Alcoa Inc. (NYSE: AA) started off the new earnings season with disappointing results that helped to stifle the recent rally. Was that enough of a sign of what's to come? No, probably not. But the earnings reports start to fly in earnest this week, which should provide a more detailed picture of the state of things.

Analysts surveyed by Thomson Reuters anticipate that some of the biggest names will prove to be holding their own. Google Inc. (NASDAQ: GOOG) is expected to post a profit of $4.91 per share, marginally higher than a year ago, and Johnson & Johnson's (NYSE: JNJ) expected $1.22 per share profit is slightly lower year over year. Even Mattel Inc.'s (NYSE: MAT) estimated loss of $0.13 per share is the same as in the year-ago period.

Here are some highlights from this past week's earnings coverage from BloggingStocks:

• Advanced Micro Devices Inc. (NYSE: AMD) reported dismal Q4 results due to lower demand.
• AMR Corp. (NYSE: AMR) reported a bigger-than-expected Q4 loss, sending shares lower.
• Check Point Software Technologies Ltd. (NASDAQ: CHKP) earnings prospects led to an upgrade.
• eBay Inc. (NASDAQ: EBAY) posted Q4 and full-year results with increased revenue due to a stronger dollar.
• Google Inc. (NASDAQ: GOOG) reported strong Q4 numbers that beat analysts' expectations.
• International Business Machines Corp. (NYSE: IBM) reported better-than-expected Q4 and 2008 earnings.
• Lockheed Martin Corp. (NYSE: LMT) posted strong Q4 results but lowered its 2009 guidance.
• Northern Trust Corp. (NASDAQ: NTRS) shares surged after posting better-than-expected earnings.
• Regions Financial Corp. (NYSE: RF) reported a huge loss due to write-downs and offered a bleak outlook.
• Societe Generale said that it expects to have broken even in the final quarter of 2008.
• Southwest Airlines Co. (NYSE: LUV) posted its second straight quarterly loss due to fuel hedging costs.
• UAL Corp. (NASDAQ: UAUA) reported a huge loss on the erosion in value of oil hedges as prices dropped.
• Usana Health Sciences Inc. (NASDAQ: USNA) posted record Q4 results despite one-time charges.

For more highlights from this week, see Apple, Microsoft, GE, Johnson & Johnson, Harley Davidson and others

Southwest Airlines (NYSE: LUV) is famous for making a profit every year since it got started in the 1970s. Given the billions that the airline industry has lost in the last several years, that's quite a feat. And I've posted about how Southwest has been able to sustain that superior performance. But now Southwest's streak could be in danger.

How so? Southwest lost $56 million in its fourth quarter -- its second in a row, because it bet that the price of jet fuel would continue to climb. Southwest had to post cash collateral after jet fuel fell 65% in 2008's second half to less than the rates in its contracts. Southwest reduced most of these fuel hedges in December. Southwest also cut its plans to expand in 2009 -- it will pull 15 aircraft from flying this year as it adds 13 new planes, and it will delay some 2010 deliveries.

But here's the good news -- Southwest made a profit of 8 cents a share excluding $117 million in costs related to fuel hedging -- 3 cents a share above the 5 cents analysts had expected it to earn. But the question that remains for Southwest shareholders is whether it will make a profit in 2009. The answer depends on whether it can cut back on capacity to match lower demand in an economic downturn and whether its fuel hedges will make or lose money for Southwest.

That market may be betting that it can keep its streak going. Its stock is up 6.4% in pre-market.

Visit AOL Money & Finance for more earnings coverage.

Peter Cohan is President of Peter S. Cohan & Associates. He also teaches management at Babson College and edits The Cohan Letter. He has no financial interest in the securities mentioned.

I think it's fair to say that there's much trepidation about the earnings season that picks up steam this week. And for better or worse, numbers from the big financials have begun to roll in. Last week we saw profit sink for JPMorgan Chase (NYSE: JPM) and significant losses from Bank of American Corp. (NYSE: BAC), Citigroup Inc. (NYSE: C), and Deutsche Bank (NYSE: DB).

