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.

Good thing that Zoloft is no longer covered by patent protection. Now it will be a lot cheaper for Pfizer Inc. (NYSE: PFE) investors to stock up on the anti-depressant so they can better cope with the drug maker's lousy earnings.

Net income in the second quarter plunged 48% to $1.27 billion, or $0.18 per share, on revenue of $10.11 billion. Excluding unpleasant stuff like restructuring charges, profit was $0.42. On that basis, Wall Street analysts expected profit of $0.50 on revenue of $11.4 billion, according to Thomson Financial.

Investors could take some solace knowing that the company doesn't think things will get much worse. It reaffirmed EPS and revenue guidance for 2007 and 2008. Good thing, too, since the company just cut its 2007 outlook in April.

Still, there wasn't much to cheer about in today's results. Sales of Lipitor, the company's most prescribed product, plunged 13% in the quarter, failing to meet Pfizer's own expectations. Zoloft sales plunged 82% while NORVASC fell 45% and Viagra fell 3%.

Investors expected sales of these drugs to plunge since they lost patent protection. Chief Executive Jeffrey Kindler has cut jobs and closed factories to cut costs. But what the company needs more than anything are new best selling drugs.

Like the minor league system in baseball, drug companies count on their pipelines to replace aging players. Whether investors will give Pfizer enough time to develop its prospects is far from certain.

January 22, 2007 was a tough day for Pfizer executives ... pardon me while I muse.

Imagine you own a business. In the past, things were good. You had all the right products and a solid reputation. Sales were strong, profits were good. But then something happened and suddenly your competition could sell the same products that you had. Oh my goodness! Whatever will you do???

Skeletonize your sales force. Cripple research and development. Curtail manufacturing. WOW! What a cool plan that is! That will send a real strong message to your customers and your competition. Why doesn't every business in a tough spot do that?

I'll tell you why, because it's the path taken by the spineless and lost. It is the way of fools.

Pfizer (NYSE:PFE) is projecting weakness, fear, and lack of fortitude. Pfizer is signaling it has nothing to offer you. Pfizer should just sell its assets, lock, stock and barrel and let someone new buy and run the show. Operating in fear of patent expiration... what a lack of vision that is.

Pfizer should just close up shop and get down the road. If its best idea for generating profits is cutting heads, well then I think the best way for investors to protect their dignity is by cutting Pfizer.

Please remain calm and move quickly towards the exits... a patent is expiring... OH NO!

Pfizer Inc. (NYSE:PFE) rolled with the punches in the fourth quarter, delivering results that beat Wall Street forecasts by one penny. Still, the drugmaker is far from out of the woods.

The drugmaker said fourth quarter earnings were $9.45 billion, or $1.32 per share, versus $2.73 billion, or 37 cents per share, a year earlier, buoyed by the sale of its consumer business to Johnson & Johnson (NYSE:JNJ) . Excluding some costs, profit was 43 cents, beating the 42-cent average estimate of analysts polled by Thomson Financial. Revenue was $12.66 billion little changed from a year earlier.

Sales the anti-cholesterol drug Lipitor, which Bloomberg News says accounts for almost half the company's profit, fell to $3.34 billion. Sales of the anti-depressant Zoloft also fell because it's no competing against lower-cost generics.

Investors were relieved that the numbers weren't any worse and sent the stock up in pre-market trading.

"In the face of many challenges in 2006, we substantially achieved a number of financial targets that we set early in the year," said Pfizer Chairman and Chief Executive Officer Jeffrey B. Kindler in a press release. The company added that it achieved its full-year financial goals including earnings per share of $2.06.

Wall Street is split about the prospects of the New York-based drugmaker.

Eight analysts rate the stock either a strong buy or a buy. Fifteen consider it a hold and one a sell, according to Thomson Financial. Their median target price is $28.

Kindler is expected to announce details of a cost-cutting plan for the company, which could involve several thousand job cuts and a new development and marketing plan, according to the Wall Street Journal. (subscription required). Investors are also awaiting word on the company's 2007 forecast.

Also check out some other earnings reports that we're following, and let us know your thoughts on earnings expectations.