GenOn Energy, Inc.

[exisnet]

Reliant Shares Rise on Raised Guidance
Thursday August 2, 3:42 pm ET
Reliant Shares Rise After Improved Guidance, Earnings Call

HOUSTON (AP) -- Shares of electricity provider Reliant Energy rose Thursday after the company raised its outlook.

The company posted revenue and a loss far below analyst expectations due to milder summer weather, but said it expects higher cash flow and earnings excluding certain charges in 2008 and 2009.

ADVERTISEMENT
Reliant shares rose $1.43, or 5.4 percent, to $28.13 in midday trading after its earnings conference call, following a 6 percent drop in premarket trading. During the call, company executives focused on plans to meet consumption demands and handle environmental concerns while containing costs.

Reliant said it expects earnings before certain charges to be $1.01 billion in 2007, $1.42 billion in 2008 and $1.49 billion in 2009. It had previously estimated $911 million for 2007, $1.18 billion for 2008 and $1.42 billion for 2009.

Its free cash flow estimates are now $231 million for 2007, $595 million for 2008 and $869 million for 2009. Earlier Reliant had expected $269 million for 2007, $433 million for 2008 and $551 million for 2009.

The increased guidance reflects better conditions for Reliant's energy-generation facilities and improved cash flows that will likely be used for share repurchases and the clean-up of polluted sites, said Michael Lapides, of Goldman Sachs Global Investment Research, in a report.

The company reported a net loss of $282 million, or 82 cents per share, down from a profit of $14.2 million, or 5 cents per share, a year earlier. Analysts polled by Thomson Financial expected, on average, earnings of 3 cents per share.

Revenue sank 5 percent to $2.65 billion, down from $2.77 billion.

Morgan Stanley's Vikas Dwivedi said in a report that the effect of mild weather was "even worse than we expected," but "does not affect our view of Reliant." The analyst rates Reliant as "Overweight" with a target price of $32 per share.

http://biz.yahoo.com/ap/070802/reliant_mover.html?.v=1