Dynegy ( DYN) swung to a fourth-quarter profit thanks to a gain on an asset sale, but the loss from continuing operations was wider than analysts had feared. Dynegy earned $305 million, or 75 cents a share, in the quarter, compared with a loss of $171 million, or 46 cents a share, a year ago. The latest quarter included earnings of $696 million, or $1.74 a share, from discontinued operations related to the sale of its midstream operations. Dynegy lost $386 million, or 98 cents a share, from continuing operations, including a $40 million impairment item and other charges. Analysts had been forecasting a loss of 12 cents a share in the most recent quarter. Sales rose 90% from a year ago to $622 million. One analyst surveyed by Thomson First Call had been expecting sales of $878 million. Dynegy updated its guidance based on a Feb. 7 reading of commodity futures, saying it now expects to produce free cash flow of $85 million to $195 million in 2006, up from its old estimate of $20 million to $130 million. It expects to post a loss applicable to common shareholders of $65 million to $130 million, compared with its old estimate for a loss of $5 million to $75 million. "Going forward, we will continue to market our production through a commercial strategy that emphasizes producing and selling energy in a timely and efficient manner to meet market requirements, while maintaining a strong balance sheet," Dynegy said. "We believe this is a proven business model that has withstood the test of time in other commodity-cyclical energy sectors, and when coupled with our strong operational performance, will produce long-term value for our company's investors as the economy strengthens and power markets continue to recover."