Duke ( DUK) stopped getting the royal treatment.

The company -- worshipped by retail investors who embrace its lofty dividend -- stirred up some detractors on Thursday with news of a major earnings miss. The company posted a first-quarter operating profit of 32 cents a share that fell a nickel shy of the consensus estimate and a full dime below last year's results.

Duke Energy North America, the company's faltering merchant energy division, shouldered the entire blame. The unit suffered an unexpected $93 million "mark-to-market" loss, erasing 6 cents from quarterly profits, that turnaround CEO Paul Anderson deemed unacceptable.

"The majority of our businesses posted solid earnings," Anderson told analysts during a conference call on Thursday. "But we continue to be dogged by issues at DENA."

In total, DENA posted a loss before interest and taxes of $521 million in the quarter. The bulk of the losses stemmed from a new $325 million charge taken on power plants that Duke is trying to sell. For analysts, the charge signaled two things. First, Duke may quickly be nearing a sale of its distressed power plants in the southeastern U.S. And second, the company may wind up getting even less than it thought for the plants and, therefore, face additional charges going forward.

Even excluding the special charge, DENA reported a $106 million loss that could threaten its plan to keep full-year losses to $300 million. The latest loss came after DENA got "whipped around by a negative mark-to-market position" on some mothballed power plants, Anderson explained. The company will continue to face mark-to-market exposure "as long as we have a mark-to-market book out there," he added.

For some time, Duke has struggled to reduce its trading exposure and stem the losses at DENA. But Anderson compares that turnaround effort to "eating an elephant. You just have to start one bite at a time."

Still, Anderson is already talking about "playing offense" in Duke's other business units. The company actually raised its capital budget to reinvest in nuclear assets inside its core electric business. Looking forward, Duke is eyeballing growth opportunities in gas transmission and field services as well.

The latter of those units is having a "banner year" already, Anderson noted. At Duke Energy Field Services, first-quarter profits more than tripled to $92 million. Ironically, trading activities -- which hurt DENA -- significantly boosted DEFS' results. The division also benefited from easy comparisons to a particularly weak quarter a year ago.

Crescent Resources, the company's real estate division, also kicked off the year with a bang. For the first time ever, Duke actually broke out the earnings for this division separately. It posted first-quarter profits of $60 million -- up from break-even last year -- and suggested that late-year profits tend to be even higher. For now, the company remains generally unconcerned about rising interest rates cutting into its real estate business.

"The current markets seem very robust," Anderson said. "In general, the strategy hasn't changed from where it was."

In the meantime, Crescent -- considered a noncore business by some -- is clearly lifting results. Credit Suisse First Boston analyst Dan Eggers was quick to note the strengths and weaknesses in the company's latest quarter.

"First-quarter results benefited meaningfully from DEFS and the Crescent real estate business," he wrote, "while DENA was significantly off the mark."

Eggers has a neutral recommendation and a $20 price target on Duke's stock. The shares were down 3.5% to $21.05 halfway through Thursday's session.

Debt reduction, totaling just $200 million, abated in the recent quarter. But the company plans to make "significant" progress in this area during the second half and remains comfortable with its long-range targets.

In the meantime, Anderson remains "neutral" on the company's full-year earnings guidance following the first quarter. He did say he's seen some early signs of improvement in Duke's most challenged business. For example, he said, all of Duke's California power plants were recently running at "full-tilt." But he stopped well short of predicting a turnaround in the depressed power market.

Anderson was far more upbeat about the company's prospects overall.

"Clearly, momentum is now working for us instead of against us," he declared.

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