Analysts surveyed by Thomson Reuters expect Bank of New York Mellon Corp. (NYSE: BK) to be among those financials reporting fourth-quarter earnings growth this week. They anticipate that Bank of New York will post a profit of $0.70 per share, compared to $0.67 per share a year ago and $0.72 in the previous quarter. Revenue is expected come to $3.8 billion, about the same as it was a year ago. Bank of New York has fallen short of earnings estimates in two of the past five quarters, by as much as 11.1%. For the full year, analysts are looking for $2.78 per share (+5.8%) on $14.8 billion (+4.2%). The consensus recommendation of analysts is to buy BK, and the long-term EPS growth rate forecast is 10.7%. Shares are 48.7% lower than a year ago. Other financials expected to report quarterly earnings growth this week include SunTrust Banks Inc. (NYSE: STI) and M&T Bank Corp. (NYSE: MTB).

What's holding the airline sector back, in addition to high jet fuel prices, and keeping the likes of AMR's (NYSE: AMR) American, Delta (NYSE: DAL), UAL's (NYSE: UAUA) United, Southwest (NYSE: LUV), and Continental Airlines (NYSE: CAL) from realizing their potential?

Many economists and analysts would agree that, along with other infrastructure and related investments, the nation's air traffic control system must be upgraded, if the United States seeks an air transportation system capable of maintaining a high level of safety -- and better service -- in the 21st century's more-crowded skies.

Further, that the United States has not already replaced an essentially generation-old air traffic control technology with a modern system is a serious demerit, and one that has -- through delays, cancellations, and other problems -- taken a toll on the flying public and the major carriers.

We have all been there before, standing beside the luggage conveyor belt after a long flight, quietly praying for our luggage to magically pop out of that little window and slide our way. When our luggage finally shows up, it typically means the end of a long day that generally has the potential to stress out most travelers.

For me at least, as long as I get my luggage I am satisfied with my trip. But for a lot of us, there are several factors we use to grade the airlines, and a recent survey shows that customer dissatisfaction is running at near record level lows. These factors include anything from planes leaving and arriving on time, to the service inside the plane from fight attendants, to just how easily mishaps get handled by the agents at the ticketing desks.

Having lived in Europe the past few years, I have been no stranger to the long distance flight back and forth to the States. I suppose I have traveled roughly 100,000 miles on airlines over the past couple of years, and I have to say that for the most part I have had very pleasant experiences. My girlfriend was unfortunate enough to have lost some luggage for a week over this past Christmas, but other than that, I have been pretty lucky.

Analysts surveyed by Thomson Financial expect Southwest Airlines Co. (NYSE: LUV) and Pfizer Inc. (NYSE: PFE) to post smaller profits in the first quarter. Both companies are scheduled to report results on Wednesday.

Southwest is expected to essentially break even as far as earnings are concerned, which is down from the same period in 2007 when it earned four cents per share. The company has beat quarterly estimates recently. It only just beat the consensus third-quarter 2007 estimate, but beat the fourth-quarter estimate by 21.2%.

Dallas-based Southwest's low-cost, no-frills approach has made it one of the leading U.S. airlines. In the past year, the company's revenues were $9.8 billion and its net income totaled $645 million. Its EPS growth forecast for the year is -28.7%, worse than the industry average but better than that of rival JetBlue Airways (NASDAQ: JBLU). The consensus recommendation of analysts remains to buy Southwest.

The stock has fallen 18.5% in the past year and trades at a P/E of 14.7. Shares closed Tuesday at $12.35.

Sometimes in a period of uncertainty, a look back can provide some perspective. So here are a few highlights from BloggingStocks on March 16, 2007,a year ago today.

