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Copper prices sting Phelps
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July 13, 1999: 4:07 p.m. ET
Mining company beats expectations, but overall sales sag under falling prices
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NEW YORK (CNNfn) - Phelps Dodge Corp. overcame continued sharp reductions in worldwide copper prices to beat second-quarter earnings estimates Tuesday, but investors remained mixed on the company's long-term prospects.
Phelps, the top U.S. copper producer, reported second-quarter earnings of $1.2 million, or 2 cents per share before a non-recurring, after-tax restructuring charge of $61 million, or $1.05 per share.
That was well below the $40.4 million, or 69 cents per share, it earned during the second quarter last year, but above the 1 cent per share loss analysts polled by First Call Corp. expected.
For the first half, Phelps earned $1.7 million, or 3 cents per share, before restructuring charges compared with $81.3 million, or $1.39 per share, a year earlier.
The results left investors uncertain about the company's prospects. Despite the better-than- expected results, Phelps Dodge (PD) shares were down 1-1/4 to 64-11/16 in late afternoon trading.
The company's overall sales dropped nearly 15 percent to $691.1 million during the second quarter while its operating cash flow for the first six months fell to $46.0 million from $109.2 million.
Company officials blamed the sluggish results on slumping copper prices, which have only recently started to rebound, and lower-than-expected earnings from its cable and wire division. The price of a pound of copper cathode on the New York Commodity exchange averaged 67 cents during the second quarter compared to 78 cents during the same period last year.
In response to falling copper prices, the company initiated a massive restructuring plan to curtail higher-cost copper production last month, resulting in a before-tax charge of $84.7 million.
Overall copper sales from Phelps' mining division reached 189,400 tons during the second quarter compared to the 214,800 tons it sold a year earlier. The company's wire and cable segment also saw lower sales, offset partially by higher sales volumes in the carbon black segment. 
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Phelps Dodge Corp.
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