession.

In May, the company outlined plans to jump-start sales growth. Last year, the retailer hired Michelle Gass, a former Starbucks marketing executive, as its new chief customer officer.

Overall, Kohl’s reported a profit of $142 million, or 70 cents a share, down from $177 million, or 81 cents a share, a year earlier.

Revenue fell to $4.37 billion from $4.44 billion.

Analysts polled by Thomson Reuters had expected per-share earnings of 74 cents and revenue of $4.40 billion.

Operating expenses grew 2.2% to $1.1 billion.

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McDonald’s Oct. sales not as weak as expected

McDonald’s Corp. on Monday said its sales in October held up better than expected as the fast-food giant continues to confront a host of problems across its business.

Global sales fell 0.5% in October, excluding newly opened stores, beating the 2.2% decline analysts were expecting, according to Consensus Metrix. October’s drop-off followed a 3.8% sales decline in September amid weakness across all of McDonald’s major divisions.

“Although October results reflect our current business challenges, we are moving with a sense of urgency to improve the trajectory of our financial performance while taking the actions necessary to pursue the brand’s long-term potential,” said Chief Executive Officer Don Thompson on Monday.

The steepest sales drop in October came in its Asia/Pacific, Middle East and Africa region, where sales at existing locations slumped 4.2%. Analysts were expecting a 6.1% drop in that region. In China, a scandal at one of its meat suppliers has shaken customer confidence, driving sales down in recent months.

In the U.S., an increasingly complicated menu has slowed service and McDonald’s once reliable base of younger customers have defected to fast-casual chains boasting customized ordering and fresh ingredients, including Chipotle Mexican Grill Inc., and specialty-burger places such as Five Guys.

Sales fell 1% in the U.S. last month, beating the 1.9% drop in sales analysts had projected.

Last month, Chief Executive Don Thompson said the company was planning fundamental changes to its business, as it reported a 4.1% decline in September U.S. same-store sales– the company’s worst monthly U.S. same-store sales performance since February 2003.

McDonald’s is planning to eliminate layers of management and creating a new organizational structure in the U.S. as it seeks to better respond to consumer tastes, The Wall Street Journal reported last month.

In Europe, broader economic softness has been compounded by political complications in Russia, where authorities have been inspecting and, in some cases, shutting McDonald’s restaurants-moves widely seen as retaliation for U.S. sanctions in response to Russia’s military incursion in Ukraine.

Sales edged down 0.7% in the division in October.

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Rayonier realigns strategy, restates results

Rayonier Inc. said Monday that it would realign its strategy and restate results for the first half of this year, following an internal review of its operations.

The forest-products company said it understated the depletion in the cost of goods sold in its quarterly reports for the periods ended March 31 and June 30. It said the understatements resulted in corresponding overstatements of income from continuing operations of $1.9 million and $2 million, respectively.

The Jacksonville, Fla., company also determined that its internal controls over financial reporting weren’t effective as of the end of last year, after the company and its auditor, Ernest Young, had previously determined there were no material weaknesses in the controls.

“As a result of the internal review, Rayonier concluded that it included in merchantable timber inventory for 2014, timber in specially designated parcels located in restricted, environmentally sensitive or economically inaccessible areas, which was incorrect, inconsistent with its definition of merchantable timber inventory, and a significant change from prior years,” the company said in a filing.

Errors in calculating depletion expense for 2012 and 2013, however, were deemed immaterial and didn’t require restatement, the company said. The effect of those errors is included in the Rayonier’s financial statement for the September period, which the company also reported Monday.

Rayonier’s new management conducted the review after the company spun off its performance fibers business. On Monday, the company unveiled new initiatives to manage its timberlands business, including through harvest adjustments and acquisitions.

Douglas Long, a 19-year company veteran and the recent director of the Atlantic region for U.S. forest resources, was promoted Monday to the new position of vice president, U.S. operations. He will oversee the company’s U.S. forest operations, taking over for Lynn Wilson, who left the company, Rayonier said.

Mr. Long will report to David L. Nunes, who took over as chief executive after the spinoff earlier this year.

