COLUMBUS, Ohio (AP) _ American Electric Power announced Friday it will cut costs and sell assets after posting a fourth-quarter and yearly loss, blaming the collapse of wholesale markets and investments in businesses that didn't pan out.
The nation's largest generator of electricity lost $837 million, or $2.47 a share, in the fourth quarter compared with net income of $52 million, or 16 cents a share, a year ago.
Excluding one-time charges, AEP had earnings of $177 million for the quarter ended Dec. 31, or 52 cents per share _ 3 cents less than projections by analysts surveyed by Thomson First Call.
The company wrote off about $1.5 billion in underperforming assets for the year, including $1 billion in the fourth quarter. AEP also took a $585 million charge for pension liability.
``The once flourishing wholesale market is no longer the promising business we contemplated three years ago,'' said E. Linn Draper Jr., AEP's chairman, president and chief executive. ``We will therefore return to the more traditional model of a regulated utility with a small commercial cell that ensures maximum value.''
AEP plans to ``systematically'' sell off any assets not related to its core utility business after reviewing ways to make them profitable, spokesman Pat Hemlepp said. Subsidiaries up for review include AEP Coal, a small telecommunications unit and power companies in the United Kingdom and Brazil.
``This will be accomplished over time and will not be a fire sale,'' Draper said.
Other parts of the restructuring include $200 million in cost-cutting, reducing dividends to 35 cents in the second quarter, down from 60 cents in the first quarter, and exploring the possibility of either bond sales or a stock issue.
Last year AEP cut 1,300 jobs, or 5 percent of its work force, and made other reductions that the company said will result in $200 million savings for 2003. The company did not know if more jobs will be cut.
For 2002, AEP lost $519 million, or $1.57 per share, compared with a profit of $971 million, or $3.01 per share, the previous year. Ongoing earnings for the year were $2.89 per share, missing analysts' projections by 2 cents.
In a conference call with analysts Friday, the company said it expects earnings per share to be $2.50 to $2.70 for 2003, based on level performance in the utility business and continued ``erosion'' from wholesale markets.
Shares of AEP were trading at $24.95, down $1.94, early Friday on the New York Stock Exchange.
AEP has about 5 million customers in 11 states: Arkansas, Indiana, Kentucky, Louisiana, Michigan, Ohio, Oklahoma, Tennessee, Texas, Virginia and West Virginia.