Analyst upgrades:

• Deutsche Bank upgraded Lloyds Banking (NYSE: LYG) to Buy from Sell as it believes shares are attractively valued based on the company's earnings potential post recession.
• Susquehanna upgraded MercadoLibre (NASDAQ: MELI) to Positive from Neutral based on valuation and improving macro trends. The firm has a $29 target on the stock.
• Piper Jaffray upgraded Williams-Sonoma (NYSE: WSM) to Buy from Neutral on valuation following the recent pullback.
• MetLife (NYSE: MET) and Torchmark (NYSE: TMK) were upgraded to Strong Buy from Outperform at Raymond James.
• Blackstone Group (NYSE: BX) was upgraded to Buy from Neutral at Goldman.

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

• Aetna Inc. (NYSE: AET) lowered its 2009 earnings guidance, initially sending the share price lower.
• Ciena Corp. (NASDAQ: CIEN) reported a bigger-than-expected Q2 net loss as revenues sank.
• Collective Brands Inc. (NYSE: PSS) saw Q1 earnings and sales decline, but beat Wall Street estimates.
• Google Inc. (NASDAQ: GOOG) earnings prospects led Goldman Sachs analysts to increase its forecasts.
• Guess? Inc. (NYSE: GES) weak Q1 results topped estimates and it offered guidance that pleased investors.

A recent Time magazine cover story described it as, "The New Frugality." The "it" here is the change in behavior, attitudes and even values Americans are embracing as a byproduct of the "Great Recession." It's just a fact that most of us have in some way or another altered our spending habits to a more frugal lifestyle as a direct result of the worst economic downturn since the 1930s.

One company feeling the sting of the country's new frugality is high-end retailer Williams-Sonoma (NYSE: WSM). Today the company reported a Q1 loss of $18.7 million, or 18 cents a share, compared with a profit of $10.4 million, or 10 cents a share, a year earlier. A performance not uncommon for retail stocks these days.

The losses were actually smaller than the company had projected, but those previous projections included a slashed advertising budget, a cut in capital spending and lowered merchandise inventories. More importantly, the company said that revenue in the quarter ended May 3 fell 22% to $611.6 million. Yikes!

Of course, Wall Street rewarded the anemic results with a near-10% drop in Wednesday's trade. So, what does the Williams-Sonoma miss tell us?

Much of the attention this week will no doubt be on how the impending General Motors (NYSE: GM) bankruptcy will shake out, as well as the usual economic concerns: Has the housing market bottomed? Will oil prices keep rising? Is the employment situation getting any better? And so on (see highlights of the economic calendar below).

What probably won't get much attention are quarterly earnings, as the earnings season for this quarter winds down. But there are a few reports that analysts surveyed by Thomson Reuters have high hopes for.

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

• Accenture Ltd. (NYSE: ACN) said revenues and bookings both declined in the most recent quarter.
• Best Buy Co. Inc. (NYSE: BBY) reported strong Q4 results in the wake of Circuit City's demise.
• Carnival Corp. (NYSE: CCL) sailed past analysts' Q1 projections, sending shares higher.
• ConAgra Foods Inc. (NYSE: CAG) Q3 results topped analysts expectations and drove shares higher.
• DryShips Inc. (NASDAQ: DRYS) swung to a larger-than-expected Q4 loss and revenue slipped.
• DSW Inc. (NYSE: DSW) reported a bigger-than-expected Q4 loss as same-store sales declined.

Home-products retailer Williams-Sonoma (NYSE: WSM), which runs such retail brands as Pottery Barn and West Elm in addition to its namesake chain, issued Q4 numbers on Tuesday. Well, they weren't spectacular. Surprised? No, I'm sure you weren't. I mean, when you sell stuff for homes, you've got to expect that you're going to see some weakness. And there's plenty of it here.

Revenues decreased almost 27% during the quarter, and earnings per share on an adjusted basis dropped over 70% to 31 cents. That beat estimates of 16 cents per share, according to Reuters' analysts, but forgive me if I don't jump up and down over that performance. And what about same-store sales? They were mighty bad. On an overall basis, they went down by over 22%.