Rayonier also cut its quarterly dividend to 25 cents a share from 30 cents. “Importantly, we believe that reducing our dividend will provide the necessary balance between our near-term financial goals and long-term shareholder interests,” Mr. Nunes said in a release.

For the quarter ended Sept. 30, the company’s first full period of results since the spinoff, Rayonier posted $32.7 million in profit, or 25 cents a share, down from $57.4 million, or 44 cents a share, a year earlier.

Sales fell 6% to $149.8 million.

Analysts polled by Thomson Reuters had projected 19 cents a share in earnings and $181 million in revenue.

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General Mills cut sales, profit forecast

General Mills Inc. lowered its earnings and sales guidance for the year ending in May, pointing to continued weak food industry trends in the U.S. and slowing growth in key emerging markets.

Those concerns echo comments made last week by rival packaged-food makers Kellogg Co. and Kraft Foods Group Inc., which reported that consumers’ shifting tastes are crimping their sales even as the improving economy eases the financial strain on some shoppers.

General Mills, the maker of Cheerios and Yoplait, has been struggling with weak consumer demand. Its results have weakened in recent periods, and the company said earlier this year that it would embark on a multiyear cost-cutting effort, along with cutting 700 to 800 jobs and closing plants in California and Massachusetts.

The company warned Friday that profit at its U.S. retail operating segment is now expected to decline for the year, adding it has seen market share declines in frozen vegetables and dessert mixes, while sales are growing in key categories like yogurt, grain snacks, fruit snacks and frozen pizza.

General Mills now expects sales for the year ending in May to grow at a low single-digit rate in constant currency, compared with its previous call for growth in the mid single-digits. Analysts polled by Thomson Reuters had forecast revenue growth of 3%.

Earnings, excluding special items, also are expected to grow at a low single-digit rate, while the company had previously predicted a high single-digit increase.

Meanwhile, General Mills guided for earnings of 75 and 77 cents a share for the current quarter, below the current consensus estimate of 88 cents a share.

Shares dropped nearly 4% premarket and are up about 7% so far this year through Thursday’s close.

General Mills and rival cereal maker Kellogg, the maker of Frosted Flakes and Pop-Tarts, are seeking new ways to grow as consumers turn away from sit-down breakfasts and carbohydrate-heavy foods in favor of items that are higher in protein or more portable, like Greek yogurt and breakfast sandwiches from fast-food drive-through windows.

Kraft, meanwhile, is trying to update and revive older brands like Jell-O and Shake ‘N Bake.

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Corrections & Amplifications

An earlier version of this story misstated analysts’ earnings estimates for the current quarter.

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Abercrombie sales drop much more than expected

Abercrombie & Fitch Co. said its sales dropped much more than expected in the third quarter thanks to slowing mall traffic and weaker results in the latter part of the period.

The teen-apparel retailer, which has been grappling with inventory challenges and an increase in markdowns, said sales in September and October were significantly weaker than those in August and the company saw particular weakness ar the Hollister brand.

“We are clearly disappointed with our results for the third quarter,” Chief Executive Mike Jeffries said. “Weak store traffic was the primary contributor to the weak sales trend, particularly in Europe, where the environment there showed signs of further slowing.”

Shares dropped 14% premarket and are up about 8% so far this year.

Abercrombie has been closing stores in an effort to improve U.S. margins, is restructuring its intimate-apparel brand Gilly Hicks and recently decided to remove logos from its apparel in response to teens that increasingly prefer unmarked attire. The company said that move also weighed on its sales.

Overall, sales for the quarter ended Nov. 1 dropped 12% to $911.4 million, missing the $982 million estimated by analysts polled by Thomson Reuters.

Comparable-store sales, which exclude newly opened locations, decreased 10%, with U.S. sales dropping 7% and international sales declining 15%.

The company expects to report per-share earnings, excluding special items such as store-closure costs, of 40 cents to 42 cents. Analysts had called for 67 cents a share.

Inventory cost was down 20% from a year earlier.

The company expects to post results Dec. 3 and said it will adjust its outlook for the year at that time.

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