Stock futures were mixed Thursday morning, indicating a similar start to U.S. stocks. While the S&P 500 showed weakness ahead of housing data to be released at 10:00 a.m. EDT, the Nasdaq composite was slightly positive after Amazon.com reported strong earnings Wednesday. Investors also braced for Ford's earnings, which indeed posted double the estimated loss. The earnings wave continues. Meanwhile, oil prices edged a little higher, but remained around $124 a barrel.
Starting with Ford (NYSE: F) then, the world's third largest automaker posted (after items) a loss of $1.38 billion, or 62 cents. Analysts surveyed by Bloomberg expected Ford to report a loss of 28 cents a share. The headlines scream of a loss of $8.7 billion though, which includes $8 billion in pretax writedowns of North American plants and assets of Ford Motor Credit Co. Ford also said it will convert three truck factories to produce small cars as rising gasoline prices sap U.S. truck sales. Dow Chemical (NYSE: DOW) couldn't manage to offset higher costs of energy and raw materials with the recent price increases it announced, and posted a 27% decrease in profit for the period. Net income was $762 million, or 81 cents a share. Revenue is up 23% to $16.38 billion. Earnings were below analyst expectation according to Thomson Financial of 85 cents per share, but better than the sales estimates of $14.9 billion. DOW shares are dropping some 9.5% in premarket trading as the company said it expects the economy to weaken.
Amazon.com Inc. (NASDAQ: AMZN) posted strong earnings Wednesday after the close, proving its growth days aren't over in this weakened economy hurt by high gas prices. Not only did it beat estimates -- with a 41% climb in revenue to $4.06 billion compared to $3.96 expected, and EPS of 37 cents compared to expectations of 26 cents -- but it also raised its full-year revenue projections. AMZN shares are climbing about 6.5% in premarket trading.
Again this week, in a list of earnings expectations for some prominent companies in a variety of sectors, we see an apparent optimism. That is, analysts are anticipating more earnings growth than earnings declines.
Analysts surveyed by Thomson Financial expect the following companies to report a rise in earnings when compared to the same period of the previous year.
There were a lot of earnings reports this week -- if you weren't setting up some trades before the reports were released, you're probably digesting the numbers now. I had a look at 3M (NYSE: MMM) this morning. The famous Dow component, which competes with Johnson & Johnson (NYSE: JNJ) and DuPont (NYSE: DD), reported this past Thursday. Net sales increased 9%, but diluted earnings per share unfortunately took a whopping decline of 25%. However, you need to take a look at what caused this drop -- there was a gain in last year's quarter from the disposition of a European pharmaceutical business, as well as some other items. Excluding these elements, you'll find that earnings per share grew by 8%.
According to the company's release, 3M did rather well in the free-cash-flow department. Last year at this time, free cash flow came in at $276 million. This past quarter saw free cash flow grow to just under $700 million. I liked that; I also liked that most of the company's divisions reported double-digit profit growth. This is a healthy, blue-chip dividend player -- plus, 3M is comfortable with its previously stated forward guidance of at least $5.47 in adjusted earnings per share for 2008 (or, as the release put it, management believes net income will see an increase of "a minimum of 10% over 2007 earnings-per-share of $4.98"), and it beat the street this past quarter by three pennies, according to Briefing.com.
Here are some things to think about regarding 3M's stock. If it does earn close to $5.47 a share, then the company sports a forward P/E ratio of a little over 14. The yield on the shares is well over 2%. And, as of Friday's close, the price of the stock -- $77.82 -- is well off the 52-week high of $97 and a little ways off from the 52-week low of $72.05. Taken together, this 3M scenario seems like an interesting set-up for a decent trade. The stock looks like it will probably meander for a bit, but it nevertheless should be looked at.
Disclosure: I don't own shares in any of the companies mentioned here; positions can change at any time.
Dow Chemical (NYSE: DOW) reported a smaller-than-forecast 3% profit drop Thursday and said it would have a good second quarter. Higher feedstock and energy costs were blamed for the drop. The chemical giant reported earnings of 99 cents per share, beating the 94 cents estimate.