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

• Acuity Brands Inc. (NYSE: AYI) reported lower Q1 earnings that still beat analysts' expectations.
• Bed Bath & Beyond Inc. (NASDAQ: BBBY) reported unimpressive Q3 results but shares rose anyway.
• Chevron Corp. (NYSE: CVX) warned of lower Q4 earnings due to lower oil prices and narrow margins.
• Constellation Brands Inc. (NYSE: STZ) Q3 earnings tumbled on on restructuring costs and weaker sales.
• Family Dollar Stores Inc. (NYSE: FDO) topped Q1 earnings expectations as consumers seek bargains.
• Intel Corp. (NASDAQ: INTC) lowered its Q4 revenue guidance once more due to lower demand.
• LDK Solar Co. (NYSE: LDK) cut its Q4 revenue outlook as clients asked for delayed shipments.
• Manitowoc Co. (NYSE: MTW) said profit will likely come in at the low end of its previous guidance range.
• Monsanto Co. (NYSE: MON) reported strong Q1 numbers and raised its full-year guidance.
• Neogen Corp. (NASDAQ: NEOG) posted its 63rd-consecutive profitable quarter, helped by an acquisition.
• Rocky Mountain Chocolate Factory (NASDAQ: RMCF) posted dismal Q3 numbers on economic downturn.
• Sears Holdings Corp. (NASDAQ: SHLD) higher-than-expected December sales prompted raised guidance.
• Supervalu Inc. (NYSE: SVU) reported a Q3 loss because of hefty one-time charges, but topped estimates.
• Walmart Stores Inc. (NYSE: WMT) cut its Q4 forecast after lower-than-expected December sales.
• Williams-Sonoma Inc. (NYSE: WSM) forecast lower-than-expected Q4 earnings on weak December sales.

For more earnings highlights, see Time Warner, Satyam, Google, KB Home, Mosaic and others

Upcoming earnings releases include Alcoa Inc. (NYSE: AA), Infosys (NASDAQ: INFY), Linear Technologies (NASDAQ: LLTC) , Xilinx (NASDAQ: XLNX), Genentech (NYSE: DNA), Intel (NASDAQ: INTC), Marshall & Ilsley (NYSE: MI), Sealy (NYSE: ZZ), Johnson Controls (NYSE: JCI).

Visit AOL Money & Finance for more earnings coverage.

Back in late September, I suggested that investors should wait before investing in specialty retailer Williams-Sonoma Inc. (NYSE: WSM).

I argued then that the price tag for purchasing the company's goods was too high for most consumers in the current environment, as the days of easy money were over.

No more endless dollars from rising home values funding unlimited purchase of goods like furniture, beds and kitchen gadgets of the sort sold by WSM. This was evidenced by continuing declining earnings and same-store sales at the company.

In addition, I noted that Williams-Sonoma had any number of formidable competitors, which could put a strain on its profit margins. There will be a time to own this stock, I wrote, but that time hasn't arrived yet. I foresaw another 20% decline in the shares.

As it turned out, there was a lot more than 20% more downside to the stock -- more like 75% before the stock finally found a bottom as Thanksgiving approached. A brief rally ensued, but a miserable Black Friday sent most shares in the retail sector quickly south again.

American Eagle (NYSE: AEO) closed at $7.52 Friday. AEO is scheduled to report Q3 EPS on November 25. RBC Capital Markets lowered its price target to $14 from $15. AEO December option implied volatility of 120 is above its 26-week average of 74 according to Track Data, suggesting larger price movement.

Dollar Tree (NASDAQ: DLTR) closed at $35.28 Friday. DLTR is scheduled to report Q3 EPS on November 25. Deutsche Bank has a Hold rating and a $35 price target on DLTR. DLTR December option implied volatility of 84 is above its 26-week average of 59 according to Track Data, suggesting larger price movement.

Williams-Sonoma (NYSE: WSM) closed at $4.84 Friday. WSM said W. Howard Lester, Chairman & chief executive, sold about 4.2 million shares between October 29 and November 21. Lester also sold WSN shares from October 13 & 14th to cover a margin calls. WSM is scheduled to report Q3 EPS on December 4. Thomas Weisel lowered its 12-month price target from $10 to $8. WSM December option implied volatility of 168 is above its 26-week average of 68 according to Track Data, suggesting larger price fluctuations.

Option Update is provided by Stock Specialist Paul Foster of theflyonthewall.com

During summers and winters in the early 1990s, I used to work for Williams-Sonoma (NYSE: WSM). In many ways, it was a dream job. I was paid to talk about cooking, learn about cooking and demonstrate cooking tools. One day, however, it occurred to me that, as much as I loved adopting a slightly condescending air when selling high-priced kitchen items, there really was a problem with the products that I was hawking. That afternoon, I talked an older woman into buying a "Tuscan grape drainer" as a gift for her niece's wedding. As the woman left the store, I realized that I had just convinced her to shell out $49.95 for what was, essentially, an earthenware bowl with holes in it and a couple of grape decals stuck on top.

