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Fall Earnings Season

Part of what drove last weeks stock market was that profit reports and expectations were above what everyone expected. Remember the old saying, profits, profits and profits. The height of earnings reports season is ahead of us. What happens in the next week is of critical importance. Heavyweights such as Ford, GM, Intel and Microsoft all Report next week.

Intel is expected to hit 10 cents a share down nearly 80% from last year. The technology slowdown is expected to hurt them. There is no telling whether a September slowdown hurt them more than Dell's sales spurt in producing replacement computers last month. Listen carefully for their forth quarter projections.

Microsoft is expected to miss last years earnings by two cents a share. Negligible for an industry in a deep recession but still noteworthy for a company facing anti trust hell. Their viewpoint about the upcoming quarter might have more impact than the report itself.

It should be interesting to see how badly the September terror impacted the bottom line at Ford and General Motors. Their sales incentives really didn't kick in full speed until October. Look for a small earnings hit caused by one horrible week in September.

With several large pharmaceutical firms report in a season full of reporting the market will turn on earnings. A lot of earnings expectations were cut in the wake of September's atrocities. Those changes may not have been made in the most scientific way.

What would happen if a few companies exceeded estimates in the next week or so? That might propel the Dow back over 10,000 and the NASDAQ over 2,000. That would be both a message to the "evil doers" as Mr. Bush says. It would also probably make sense for a market that still looks a little undervalued to me.

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Shmuel Protter
investmenttool.com

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