Splits & Superlatives

Nothing gladdens a stockholder's heart like a split, and last week five major U.S. corporations announced splits. They were IBM, Philip Morris, United Air Lines, Standard Brands and Socony Mobil. For IBM, the three-two split of shares now at 497 was the tenth since 1926; it meant that an investor who bought 100 shares for $2,750 when IBM was founded 52 years ago would now have 19,231 shares worth $9,557,800, along with $586,300 in dividends. Speaking of dividends, such corporations as Borden Co., Olin Mathieson and American Tobacco raised theirs last week on the strength of sturdy earnings. Even Jersey Standard, whose earnings slipped 1 1/2% to $1.04 billion last year, felt secure enough to raise the quarterly dividend from 750 to 800.

Even more impressive were the sales and earnings reports that poured in like a gilt-edged harvest from company after company. From post-tax profits of $37.2 billion in 1964, U.S. companies increased earnings last year to $44 billion. The average industrial company's profit increased 13.4%, with the average dividend rising from $2.60 to $2.85. Buoyed by continuing profits from jet aircraft, the air-transportation industry led all others with a 54% increase in earnings. Electronics were up 48%, textiles 45% and TV manufacture 34% .

So many companies set records that the word became almost meaningless. Among those reported last week:

> Du Font's sales rose 9% to $2.99 billion, while earnings of $407 million were 20.5% higher and the best in the company's 163-year history.

> U.S. Steel reported record sales of $4.5 billion, up 8.1%, while earnings rose 16.3% to $275 million.

> Westinghouse earnings shot up 39% to $107 million, crossing the elite $100 million mark for the first time.

> Union Carbide, like Westinghouse, passed a milestone; sales crossed the $2 billion point for the first time, and earnings rose 20% to $226.9 million.

> Xerox profits were up 47% to $58.6 million, the 14th consecutive year that the copying pioneer has improved its performance.

> Continental Can established new marks on both sales ($1.2 billion) and earnings ($59.2 million).

Standard & Poor's, the investment service that keeps track of corporate earnings and dividends, not only reported record earnings itself ($2.7 million), but also seemed to celebrate the buoyant business outlook by appointing a pretty girl, Skidmore Graduate Penny Kaniclides, 28, a vice president of its computer subsidiary.

The superlative 1965 reports provoked an obvious question: Could the results be surpassed in 1966? Perhaps, but the margin of increase is likely to be less. This year there is no corporate tax reduction to brighten balance sheets. Costs are also increasing, and most companies will have to lay out more money in overtime pay as the pool of available labor lessens. Estimates are that, as contrasted to last year's 19% increase, corporate earnings will probably rise only another 6 1/2% to 9% in 1966.

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