Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : Paint The Table -- Ignore unavailable to you. Want to Upgrade?

To: Lost1 who wrote (8558)	1/6/2002 7:56:59 PM
From: Lost1	Respond to of 23786

Fewer Profit Warnings Lift Investor Gloom By Nick Olivari NEW YORK (Reuters) - Here's a life raft for investors drowning in stock market losses: Fewer companies are warning that quarterly earnings will miss expectations. Higher earnings bolster stock prices, and while expectations for profits are still low with less than two weeks until companies begin reporting fourth-quarter results, the number of warnings is the lowest in a year. ``It seems to be a good trend and fewer early warnings will hopefully lead to less disappointments,'' said Rich Barnett, director of equities at City National Investments, a unit of City National Bank, in Beverly Hills, Calif., which oversees $5 billion in assets. ``We had some nasty surprises in the past and maybe the worst is behind us.'' It's the trend, though, that counts. The percentage of companies reporting disappointment is falling sharply, even though many companies still have bad news. For the current fourth-quarter period, 1,204 companies have issued statements forecasting fourth-quarter results, with 44 percent saying results will be worse than anticipated, according to Thomson Financial/First Call, a Boston-based research firm. As bad as that sounds, it's better than earlier last year. By this time in the third quarter, 63 percent of companies making pre-announcements were warning investors that profits would fall short. That was less than the 68 percent that warned in the second, and the 70 percent in the first quarter. The disappointment is continuing in the fourth quarter with such bellwether companies as telecommunication equipment maker Lucent Technologies Inc.(NYSE:LU - news), optical networker Ciena Corp. (Nasdaq:CIEN - news) and apparel retailer Gap Inc. (NYSE:GPS - news) But the number is way down when compared with the same time in prior periods. There is also good news on the other side of the equation, with 25 percent of those pre-announcements being positive, up from an average of 16 percent in the first three quarters. Specialty finance company GreenPoint Financial Corp. (NYSE:GPT - news), household products maker Clorox Co. (NYSE:CLX - news), telecommunications equipment maker Nortel Networks Corp.(NYSE:NT - news) and home builder Lennar Corp. (NYSE:LEN - news) were among companies guiding estimates higher in recent weeks. STANDARD & POOR'S 500 The outlook also looks better for companies within the Standard & Poor's 500 index, home to some of the biggest firms in the United States. Of the 322 companies that have pre-announced earnings, just 42 percent have warned results will miss expectations, including Dow Chemical Co.(NYSE:DOW - news) on Wednesday. That's down from the 63 percent of companies that warned in the previous quarter, 67 percent in the second and 70 percent in the first. ``It does look like an improvement, with a slowdown in the number of negative earnings pre-announcements,'' said Ken Perkins, a research analyst at First Call, which tracks analyst estimates. ``It could be a sign that things are turning around.'' Technology companies, whose stocks suffered some of the biggest declines as profits fell, are also making fewer negative pre-announcements this quarter. Just 48 percent have issued warnings on earnings in the latest quarter, down from 68 percent in the prior period and 77 percent in each of the first two quarters. ``It seems like there were not a lot of pre-announcements in technology this quarter,'' said Ahmet Okumus, president of Okumus Capital LLC, which manages $520 million. Still, it won't be all smooth sailing. Overall, analysts expect company earnings for the S&P 500 index to drop 22 percent, according to First Call. If accurate, that would be the worst period since the second quarter of 1991, when earnings declined 24 percent. Investors are still bracing for a potential slew of warnings in the coming week. ``We'll have a better feel for how things will be at the end of next week,'' First Call's Perkins said. ``Next week could be a big week as companies may have pushed back their earnings because of the holidays.'' The lion's share of earnings reports will come in the week beginning Jan. 14, Perkins said.