If two weeks ago some hoped we've seen the bottom of the subprime mortgage crisis, since then more problems, especially with European banks seem to pop. Credit Suisse (NYSE: CS) reported a wider-than-forecast loss of $2.1 billion on a $5.3 billion writeoff as the global effects of the U.S. subprime mortgage crisis continued to spread. Share of CS though are rising in premarket trading about 1.8% as the bank may have seen the worst.
Bank of America Corp. (NYSE: BAC) shareholders don't want the bank to proceed with the $4 billion acquision of Courntrywide Financial Corp. (NYSE: CFC), the mortgage lender that has become the poster child for the subprime mortgage problems. The have pleaded on Wednesday with the bank's CEO.
For nervous investors and analysts looking for good news on the earnings front, it's been a week of mixed blessings. However, judging by the expectations for the following ten so-called barometers of the U.S. economy, or important sectors of it, things could be looking up. All these companies are scheduled to report quarterly results next week (April 21 to April 25).
These first six companies are expected by analysts surveyed by Thomson Financial to post growth in profits in the most recent quarter, compared to the same period of last year:
By definition, no. Stocks carry risk. If you don't want risk, put your money in treasury bills or under the mattress. But don't expect much of a return, if any. Having said that, certain stocks do have attributes that make them relatively, and I emphasize this word, relatively, safer investments than others.
First and foremost, they have solid earnings. The best ones increase earnings every year for several years, no matter what the economy does. Examples: Coca-Cola Co. (NYSE: KO), Johnson and Johnson (NYSE: JNJ) Procter & Gamble Co. (NYSE: PG), Colgate-Palmolive Co. (NYSE: CL). If you've watched these stocks during the last 6 months, they've gone down but nowhere near the depths of most others. They have solid earnings investors can count on. Investors pay for that.
TheStreet.com's Jim Cramer says balance sheets are strong, so spillover isn't an issue.
I get emails and postings almost every day from fixed-income specialists, saying that the credit markets' myriad problems simply aren't being reflected in the equity markets, and that's just plain wrong. They warn us equity players that we are dreamers and that it is just a matter of time before the terrible problems in collateralized debt, huge leverage, and now auction rate preferred notes spill over into equities and that any rally in stocks is just a fool's paradise.
There's a problem with this inevitability story though, one that eludes these critics and might continue to elude them -- it hasn't happened yet, despite a year's worth of turmoil. That's a long time for a big problem like this to be cordoned, so it is worth looking at whether the naysayers are wrong and something else is at work.
When I look around at the vast choices of assets out there for the thousands of fund managers and institutions that have to put their money somewhere -- provided it is not dedicated to a particular asset from the get-go -- I see one world in chaos and another world in order. The bond market, the credit market, is in total disarray, with every aspect of its existence save Treasuries under fire. We know now that a simple reset market for municipals is failing because, of course, the charade of the bond insurers and their chimerical protection. The CDO market stinks. This is a multibillion dollar market where no one can figure out the prices of anything and the spreads between the bid and the ask are so wide that no one can afford to own or trade them. You don't know where they are marked. You don't know what's in them. You don't know what they are really rated. They are basically worth nothing right now to anyone. Commercial paper? Hardly worth the pick-up in interest. "Cash reserves"? We have seen the "buck" supported over and over again. There has to be a moment where the buck is broken.
General Motors Corp. (NYSE: GM) posted a fourth-quarter loss of $722 million, or $1.28 a share , after a year-earlier profit on rising costs in North America. Sales fell to $47 billion. For 2007, it posted a record net loss of $38.73 billion, or a loss of $68.45 per share. GM, eager to lower wages is offering a new round of buyouts to all 74,000 of its U.S. hourly workers who are represented by the United Auto Workers. GM shares are down 3.3% in premarket trading.
Teva Pharmaceutical (NASDAQ: TEVA), reported fourth-quarter earnings rose 24% to $570 million, or 69 cents a share, beating estimates of 66 cents per share. Sales grew 13% to $2.58 billion from $2.28 billion. Still, TEVA shares are down nearly 1.7% in premarket trading.
Time Warner (NYSE: TWX) was upgraded at UBS from Neutral to Buy. Shares are up over 1.1% in premarket trading.
