TXU Trims Guidance

Shares sink as the company promises hefty investments in generation capacity.
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TXU

(TXU)

sank 8% Monday after the company guided to the low end of 2007 earnings estimates.

The utility also reaffirmed its 2006 operational earnings outlook, authorized a buyback of up to 20 million shares and boosted its quarterly dividend by 5%.

The Dallas-based generation company said it expects operating earnings of $5.50 to $5.75 a share for the year 2006. For the year 2007, operational earnings are expected to be $5.25 to $5.55 a share. Analysts polled by Thomson First Call were expecting earnings of $5.62 a share in 2006 and $5.49 a share in the year 2007.

TXU said it "estimates a five-year compound annual growth rate for operational earnings per share of 8%-10%. Relative to prior estimates, this five-year growth rate reflects the impact of commodity price changes, the allocation of capital to growth investments, and the expected impact of equity sell-downs in the power generation program."

TXU said its board has authorized the repurchase of up to 20 million shares of its common stock through the end of 2007, and has extended the expiration date of the remaining 3.4 million shares of the 2006 program to the end of 2007.

Additionally, the company said that its board has raised the quarterly dividend 5% to 43.25 cents a share.

Shares plunged $5.14 to $58.11.

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