- The Washington Times - Tuesday, August 6, 2002

Shares of CSX Corp. fell for the fourth straight day yesterday, but analysts said the Richmond-based railroad probably would not continue to see its stock price affected by the Amtrak derailment July 29 in Kensington.
The derailment, which occurred on CSX-owned tracks, injured more than 100 people and was suspected to have been caused at least in part by a heat-warped track. The National Transportation Safety Board is investigating the incident.
Shares of CSX fell $1.22, or 3.7 percent, to close at $31.89 on the New York Stock Exchange yesterday.
Analysts and representatives of the Federal Railroad Administration said derailments like the one on July 29 are rare and that the safety record of CSX indicates no major problems with the railroad.
"Overall, CSX's safety record is fairly comparable to railroads of like size," said FRA spokesman Warren Flatau.
CSX reported 3.44 accidents per 1 million miles traveled in 2001, less than all but two of the eight railroads of comparable size, according to FRA data. In response to the July 29 accident, CSX lowered the speed limit for Amtrak trains traveling on its tracks, making them in line with freight trains.
Analysts said the accident last week should not have any continued effect on the company stock price. But said a few cents per share added to earnings in the next quarter would not be surprising if the railroad takes on a non-recurring charge.
CSX spokesman Dan Murphy said the company would not take a charge.
CSX earned $135 million (63 cents per share) in the most recent financial quarter, compared with $108 million (51 cents) a year ago. Revenues, however, rose from $2.06 billion to $2.07 billion.
The replacement of workers with computer systems has long been an issue in the industry, analysts said. Because of this, they said, the NTSB's investigation of the July 29 accident will be closely followed.
If the NTSB determines that a computer system failure contributed to the derailment, CSX employees could use that as leverage if the company considers replacing workers with computer systems in the future. This could lead to fewer cost-cutting measures by the company down the road, said Kevin Tynan, an analyst with Argus Research in New York.
"If the union is complaining about computerized systems taking jobs, and then you have an accident, it makes it easier for them to state their case," Mr. Tynan said.
Mr. Murphy, of CSX, said the company does not expect to battle workers on the issue of computer systems because it has increased jobs in track maintenance.
The biggest challenge for CSX now, analysts said, is riding out the sluggish economy and trying to improve its revenue.
Earnings have been good for the company in recent quarters, but much of the net income stemmed from cost-cutting measures related to the integration of Conrail, which it acquired in 2000.
"When you dive into it, you see that it's all cost cutting," Mr. Tynan said. "Their top line is not really growing."
But increasing revenue in the current economy is not easy, Mr. Tynan said. The success of railroads is intimately tied to the strength of the economy. If less is being bought, sold or built, less is being hauled across the country. And there is no clear horizon in sight, analysts said.
"There's no reason to believe we're going to see top-line growth in the railroad industry in the next quarter," Mr. Tynan said. "There aren't many signals of a recovery just yet."

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