Tony and thread - I don't think Intel pre-announced, but he is a report from CNBC:
By Amanda Grove
CNBC
ALREADY a high percentage of companies are making negative preannouncements. And analysts are revising earnings downward when it comes to year-over-year growth for the S&P 500 stocks. First Call says it has already identified a negative trend.
"The fact that we've gone from 10 percent [earnings growth] at the beginning of the third quarter on July 1st, down to 6.5 percent now - that's 3.5 percentage points in just over a month," said First Call's research director Chuck Hill. "Normally you get about a 2.5 percentage drop in the estimates over the full quarter."
That's a bad sign, Hill says, considering that we're only a third of the way through the quarter.
Among those companies that have negatively preannounced: National Semiconductor, Intel, Linear Technology, LSI Logic, Wausau Paper Mills and DuPont.
The main culprit, says Hill, is Asia.
"When you look at the industries where the companies are being effected most," he said, "it's the kind of thing where Asia's the problem - whether it's commodities pricing, oils, metals, papers, chemicals or whether it's technology selling a lot of their product to Asia."
As for sectors, First Call says the hardest hit - year-over-year for the third quarter - will be energy, including stocks like oils and drillers. They're expected to be down 19 percent; basic materials like paper, chemicals and metals are expected to be down 14 percent; and technology is expected to rise only 6 percent.
"If the numbers are going down so dramatically for basic materials, which is a deep cyclical, and for energy, which is sort of associated with GDP, clearly people are making the assumption that this is going to be one weak economy going down throughout," said Ash Rajan, who tracks earnings for Prudential Securities.
Experts say investors should focus on the earnings-revision activity during the next month or so to see whether the Asian problem will continue to plague earnings this quarter and next. |
