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Closing Bell: Tenet Healthcare

J.P. Morgan Chase (JPM) William Harrison Jr. has come a long way. For two years, the head of the No. 2 bank has been criticized for the lousy timing of his merger with Chase Manhattan, plagued by Enron (ENRNQ)-related scandals and money-losing loans. But a turnaround is afoot. After three straight quarters of gains, profits for the third quarter hit $1.63 billion, trouncing the $40 million earned the year earlier. What accounts for JPM's newfound strength? As with other banks, it has slashed its bad-debt costs, and it enjoyed a booming consumer-loan and credit-card market. The bank's private equity arm also earned its first profit ever, and investment-banking fees rose 20%. Still, not everything is hunky-dory: Revenue growth failed to meet analysts' expectations, and JPM's lucrative underwriting and advisory businesses have not yet fully recovered. Wall Street reacted by pushing shares down more than 5%. Looks like Harrison still has a ways to go before he can call it a day. The biggest dips at Euro Disney in France may be on its balance sheet. For the second time since it opened the gates in 1992, the theme park, which is 39%-owned by Walt Disney, is in talks with its lenders about restructuring its debt. Saudi Prince Alwaleed bin Talal, who bought $55 million in stock during the 1994 restructuring, is thinking of increasing his 16.3% stake, according to his spokesman. With European travel hurt by a sluggish economy, strikes in France, and lingering fears about terrorism, Euro Disney is expected to report larger-than-anticipated losses in November. In July, the company said that it would be unable to meet its projected 2003 and 2004 forecasts. It also began negotiations with Walt Disney and its banks to waive covenants on some $2 billion in financing and to find new financing sources. In a key sign of the telecom industry's increased stability, equipment maker Lucent Technologies (LU) reported its first profitable quarter since March, 2000. Rising sales of wireless and fixed-line equipment helped the company earn net income of $99 million, or 2 cents a share, on revenue of $2.03 billion. Shares rose 4.5%, to $2.56, on the Oct. 22 news. The results also reflect sweeping cost cuts and an overhaul of the company's supply chain, CEO Patricia Russo said. The company expects to achieve sustained profitability sometime in 2004. "It's time to close a chapter on what has been an extraordinarily challenging, prolonged, and unprecedented period for both Lucent and the industry," Russo said. Big Pharma is in a deep funk, led by a suffering Merck (MRK) the company took an earnings hit from slowing drug sales in the third quarter. As a result, the New Jersey-based company will eliminate 4,400 jobs, about 7% of its total workforce. Merck will incur charges of $140 million to $200 million from the layoffs in the fourth quarter, resulting in a second year of lower earnings. "Our products have not met the challenging revenue targets we thought were achievable," CEO Raymond Gilmartin said on Oct 22. Merck is not alone -- on the same day, Pfizer, Schering-Plough (SGP), and Wyeth (WYE) all reported weaker results than a year ago. Maybe you can be too careful. (AMZN) stock fell 9% on Oct. 22, to $54.03, as investors balked at its outlook for next year. The online retailer forecast sales growth of 16% in 2004, about half its expected growth rate this year. The stock plunge came despite a reported profit of $16 million, Amazon's first quarterly profit outside the holiday season, on $1.1 billion in sales. One reason for caution: Sales by other merchants on its site, for which it takes only a commission, are growing fast, to 22% of sales. But although those deals are very profitable, they bring in less revenue than Amazon's own sales. -- Freddie Mac (FRE) may owe as much as $750 million in back taxes, following an IRS probe.

-- Circuit City (CC) Stores will sell its credit-card portfolio to FleetBoston (FBF) for $1.3 billion.

-- Wrigley's is raising the price of its gum by 5 cents, to 30 cents, the first hike in 16 years. Shares of Tenet Healthcare (THC) slid 12% on Oct. 22, to $13.60, after announcing that it would miss second-half earnings forecasts. Tenet, which faces several federal investigations, also has been hit with $500 million in unexpected bad-debt expenses.

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