Before the bell 7-20-07: Stock futures slip on earnings

Posted Jul 20th 2007 7:59AM by Melly Alazraki
Filed under: Before the Bell, Major Movement, Earnings Reports, Google (GOOG), Microsoft (MSFT), General Motors (GM), Toyota Motor Corp. (TM), Citigroup Inc. (C), Advanced Micro Dev (AMD), Economic Data

Stock futures indicate markets are headed for a lower start a day after the Dow Jones Industrial Average closed about 14,000, mostly due to tech earnings from last night.

Yesterday, U.S. stock markets rallied as several technology-sector firms reported strong results, including International Business Machines (NYSE: IBM). However, financial sector shares didn't share the market's sentiment and declined after downgrades from rating agencies and Federal Reserve Chairman Ben Bernanke warning of losses from subprime mortgage defaults.

Today, there isn't any economic data for investors to chew on as they will likely focus on earnings from yesterday evening and this morning.

There's some news coming from China, however:
As only yesterday we heard that China's economy is growing at double digit pace (11.9%), the fastest in 12 years, China raised interest rates for the third time since March to try and cool down the economy somewhat.
China also said it had shut down several firms involved with the food and drug safety scares lately and will ban them from exporting.
In a related matter, beginning next year, labels on meats will have to display country of origin.

From the U.K. we hear that despite recent rate hikes, the country's economic growth unexpectedly quickened in the second quarter as manufacturing rebounded.

Markets in Asia closed mostly higher and so far in Europe markets have turned lower after starting the day with gains.

Corporate news:

In the continued battle for top carmaker, General Motors Corp. (NYSE: GM) regained its No. 1 position in the second quarter of the year in global sales, ahead of Toyota Motor Corp. (NYSE: TM) but remained No. 2 for the first half of 2007.

Earnings yesterday:

Google - It really was bound to have happened. Once everybody on the Street almost take it for granted Google would beat estimates, that's when you know it would hit. And indeed Google Inc. (NASDAQ: GOOG) last night reported second quarter results that disappointed investors when margins narrowed and it missed EPS estimates (polled by Thomson Financial) by 3 cents -- $3.56 vs. $3.59. Investors pounded the stocks down and GOOG is trading in premarket down 7.8% (7:28 a.m.).

Microsoft - Meanwhile, Microsoft Corp. (NASDAQ: MSFT) earnings came in line with estimates at 39 cents per share. Windows Vista attracted most of the hype, but it was Office 2007 that helped the software giant bolster results of fiscal fourth-quarter results. The company took the expected charge related to its game console. MSFT shares are down 1.7% in premarket trading (7:40 a.m.).

Advanced Micro Devices - Chipmaker AMD (NYSE: AMD), on the other hand, reported results that took the stock more than 4% higher in after-hours and premarket trading as sales grew much more than expectations.

Earnings today:

Citigroup Inc. (NYSE: C) reported a second-quarter profit increase of 18% after pulling in record revenues, boosted by strength in overseas operations. Net income rose to $6.23 billion, or $1.24 per share, on record revenues of $26.63 billion, a 20% increase. This beat analyst estimates of earnings of $1.13 a share and revenue of $24.89 billion.

Tags: amd, c, gm, goog, msft, tm