Western Waste's loss deepens in third quarter; revenue stays flat.Western Waste Industries reported last week a net loss of $9.8 million, or 71 cents a share, for the fiscal third quarter ending March 31, due in part to the company's plans to scrap some of its landfill projects. A year earlier, the firm posted a net loss of $5.1 million, or 37 cents a share. Revenue in the latest quarter was $57 million vs. $56.6 million a year before. The new loss was due to an $18.2 million unusual charge, $10 million of which was related to development costs of eight landfill projects, said Rich Widrig, spokesman for the Torrance-based company which is one of the five largest waste companies in the U.S. In the last several months the company has been evaluating all the landfill projects it has in development in a number of states, Widrig said. "What we're saying here is we're taking a general reserve because some of them aren't as viable as they were." The company began the landfill projects several years ago, Widrig said, "when it looked like there was going to be a squeeze on landfill capacity in many sites in the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. ." In the late 1980s, Western "aggressively sought to grow its landfill business," he said. But since then, the landfill shortage and high dumping or tipping fees have not materialized, and Western has decided it will not go forward with some of the eight projects under development. Widrig said the company has not decided which projects will be scrapped, but said it was denied permits for two projects, one in Louisiana and another in Arkansas, during the last fiscal quarter. The company also took a special charge during the quarter for projected future expenses it will incur To become subject to and liable for; to have liabilities imposed by act or operation of law. Expenses are incurred, for example, when the legal obligation to pay them arises. An individual incurs a liability when a money judgment is rendered against him or her by a court. in upgrading its seven operating landfills and also took a charge for re-evaluating the price of real estate it owns, Widrig said. Western Waste reported a loss for the first three quarters of its fiscal year of $5.22 million, vs. net income of $202,000 a year before. For the last quarter, the company posted operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. of $2 million, or 15 cents a share, compared to $2.2 million, or 16 cents a share, a year ago. Some Wall Street analysts are souring souring said of ham. See taint. on the company, whose stock was trading at $10.625 a share on May 11, off its 52-week high of $14.75. Thomas Ennis, an environmental analyst at Pershing & Co. in Jersey City, N.J., said he recently changed his position on Western Waste's stock from a buy to a hold/sell. "I held onto them as long as I could, but the last three quarters their gross margins have gone down," Ennis explained. He noted revenue was $57 million in the latest quarter, compared to $57.2 million in the second quarter and $58.1 million in the first quarter. In a statement, Western Waste Chairman and Chief Executive Officer Kosti Shirvanian blamed the revenue slippage Slippage The difference between estimated transaction costs and the amount actually paid. Notes: Slippage is usually attributed to a change in the spread. See also: Spread, Transaction Costs Slippage on the California economy and heavy rains. Rain and recession can cause a decrease in the volume of waste. Ennis said a large portion of Western Waste's business is tied up in Southern California Southern California, also colloquially known as SoCal, is the southern portion of the U.S. state of California. Centered on the cities of Los Angeles and San Diego, Southern California is home to nearly 24 million people and is the nation's second most populated region, industrial, commercial and municipal garbage garbage: see solid waste. hauling contracts, and the volume of garbage has decreased because of the recession. "They're so dependent on the California economy," he said. But Donald Zwyer, a special situations analyst with Salomon Brothers
Salomon Brothers was a Wall Street investment bank. in New York New York, state, United States New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of , initiated coverage of Western Waste last week by issuing a buy recommendation. Zwyer looks for the stock price to increase to $18 a share in the next two years. He noted the stock traded as high as $23.50 a share in 1991 and said it is currently "very undervalued Undervalued A stock or other security that is trading below its true value. Notes: The difficulty is knowing what the "true" value actually is. Analysts will usually recommend an undervalued stock with a strong buy rating. ." In his report, Zwyer said he believes the $18.2 million charge reflects "a house cleaning of all potential problems at Western Waste." Environmental analyst James McDonald James McDonald could refer to:
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