Wall Street analysts seemed to have thrown up their hands when it comes to fourth quarter earnings. Given the current economic environment, who can blame them?Earnings estimates are almost useless. They have ranges big enough to drive a truck through. No, make that a train. I mean a tank. Imagine a large mode of transportation and you get the idea. My colleague Douglas McIyntyre recently argued "that has changed so much in the last two quarters that predictions have become hard to make and going into this earnings season the job may become impossible."
Take General Electric Co. (NYSE:GE). The conglomerate, which has been in Wall Street's dog house forever, is expected to post earnings of 52 cents for the fourth quarter. Or, the parent company of NBC might earn 36 cents. Everyone is sure that Citigroup Inc. (NYSE:C) is a basket case but exactly how screwed up the company is a matter of debate. Analysts are forecasting a losses of 47 cents to $1.14 per share.
Time Warner Inc. (NYSE: TWX) could earn anywhere from 18 cents and 33 cents. Analysts' estimates for JPMorgan Chase & Co. (NYSE:JPM) range from a profit of 25 cent to a loss of 20 cents. Pfizer Inc. (NYSE: PFE), which recently announced it would fire 800 scientists, may earn anywhere between 55 cents and 63 cents.
Analysts aren't even sure about companies doing well. Wal-Mart Stores Inc. (NYSE:WMT) is projected to earn between 92 cents and $1.11. Google Inc. (NASDAQ: GOOG), which analysts can never figure during the good times, may earn anywhere from $4.54 and $5.43.
The wide ranges are not entirely the fault of analysts. Companies set the ranges wide enough for them to hit so they don't "miss" estimates. It's all a big game and investors are the big losers. The confusion, though, is understandable.
Companies are cutting earnings forecasts left and right. Lexmark International Inc. (NYSE:LXK), the computer printer company, slashed its fourth-quarter outlook yesterday and said it would slash 400 jobs. So many companies are firing workers that it's easy to get numb to them all.
Analysts seem like they are becoming as useful as fortunes in a fortune cookie.
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Reader Comments (Page 1 of 1)
1-14-2009 @ 10:48PM
Moxie said...
Let's see, they can't figure it out huh? Regular workers see a 2.5-3% (maybe) pay raise a year. The employer tells employees their health care coverage is going up and that eats 50%(+) of the raise the employee received. So said employee is no more financially ahead than before he received the raise. Price of most goods go up 10-37% once again said employee has even less money to burn for extra or non-essential products. Yeah...it's hard to figure this stuff out when you forego basic commonsense.
1-14-2009 @ 5:53PM
Phil said...
That why they are ANAL-YST . They truly know NOTHING and never did! That was the problem , people believe them to start with and poof their 401ks were gone ! Then you have the fox news idiots and Limbaugh and the sorts telling you how to think ! LOL LOL Only in America .