Earnings May Fail To Lift Markets Again

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Earnings May Fail To Lift Markets Again
Peter C. Beller, 10.21.09, 06:00 PM EDT
Late trading Wednesday indicates investor disappointment despite better profits than expected.
Investors hoping that another batch of earnings reports could reverse two days of sliding markets on Thursday may yet be disappointed if late trading is any indication. Results from a range of companies out after the closing bell mostly came in above Wall Street estimates but investors were punishing companies that are cutting their way to profitability instead of growing sales. Biotech shares will likely be in focus after Amgen reported quarterly earnings of $1.49 a share, up from $1.23 last year and 22 cents ahead of analyst predictions. Cost-cutting may be at work since sales were down by 1.6% and investors pushed the stock down 5.2% in extended trading.

Tech companies continue to report better-than-expected profits. Online auctioneer eBay ( EBAY - news - people ) said late Wednesday is earned 38 cents a share in the latest quarter, down from 45 cents last year though sales grew 5.7%. Shares lost 5.1% after the closing bell.
Software firm VMware  ( VMW -  news  -  people ) also beat the Street with a quarterly profit of 24 cents a share, the same as last year's but four cents over analyst expectations. Sales climbed by 3.7% and management gave an upbeat forecast that helped shares gain 1.3% after the session.

Among the blue chips, 3M ( MMM - news - people ) reports results in the morning before trading begins. The diversified manufacturer of adhesives, office supplies and materials is expected to report a significant drop in its third-quarter profit to $1.17 from $1.42.

Commodities investors will look to agriculture firm Bunge Limited ( BG - news - people ), which is also expected to say earnings fell in the latest quarter. The firm is likely to report earnings of $1.47 a share, down from $1.70 last year. Also in commodities, analyst think Dow Chemical ( DOW - news - people ) saw its profit shrink to 10 cents a share from 60 cents in 2008.

Regional banks have been hammered by loan losses while facing increased competition from their larger brethren who benefit from massive government bailouts. Fifth Third Bancorp ( FITB - news - people ) may report another quarterly loss Thursday morning. Wall Street thinks the midsize lender lost 17 cents a share compared to a narrowed loss of four cents last year.

NingCaiChen

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