• Business & Sports: Oil, Duke, & Notre Dame -- down: What's bigger news, who's in the March Madness or oil dropping below $57 a barrel?
• Will '300' controversy result in higher ticket sales?: Yeah, because this should be the main source of contention between the U.S. and Iran.
• An OPIC to counter OPEC: An Organization of Petroleum Importing Countries? Whatever became of that?
• Harry Potter and the 12 million order: Will the final movie in the Harry Potter series -- er, make that two movies -- generate this kind of excitment? Will anything?
• The CPI Numbers: Wall Street breathes brief sigh of relief: Wall Street could use another sigh of relief about now.
• Time magazine's facelift: Magazines? Is anyone still reading those?
• Microsoft's Ballmer takes more shots at Google: Microsoft (NASDAQ: MSFT) has a beef with Google (NASDAQ: GOOG)? Who'd have guessed?
• Heineken -- the next Starbucks?: Does Heineken still want Starbucks (NASDAQ: SBUX) as a role model?
• CNBC: Blackstone prepping for mega IPO: Remember the days when private equity was king?
• The Story You Didn't Read: Digital killed the TV star: TV is going digital? Seems like I heard something about that somewhere recently?
• Subprime investment opportunities?: Investment banks struggling with the subprime mess? The more things change ...
• JetBlue passengers grounded ... again: Last year it was JetBlue (NASDAQ: JBLU) cancellations; this year it's Southwest (NYSE: LUV) cancellations.

The stock market was up earlier today on hopes of a continue follow-on from yesterday's monster gains, but closed weak at the end of the day. The good news is that we didn't give back most of yesterday's gains. The bad news is that bears can claim there isn't enough positive mojo to keep the market surging a second day. That's what makes a ballgame. Seeing oil hit $110 per barrel probably didn't help matters for those hoping for an ease in gas prices and a break for retail. Below are the unofficial market closing levels:

• DJIA 12,110.24 (-46.57; -0.38%)
• S&P500 1,308.77 (-11.88; -0.90%)
• NASDAQ 2,243.87 (-11.89; -0.53%)
• 10Y-Bond 3.483% ( -0.113%)
• See the new 52-week low club
  

Southwest Air (NYSE: LUV) was one of the standout stocks with a 7% price drop down to $11.49 after it grounded 41 planes and canceled flights. The airline will recover from this incident, but what is odd is that if you look it up and down it isn't rewarding shareholders even when it cheats.

Humana Inc. (NYSE: HUM) was the news disaster of the day for large cap stocks with a 13.7% drop to $40.88 after noting higher pharmacy charges were going to nearly chop first quarter earnings in half. The stock put in another 52-week low under the $42.85 prior low despite a Merrill Lynch upgrade late in the day defending the stock.

A biotech called Progenics Pharmaceuticals, Inc. (NASDAQ: PGNX) acted as the biotech implosion of the day with a monster drop of 63% to $5.31 (close to perceived cash balance) after its bowel drug failed in Phase II tests. It looks like the placebo was even better.

Thornburg Mortgage (NYSE: TMA) was the monster gainer today with shares up 82% to $2.86, after its coverage was raised to Peer Perform at Bear Stearns. KLA-Tencor (NASDAQ: KLAC) saw shares fall more than 9% to $37.80 on a downgrade today. (Top 10 pre-market calls).

Tomorrow we have the weekly jobless claims, and while weekly numbers are less watched they may be more front and center as everyone is hoping the job market doesn't head as far south as the economy. We also have February import prices, so we'll get to see more evidence of the inflation we know is there.

In the airline industry, it seems that any deal will do. Northwest Airlines Corp. (NYSE: NWA) is already fairly far along in discussions about merging with Delta Air Lines Inc. (NYSE: DAL). Now UAL Corp.'s (NASDAQ: UAUA) United Airlines is talking with Continental Airlines Inc. (NYSE: CAL). But one set of negotiations in not enough for Continental. It is also talking to AMR Corp.'s (NYSE: AMR) American Airlines, according to The Wall Street Journal (subscription required). The paper reports "the talks were exploratory, and it isn't clear they will go further."

Airlines are seeking mergers under the premise that combining companies saves costs. While that is true to some extent, the marriages also hurt customer service -- badly. Putting together incompatible reservations and service operations can take years and be extremely complex, which can make it hell for consumers who just want to take an airplane ride from here to there. Bad customer service is a sure way to drive off fliers, and that is not good for revenue.

The savings in a merger also might not be as great as imagined. Fuel costs stay the same. The number of pilots and crews may drop some, but that can also cause labor disputes and strikes that interrupt service. The number of people needed to handle customer support and processing of reservations probably cannot be cut by much, especially if retaining revenue with unhappy fliers is important.

