Waste Management (NYSE: WMI) shares are off 7% today to just over $36. Wall Street was not happy with the company's guidance.

The first bit of bad news was that revenues for the quarter were $3.40 billion as compared with $3.44 billion in the year ago period. Net income for the quarter was $278 million, or $0.54 per diluted share, compared with $300 million, or $0.55 per diluted share, in the prior year period. The company claims that some of its financial problems had to do with labor friction in its California operations.

Waste Management does a lot of hauling from construction sites, so, with building volumes down, revenues were bound to take a shave.

Company executives said that the rest of the year would be a little light. "In looking at our full year 2007 earnings projections, the previously projected range of $2.07 to $2.11 per diluted share included a Section 45K tax credit benefit of $0.04 per diluted share in the second half of the year. We no longer expect to receive that $0.04 per diluted share benefit. After reducing the range by this $0.04 per diluted share non-operational tax item, we are confident we can meet the revised 2007 full-year earnings projection." Which is a fancy way of saying things are worse off than we thought.

Investors would think that there will always be garbage to take out, but a housing slowdown is undermining that, and there would be every reason to believe that the trouble could get worse. The shares are near their 52-week low, and if the construction business gets worse they will be lucky to hold that level.

Douglas A. McIntyre is an editor at 247wallst.com.

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