Prediction Confirmed

Everyone knew that first-quarter sales would be off, compared with 1953. But what about earnings? For weeks, investors have been bidding stock prices up to new highs, staunchly believing that profits would hold up largely because of the death of the excess profits tax. Last week the news in the first batch of quarterly earnings and estimates was good (and the Dow-Jones industrials rose another four points, to 313.7).Items:

P:E. I. du Pont de Nemours, a consistent stock-market leader, reported that its first-quarter sales of $403 million were down 8% from last year. Nevertheless, said President Crawford Greenewalt, profits were expected to be "well above net earnings realized in the first and last quarter of 1953."

P:R. J. Reynolds Tobacco Co. said its unit sales were off, but because of a price increase and the death of E.P.T., "net earnings will be larger" than the $7,685,000 a year ago.

P:Republic Steel, which like others in the industry has been hard-hit by a drop in orders (first-quarter operating rate: 69.4%), was nevertheless able to keep per-share earnings up to $1.79 v. $2.24 last year. Said President Charles White: orders have picked up in every month since October. Armco Steel was actually able to show a rise over last year's $7.7 million.

P:American Telephone & Telegraph, which installed 400,000 phones in the first quarter (140,000 less than a year ago), reported earnings of $110 million, up 8% from 1953. Furthermore, recent cuts in excise taxes, said President Cleo F. Craig, "will stimulate increased telephone usage and particularly more long distance calling."

P:St. Regis Paper's sales were up slightly (to $50 million), and earnings rose from $3,760,587 to $3,949,456.

P:National Lead, helped by a new die-casting division, said that a slight gain in sales had brought approximately a 30% rise in earnings over the $6,202,049 reported for 1953's first quarter.

For all the good news, many a company was still having trouble. United Air Lines, for example, told stockholders that because of higher costs they could look forward to a loss for the quarter, despite an 11% gain in revenues over 1953's $37 million. A 14% drop in revenues caused the Erie Railroad's net to fall more than 50%, to 54-c- a share.

In the auto industry, such independents as Studebaker, Nash, Packard and Kaiser (see below) were badly pinched, and Chrysler's share of the market dropped in its struggle to keep up with General Motors and Ford. To the victors went the spoils: G.M.'s first quarter net was expected to top last year's $151 million by at least 15%.

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