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Profits show surge of strength

From AT&T to GM to IBM, prominent U.S. corporations reported lucrative quarterly profits Thursday, a reflection of the country's economic strength.

Beyond the Fortune 500, many smaller companies fared well too, judging by financial results they disclosed for the July-September quarter.

Several economists said the data released by AT&T Corp., General Motors Corp., International Business Machines Corp. and others was evidence of lively economic activity that soon will oblige businesses to boost employment to satisfy increased demand for goods and services.

"Anybody looking for a job should breathe a sigh of relief because this is very good news," said Hugh Johnson, chief investment officer at First Albany Corp., a securities brokerage in Albany, N.Y.

A review of the figures released so far reveal that companies engaged in a broad range of businesses have experienced improvements that benefited their bottom lines.

In manufacturing, the automotive industry continued to ride the wave of rising consumer spending. The nation's biggest automaker, GM, posted a third-quarter profit of $552-million. Although GM executives said the results still reflected weakness in its North American automotive business, there was still a big turnaround from the prior year's loss of $113-million.

In communications, AT&T's quarterly profit improved 14 percent, if the costly acquisition of McCaw Cellular Communications is excluded.

IBM, a bellwether of America's pre-eminence in computer manufacturing and high technology, provided news confirming its resurgence from recent years of weakness. IBM earned $710-million in the third quarter, compared with a $48-million loss a year ago.

The good news extended into consumer products, where Coca-Cola Co. reported 20 percent quarterly profit growth.

Even airlines, which have been big money losers in recent years, have shown remarkable strength. Northwest Airlines Corp., veering toward bankruptcy last year, reported a 54 percent improvement in quarterly earnings.

The figures from these and other companies furnish fresh evidence that the plant closings, layoffs and other cost cuts associated with corporate restructurings in recent years have paid off _ at least as far as bottom lines go.

"It's shaping up to be another excellent quarter," said William Quinn, assistant vice president at the Institutional Brokers Estimate System, a Wall Street research firm that tracks quarterly results.

Another strong quarter could encourage companies to hire more workers in anticipation that the good times will continue.

"I think employers are going to start to open the gates a little more and start hiring," said Richard Belous, chief economist at the National Planning Association, a Washington research concern.

"A lot of companies will give up trying to meet their staffing needs by either relying on a lot of overtime or by using part-timers or temporaries and sub-contractors," he added.

Mindful of GM's recent decision to settle a potentially crippling strike by hiring more workers, other companies could be inclined to follow suit, said Quinn.

David Blitzer, chief economist at Standard & Poor's Corp., said willingness to invest in new plants and equipment also could get a lift if the third-quarter performances bolster economic optimism.

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