In an industry where mergers and Chapter 11 filings have been part of the landscape for decades, combining airlines may be no panacea. It is good to remember that the two most successful carriers in the United States, American and Southwest Airlines Corp. (NYSE: LUV) have never been much enamored of merging.

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

The earnings crunch is in full swing, and here are a few of the highlights of this past week's earnings coverage from BloggingStocks:

• Abbott Laboratories (NYSE: ABT) swung to a profit on the strength of drug sales.
• AK Steel Holding Corp. (NYSE: AKS) swung to a fourth-quarter profit and easily beat estimates.
• Aladdin Knowledge Systems Ltd. (NASDAQ: ALDN) posted solid results and raised its forecast.
• Amdocs Ltd. (NYSE: DOX) reported a record quarter and reaffirmed its guidance.
• Amgen Inc. (NASDAQ: AMGN) beat exectations, but concerns remain about FDA scrutiny.
• Apple Inc. (NASDAQ: AAPL) easily beat expectations and offered revised guidance (see live blog, transcript).
• Caterpillar Inc. (NYSE: CAT) posted a solid quarter on strong international growth.
• Coach Inc. (NYSE: COH) beat estimates on strong direct-to-customer and same-store sales.
• ConocoPhillips (NYSE: COP) posted a strong fourth quarter due to rising oil prices.
• CSX Corp. (NYSE: CSX) beat expectations as increased productivity offset increased fuel costs.
• Eaton Corp. (NYSE: ETN) posted solid fourth quarter results due to growth overseas.
• Equity LifeStyle Properties Inc. (NYSE: ELS) beat expectations in the fourth quarter and offered guidance.
• Franklin Resources Inc. (NYSE: BEN) reported solid results and increased its quarterly dividend.
• Johnson & Johnson (NYSE: JNJ) posted a solid fourth quarter and affirmed its 2008 guidance.
• Microsoft Corp. (NASDAQ: MSFT) posted strong results due in part to demand for Vista.
• Nintendo Co. (OTC: NTDOY) profit soared on demand for the Wii, and the company raised is sales outlook.
• Nokia Corp. (NYSE: NOK) reported a strong fourth quarter and increased market share in handset sales.

Here are a few more highlights of this past week's earnings coverage from BloggingStocks:

• Charles Schwab Corp. (NASDAQ: SCHW) missed earnings estimates but beat revenue expectations.
• Citigroup Inc. (NYSE: C) posted a bigger than expected loss, due to subprime-related write-downs.
• General Electric Co. (NYSE: GE) reported a solid fourth quarter, bringing a hint of optimism to Wall Street.
• JPMorgan Chase & Co. (NYSE: JPM) missed estimates due to consumer lending issues.
• Merrill Lynch & Co. (NYSE: MER) posted a bigger than expected loss due to large write-downs.
• Schlumberger Ltd. (NYSE: SLB) missed expectations due to market conditions and weather factors.
• Sears Holding (NASDAQ: SHLD) lowered its fourth quarter outlook on weak holiday sales.
• State Street Corp. (NYSE: STT) beat expectations, after a subprime-related charge is excluded.
• TD Ameritrade Corp. (NASDAQ: AMTD) net income rose sharply on increased trading activity.
• US Bancorp (NYSE: USB) missed earnings estimates, but is "well capitalized" according to the CEO.
• Washington Mutual Inc. (NYSE: WM) swung to a loss due to the credit crunch, as it had warned.
• Wells Fargo & Co. (NYSE: WFC) reported its lowest quarterly profit in years, as analysts had expected.

See additional earnings highlights. Also, Jim Cramer ponders the ennui of the new earnings season. Peter Cohan mulls whether this will be the worst earnings period for the lending industry since the Great Depression.

Upcoming results to watch for include Bank of America (NYSE: BAC), eBay Inc. (NASDAQ: EBAY), Johnson & Johnson (NYSE: JNJ), Pfizer Inc. (NYSE: PFE), Ford Motor Co. (NYSE: F), Southwest Airlines (NYSE: LUV), AT&T Inc. (NYSE: T), Caterpillar Inc. (NYSE: CAT), and Harley-Davidson Inc. (NYSE: HOG).

Visit AOL Money & Finance for more earnings coverage.

