Still Soaring

Despite all the frets about the U.S. economy, second-quarter earnings reports set new records. The Wall Street Journal reported the earnings of 498 companies as 10.9% above the same period in 1965. On either side of that average, the figures ranged from a 67% increase for four airlines (American, Braniff, Pan American and Seaboard World) to a 7% decrease for six cement companies.

Other industrial gains included: chemicals, 11%; department stores, 14%; drug manufacturers, 16%; railroads, 24% ; mining and metals, 28% ; textile manufacturers, 18%; rubber companies, 26%. However, sales losses in two giant industries--autos and steel --kept the nation's overall earnings gain from matching the first quarter's 12%. Items:

> General Motors, the world's largest industrial corporation, reported that earnings were off 14.5% and sales dropped to $546 million from $638 million for the comparable period in 1965. Besides slipping sales, rising costs were among the reasons cited by Chairman Frederic Donner for the decline.

> U.S. Steel, whose sales to the auto industry, on the reckoning of Chairman Roger Blough, will be down 1,000,000 tons this year, earned $77 million on sales of $1.19 billion as against $81 million on sales of $1.23 billion last year. Second-quarter per-share earnings were $1.43--up from $1.38 a year ago. The increase was a result of the recapitalization of U.S. Steel last year, when preferred shares were exchanged for debentures, the interest on which is tax deductible.

> Jersey Standard, the world's largest oil producer, reported its most spectacular results in 83 years. With crude-oil production up 6% to 4,000,000 bbl. a day, earnings were $267 million on revenues of $3.4 billion, as against $242 million on $3.09 billion in last year's second quarter. Chairman Michael Haider attributed the gain to growth on all fronts, with overseas operations accounting for more than 50% of income.

> Magnavox, which FORTUNE puts in eighth place among all U.S. companies for return on invested capital (28.4%), reported that second-quarter earnings were up an astonishing 103% on a sales increase of 51.2%. The largest gains were made in the consumer electronics division, notably color television, where unit sales more than doubled those of the comparable 1965 period.

> International Business Machines for the first time reached $1 billion in gross income from sales, rentals and services. Net income rose to $129 million, up from $117 million a year ago. Competing Burroughs Corp. turned in a 107% increase, almost doubling its per-share earnings to 800. Chairman Ray Eppert anticipates that 1966 net income will be $3.35 per share as against last year's $2.37.

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