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Politics : Idea Of The Day

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To: IQBAL LATIF who wrote (27356)	7/2/1999 12:55:00 AM
From: Les H	Read Replies (1) of 50167

MARKET EARNINGS Earnings reports will be light not only this week but next week as well, so the focus for a while will be on pre-announcements as we move into the peak weeks for pre-announcements. So far, it continues to look like business as usual. The number of negative pre-announcements is 176. It would appear that the final number may be about 400, which would be the usual seasonal increase from the 1Q99 total of 379 and well below the inflated 493 of 2Q98. The recent negative pre-announcements from several major technology companies has generated much attention, but most were more related to company specific problems and not indicative of broader industry problems. The percentage of negative pre-announcements coming from the technology sector continues to run below average. That is in contrast to above average percentages in 2Q98 when the industry was faced with cutting back inventories of personal computers and in 1Q99 when a number of software companies warned about slowdowns in Y2K business. Expectations for S&P500 earnings growth is currently at 11.7%. It has fallen 0.9 percentage points in the last six days, mainly because of the revisions generated by several of the negative pre-announcements. Compaq alone accounted for 0.5 percentage points. However, the net revision activity from 13.9% on 1 Jan to 11.7% now is far less than normal for a six month period. The final results for 2Q99 are still likely to be close to 15%, well above the 10.5% in 1Q99. The estimate from the industry analysts for 3Q99 is 21.8%, and the final outcome is likely to be about 20%. Despite some concern over recent pre-announcements, the overall earnings news for the next two months or so is likely to be quite positive, particularly during the peak weeks of the reporting season staring the week of 12 July.

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