If you're a woman of a certain age (that age at which you decide you never wish to pose for Playboy), you may be at the altar of All That Is Good and True praying that Kyla Ebbert's 15 minutes of fame would be up already!

If you're anyone else, you're probably clicking over to Playboy.com right now to see her sexy lingerie-clad shots (there's also a video of Kyla wearing nothing but a barely-long-enough cowl-neck shirt walking down a hotel hallway). You are probably thinking one of two things: (1) this is the first time that terrible fashion sense actually paid; or (2) Southwest Airlines (NYSE: LUV) is very, very smart.

This is the first time I can remember that some awful PR for an airline ended up paying off for both the airline and the wronged passenger, prolonging not only Kyla Ebbert's 15 minutes but also Southwest's own.

When Ebbert first was escorted off a Southwest plane for her skimpy attire (and, after begging and adjusting her tank top and skirt, allowed back on), she said she was humiliated. It was a few months later before she decided to tell someone about it; probably urged by her boyfriend, hoping to go from ordinary schlep to Boyfriend of Playboy Model. Suddenly: everyone was buzzing. It looked bad for Southwest -- very bad.

But like the Teflon Don of airlines, Southwest bounced back, apologizing to Kyla and offering a skimpy fare sale in her honor. Southwest did not get her permission to use her name in its advertising. It did not affect Southwest's prospects in the slightest.

Now Southwest is memorialized as the launchpad for the fake-blonde-who-could turn 15 minutes into too long; and it's not lost a bit of its edgy, sexy cache. Bravo, Southwest, for turning mud into smutty gold.

The airline sector is seeing nice gains today after positive earnings reports from JetBlue (NASDAQ: JBLU) and UAL Corp (NASDAQ: UAUA), and the declining oil futures are helping, too. US Airways (NYSE: LCC) is scheduled to report its third quarter earnings before the market opens on Thursday.

In light of major fuel price increases, US Airways has cut its capacity and is considering increasing fares in the next quarter. The airline had better-than-expected traffic over the past few months, and a Goldman Sachs analyst noted that LCC should benefit from fare hikes at low-cost carriers like Southwest (NYSE: LUV), as some customers are likely to defect to US Airways.

On average, analysts are expecting earnings of $1.75 per share, down from $2.74 last quarter, but up from from $1.09 in the year ago period. LCC has beat Wall Street expectations each of the last eight quarters. Though fuel prices have pressured the airlines as oil climbs well into the $80s, the solid earnings from others in the industry this quarter should bode well for the company. If you expect LCC to also report a positive quarter, then now could be a good time to take a look at a bullish hedged trade on the stock.

MOST NOTEWORTHY: Southwest Airlines, AMR Corp, ConocoPhillips, Comcast and Time Warner Cable were today's noteworthy downgrades:

• Citigroup downgraded shares on both Southwest Airlines (NYSE: LUV) and AMR Corp (NYSE: AMR) to Hold from Buy to reflect elevated risks from continued high fuel prices and relative valuations.
  
• Deutsche Bank lowered shares of ConocoPhillips (NYSE: COP) to Sell from Hold on valuation noting that 13 out of the past 15 years, integrated oils have underperformed during the period October 1st to December 5th. They also believe the company's 3rd October trading statement could raise concerns over Q4. on valuation noting that 13 out of the past 15 years, integrated oils have underperformed during the period October 1st to December 5th. They also believe the company's 3rd October trading statement could raise concerns over Q4.
  
• Soleil downgraded shares of Comcast Corporation (NASDAQ: CMCSA) and Time Warner Cable (NYSE: TWC) to Hold from Buy due to concerns about the company's prospects in a weakening economy.

OTHER DOWNGRADES:

• RBC Capital downgraded Research in Motion Limited (NASDAQ: RIMM) to Outperform from Top Pick.
  
• Citrix Systems (NASDAQ: CTXS) was downgraded to Neutral from Buy at Banc of America.
  
• Deutsche Bank lowered shares of VistaCare (NASDAQ: VSTA) to Sell from Hold and Publicis (PUB) to Hold from Buy.
  
• Thomas Weisel downgraded SunPower Corporation (NASDAQ: SPWR) to Market Weight from Overweight.