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Earnings Preview: Reynolds American To Post 3Q

Investors also will be interested to hear about the company's test market in the Des Moines, Iowa, area of a nicotine gum under the Zonnic brand aimed at helping people stop smoking that was expected to start in the third quarter. In 2009, Reynolds bought a Swedish company Niconovum AB, which makes nicotine gum, pouches and spray products. The test market is the first of its products to be sold in the U.S.

WHY IT MATTERS: As the first domestic tobacco company to report its third-quarter earnings, Reynolds American's results will help reveal key tobacco industry trends in the U.S.

Continued strength from Pall Mall could mean smokers are still switching to cheaper brands to save money, and those who tried the brand during the recession are remaining loyal. But if volumes of premium brands like Camel are rebounding, that could signal consumers are adjusting to higher prices on cigarettes following federal and state tax hikes.

WHAT'S EXPECTED: Analysts, on average, expect Reynolds American to report earnings of 79 cents per share on revenue of $2.2 billion, according to FactSet.

LAST YEAR'S QUARTER: Reynolds American reported adjusted earnings of 70 cents per share. Its revenue was $2.2 billion, excluding excise taxes.

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Michael Felberbaum can be reached at http://www.twitter.com/MLFelberbaum.

Copyright 2011 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.
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