3M's adjusted fourth-quarter profit exceeded Wall Street expectations even though earnings fell from year-ago results, which included a one-time gain. Net income was $851 million, or $1.17 per share, compared to $1.18 billion, or $1.57 per share, in the year-ago period. Excluding a charge of $12 million, or 2 cents per share, profit rose to $1.19 per share. Analysts surveyed by Thomson Financial had expected earnings of $1.17 per share.
Sales rose 7% to $6.21 billion from $5.78 billion last year, and beat analyst estimates of $6.14 billion. For the year, profit rose 11% to $4.1 billion, or $5.60 per share, from $3.95 billion, or $5.06 a share, in 2006. Annual revenue rose 7% as well, to $24.5 billion from $22.9 billion in 2006.
Shares rose .75% on Tuesday to close at $78.02. Shares had fallen to a 52-week low of $72.05 last week.
Hamilton Sundstrand, a unit of United Technologies (NYSE: UTX), will reportedly announce a partnership with US Renewables Group, the Wall Street Journal reported. The partnership is set to commercialize a new type of solar-power plant that will convert molten salt to convert the sun's heat to electrical power.
The Wall Street Journal also reported that despite warning investors of a dimmer financial picture in 2008, 3M Co.'s (NYSE: MMM) stock price has been stabilizing. For 2009, the company maintains a "guarded optimism" regarding optical films.
In other GM news, the Detroit News also reported that General Motors will temporarily lay off 180 workers at its Grand Rapids plant this week due to weak truck sales in 2007.
TheStreet.com's Jim Cramer says you've got to look at individual stories here rather than just go with the prevailing sentiment.
The presumption behind everything I read is that everyone is going to stop using and buying everything. Yet none of it is in the numbers.
That's right. Demand for everything from semiconductors and disk drives to cockpits and train brakes is collapsing. And none of it is in the numbers.
But when I look at the individual companies I don't see it.
Nevertheless the orthodoxy will be in full force today because of industrial production numbers from China that show some slowing. I am sure that will cause a new wave of trembling about copper and paper and coal and iron ore to join the reservations about everything else that is not being bought. So what's my problem with this?
We all know that diversification is one of the key fundamentals in long-term financial planning. 3M Company (NYSE: MMM), a nearly century-old technology company that produces everything from surgical supplies and flat screen TVs to asphalt shingles and that old reliable Scotch Tape, shows how to put that principle into practice. Not only do the company's products cover a wide cross-section of the technology marketplace, but its increasing reach into foreign markets allows the company to offset slow sales in the U.S. with international activity, and also to take advantage of a weak dollar by encouraging foreign investment.
Recent expansions of 3M's holdings in Eastern Europe, South America and Asia allow the company to continue to spread the risk of local instability over a worldwide organization, as well as provide new markets for products that have long been profitable in the U.S.
The third quarter earnings last week did show a reduction in the company's annual revenue forecast, causing the stock price to fall from this year's highest price of $95.82 (only two weeks ago) to its current price in the mid $80s. However, those same 3rd quarter returns also showed a solid increase in net income for the quarter (7.4%), and the company raised its annual earnings forecast to levels above analysts' expectations. What this means for a smart investor is that you can pick up a stock Goldman Sachs is valuing at $97 for almost $10 less -- and you should see a return in fairly short time.
Stock futures were mixed Thursday morning, indicating a similar start to U.S. stocks. While the S&P 500 showed weakness ahead of housing data to be released at 10:00 a.m. EDT, the Nasdaq composite was slightly positive after Amazon.com reported strong earnings Wednesday. Investors also braced for Ford's earnings, which indeed posted double the estimated loss. The earnings wave continues. Meanwhile, oil prices edged a little higher, but remained around $124 a barrel.
There were a lot of earnings reports this week -- if you weren't setting up some trades before the reports were released, you're probably digesting the numbers now. I had a look at 
For nervous investors and analysts looking for good news on the earnings front, it's been a week of mixed blessings. However, judging by the expectations for the following ten so-called barometers of the U.S. economy, or important sectors of it, things could be looking up. All these companies are scheduled to report quarterly results next week (April 21 to April 25).
Ted Allrich is the founder of 
3M Company
General Motors Corp. (NYSE: .gif){kind=logo}
3M
We all know that diversification is one of the key fundamentals in long-term financial planning. 
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