Williams Says Earnings Beat Estimates

Responding to investor concerns related to California's energy crisis, Tulsa-based Williams Cos. said Tuesday that its fourth quarter earnings will be well above expected earnings estimates. Shares of the company had dropped to a 52-week low last week after news surfaced that California's utilities --- one of Williams' largest markets --- might not be able to pay their power bills.

The No. 2 U.S. gas pipeline operator, which continues to serve California's wholesale energy markets, said in a statement that it "does not expect material creditworthiness issues in the fourth quarter." High prices in California and across the country are boosting its profits, it said. Williams made the announcement early Tuesday, and the company's stock responded, rising 4 and 9/16 to close at 37 and 7/16.

The company was expected on average to earn 17 cents a share in the fourth quarter, based on a poll of 14 analysts by First Call/Thomson Financial. While not disclosing expected earnings numbers, Williams said its report will "substantially exceed" the estimate. In the fourth quarter of 1999, Williams had earnings from continuing operations of $57.1 million, or 12 cents a diluted share, on revenue of $2.45 billion. Its 2000 fourth quarter results will be released Jan. 31.

"The driver of our better-than-expected earnings performance is coming from our energy businesses, which we expect to substantially exceed current Wall Street estimates," said CEO Keith E. Bailey. "The improvement is occurring in many areas of our energy businesses, but is primarily because of higher trading results. This is due in large part to price volatility in the forward energy markets that is occurring throughout the nation."

Most of Williams' California electric energy position was sold into forward markets, an arena that the state's utilities could not participate in, said Williams. Because of that, the company does not expect to have any credit problems, it said.

In the third quarter, Williams' energy services unit of trading and marketing businesses saw its profit double to $311.5 million primarily based on energy trading. Sales in energy trading grew by $133.2 million as gas, electricity and gas liquids prices climbed. The energy services unit's revenue grew 54% in the third quarter to $2.56 billion, up from $1.66 billion a year earlier.

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