DOW JONES NEWSWIRES
DTE Energy Co.'s (DTE) fourth-quarter net income dropped 49% as
increased revenue at its gas utility couldn't offset lower sales
and higher uncollectible expenses at its largest operating unit,
Detroit Edison.
Beyond the quarter's profit falling short of analysts'
expectations, the electricity and gas provider Monday forecast 2009
operating earnings of $2.75 to $3.05 a share, below Wall Street's
view of $3.16, as economic challenges are expected to continue
through the year.
The weak economic outlook in Michigan, which has been hurt by a
decline in the automotive and steel industries, could negatively
affect Detroit Edison. Earlier this month, UBS lowered its
investment rating on DTE shares to neutral from buy, amid concerns
about the region's economic outlook, which the firm believes could
hurt the unit's long-term growth.
DTE reported net income of $129 million, or 80 cents a share,
down from $255 million, or $1.56 a share, a year earlier. The prior
year included 39 cents in earnings from discontinued
operations.
Revenue dropped 1.8% to $2.17 billion.
Analysts polled by Thomson Reuters expected per-share earnings
of 98 cents on revenue of $2.1 billion.
Detroit Edison's earnings fell 29% on a per-share basis amid
falling electricity usage, while the company's gas utility, which
primarily consists of Michigan Consolidated Gas Co., reported a 22%
jump. Detroit Edison serves 2.2 million customers in Southeastern
Michigan while Michigan Consolidated purchases, stores and
distributes and sells natural gas to about 1.3 million customers in
Michigan.
Slumping electricity sales have forced utilities to cut jobs and
trim capital-spending programs. Small reductions in usage can have
a big impact on utilities, as they typically base their rates on an
expectation of gently rising energy sales and aren't allowed to
adjust them except as determined by rate cases.
Shares were even in after-hours trading Monday at $28.70.
-By John Kell, Dow Jones Newswires; 201-938-5285;
john.kell@dowjones.com