Williams Crushes 1Q Estimates
By Matt Paolucci

U.S. energy group Williams Cos. Inc. (WMB) on Wednesday posted first-quarter operating profits that more than doubled from a year earlier, surpassing Wall Street estimates, as higher oil prices and stable natural gas prices boosted profit margins.

Tulsa-based Williams rang in with earnings, before a change in accounting, of $121.3 million or 27 cents a share in the first quarter, up from $58.5 million or 13 cents a share a year earlier. Analysts' estimates were for profits of 16 cents a share.

Revenues surged 25 percent to $2.43 billion, up from $1.94 billion in the same period last year.

Including accounting changes, net income per share was 22 cents a share, versus 12 cents a share, a year earlier. The accounting change reflected a shift of revenue recognition from the percentage-of-completion method to the completed- contract method at its Solutions unit.

"We are particularly proud of results from the electric power side of the business, where we realized significantly higher segment profit and saw physical trading volumes increase 124 percent," said Chairman, President and CEO Keith Bailey.

"Our communications business is on track to deliver the nation's largest and most advanced broadband network at years end, on time and on budget. We are rapidly approaching the time when our entire network is commercially available to serve growing demand," Bailey added.

The communications unit, which includes fiber optics, reported a widened loss in the first quarter due to higher costs associated with staffing increases.

Williams' Energy Services profits vaulted 63.9 percent to $205.1 million, compared with $125.1 million last year, due to new contracts and higher volumes.

The Company's Gas Pipeline unit reported profits of $197.3 million compared with $186.8 million a year earlier. The increase reflected a gain from a lawsuit and investments in new projects offset by job-reduction costs.

Natural gas liquids sales volumes increased 59 percent on margins of about 18 cents per-gallon, compared with less than 2 cents a year ago.

Separately, the Company said it had agreed to acquire a liquid natural gas plant in Lusby, Md., from Columbia Energy Group (CG) for $150 million. Williams expects the deal to be completed by July. The Cove Point plant is the largest LNG import facility in the country, with a capacity of 1 billion cubic feet per day.

Wall Street is a huge advocate of Williams. Out of the eighteen analysts who follow shares of WMB, sixteen rate the stock either a Strong Buy or Moderate Buy.

The future of the Tulsa-based company also looks bright. According to Zack's Investment Research, Williams' fiscal 2000 and 2001 earnings per share forecasts are for 55 cents and 87 cents, respectively. WMB earned 36 cents in fiscal 1999.