United Continental shares off on revenue concerns

CHICAGO ― Shares of United Continental Holdings fell about 7 percent on Friday as some analysts cut their fourth-quarter profit estimates, citing weaker-than-expected revenue.

United Continental said in a U.S. regulatory filing late on Thursday that it expects consolidated passenger revenue per available seat mile, an important measure called unit revenue, to rise 8.5 percent to 9.5 percent in the fourth quarter.

Helane Becker, an analyst with Dahlman Rose & Co, said her firm had estimated 10 percent growth in quarterly unit revenue.

“We think there are concerns about a recession in Europe,” Becker said in an email. Dahlman Rose cut its fourth-quarter profit estimate for United Continental to 25 cents a share from 50 cents a share to account for lower capacity and traffic.

Becker said United would likely benefit in Chicago, Los Angeles and the Atlantic from the restructuring of AMR Corp’s. American Airlines, which filed for Chapter 11 protection last month.

James Higgins, an analyst with Ticonderoga Securities, reduced his fourth-quarter profit estimate on United Continental to 16 cents a share from 43 cents a share. Analysts on average, currently expect 46 cents a share, according to Thomson Reuters I/B/E/S.

In a note to clients, Higgins said exposure to mainland Asia revenue could be creating more revenue uncertainty for United than for other airlines.

“We like the carrier’s longer-term prospects but are a bit wary of near-term revenue trends,” Higgins wrote.

Most U.S. airlines have posted profits this year, aided by service cuts, higher fares and retirement of less fuel-efficient planes. Still, economic woes loom as a threat to overall demand for air travel.

Last week, Delta Air Lines Inc. said it expects recessionary effects from the euro-zone crisis to weigh on 2012 and said it would cut capacity in Europe by 7 percent.

Shares of United Continental were off 6.7 percent at $18.91 in morning trading as Delta and US Airways Group also fell. The Arca Airline index was down 2 percent. AMR Corp was up 4.3 percent to about 60 cents and Southwest Airlines rose 0.4 percent to $8.43.

Nathan’s Famous to buy back up to $11 million of shares

NEW YORK ― Restaurant chain operator Nathan’s Famous Inc. said it will buy back about 10 percent of its outstanding stock for a maximum price of $11 million.

Nathan’s shareholders can tender their shares at a price range of $20-$22 per share under the Dutch action. The company’s stock closed at $19.08 on Monday on Nasdaq.

Nathan’s Famous, known for its beef frankfurters, said the offer will start on Dec. 8.

The offer is expected to expire at midnight on Jan. 12 and the company can buy up to an additional 2 percent shares under the offer. It has 4.95 million shares outstanding.

Nathan’s, which started as a nickel hot dog stand in Coney Island, N.Y., in 1916, intends to fund the purchase with cash on hand, it said in a statement.

Buffett builds $10.7 billion stake in IBM, tied for largest share

OMAHA, Neb. ― Warren Buffett said his Berkshire Hathaway Inc. has accumulated a 5.5 percent stake in IBM, the billionaire investor’s biggest bet in the technology field he has historically shunned.

Buffett, in a CNBC interview on Monday, said he had bought about 64 million shares of IBM at a cost of $10.7 billion. Berkshire started buying the shares in March, with a goal of building a $10 billion position, he said.

Buffett said IBM did not know that he was building a stake and that the company was finding out about his investment for the first time as he disclosed it on CNBC.

IBM spokesmen were not immediately available to comment.

The legendary investor said he has always looked at IBM’s annual report — his preferred method of identifying companies to invest in — but this year “I read it through a different lens.”

Buffett said follow-on conversations with various technology executives throughout the Berkshire conglomerate convinced him to start building the stake.

Berkshire is due to make a quarterly report of its equity holdings on Monday night.

According to Thomson Reuters data, a 5.5 percent position in IBM would tie Buffett with State Street Global Advisors for the largest stake in the company.

IBM shares rose nearly 1 percent in premarket trading. Since early March, when Buffett started building his position, IBM shares are up about 17 percent, against a 3 percent decline for the S&P 500.

One place where Buffett is not investing is European banks.

Buffett, who put $5 billion into Bank of America Corp earlier this year, comes up whenever there is talk of a large European bank needing to raise capital, particularly in the current environment of writedowns on sovereign debt.

But he told CNBC that he would need to understand European banks better before investing in them, and that he has not yet seen an investment opportunity there in which he wants to take part.

The “Oracle of Omaha” and Berkshire Hathaway chief executive said he expects Europe’s economy to show improvement 10 years from now, but getting there will be difficult.