As much as I like cooking, I have to acknowledge that nobody really needs a berry spoon, an asparagus peeler, a corn shucker, or most of the numerous other items that Williams-Sonoma hawks to its customers. The store is, in its own way, comparable to Sharper Image, Wilson's, or any number of the other specialty niche retailers that are finding it so difficult to weather the recession. Recently, in an attempt to lure shoppers into its premium stores, the retailer reduced prices massively, cutting into its profit margin and producing a 42% drop in fiscal first quarter profits.

As some analysts have noted, part of William-Sonoma's problem is that it is supporting an expensive catalog division that isn't really pulling its own weight. Moreover, as shipping prices continue to increase, it is likely that the company will see its catalog sales continue to decline. However, this is only half the issue: while most stores are feeling the recession pinch, it is hitting specialty retailers particularly hard. As Linens N' Things, Sharper Image, Wilson's Leather, and other companies could certainly attest, it's not a good time to specialize. Or, to put it another way, in this economic climate, people are using colanders to drain their grapes.

And who's next on the block? Well, have you taken a peek at the Gap (NYSE: GPS) recently?

Here's a peek at what analysts surveyed by Thomson Financial are expecting from companies scheduled to report quarterly results in the first week of June, 2008.

The following companies are expected to post earnings growth, compared to the same period in the previous year:

• Take-Two Interactive (NASDAQ: TTWO) up 136.6% (from a loss) to $1.12 per share, on $499.1 million in revenue
• Lululemon Athletica Inc. (NASDAQ: LULU) up 58.3% to 12 cents per share, on $71.8 million in revenue
• Vimpelcom Communications (NYSE: VIP) up 54.2% to 59 cents per share, on $2.1 billion in revenue
• Focus Media Ltd. (NASDAQ: FMCN) up 36.4% to 33 cents per share, on $161.3 million in revenue
• Ciena Corp. (NASDAQ: CIEN) up 29.7% to 37 cents per share, on $238.4 million in revenue
• Greif Inc. (NYSE: GEF) up 24.1% to 87 cents per share, on $839.9 million in revenue
• Vail Resorts Inc. (NYSE: MTN) up 18.4% to $2.44 per share, on $474.8 million in revenue
• Guess? Inc. (NYSE: GES) up 17.4% to 46 cents per share, on $451.6 million in revenue
• Del Monte Foods Co. (NYSE: DLM) up 15.4% to 26 cents per share, on $1.0 billion in revenue
• Cooper Companies Inc. (NYSE: COO) up 14.6% to 48 cents per share, on $256.7 million in revenue
• Jackson Hewitt Tax Service Inc. (NYSE: JTX) up 1.9% to $2.08 per share, on $161.6 million in revenue

How did we get here anyway? Housing and construction companies have been crushed as the bubble burst and now investors have to make a critical decision. Do you stay and hope for a recovery or bag it and move to another position that has the potential to provide better returns?

The problem is simple to explain: Most investors hate taking a loss. In fact, most investors will look to get "even" before they sell and this attitude usually leads to greater losses, anxiety and poor decisions. The truth is that much of this can be avoided with proper risk management techniques. If any of this describes you, then consider developing a plan for risk management and a discipline that will help to protect your hard earned principal. Now, more than ever, investors need a plan. We all need a plan that includes well developed risk management disciplines, which is why I dedicate a full chapter to it in my book, The Disciplined Investor.

Monday, June 2

The week begins with the 10 am release of construction spending and the ISM Index. Construction spending is expected to continue to be weak as is the ISM.

Then we have a few housing-related earnings releases that should be of interest. Watch NCI Building Systems Inc. (NYSE: NCS). This company is engaged in manufacturing and marketing of metal products for the nonresidential construction industry. Terrific! This is a company that is suffering along with the entire construction sector...that is for sure. In fact, they company lowered the outlook for the remainder of the year back in March. It stands to reason that not much is better. The ace in the hole is the recent trend of lowering expectations and then coming out with an earnings beat. Even so, this has too much potential for problems and the sideline is a good vantage point to watch the earnings announcement, which is expected to come in with a PROFIT of 31 cents per share on $365 million of revenue. (Uh...That I would like to see.)

MOST NOTEWORTHY: Motorola, Williams-Sonoma and Synchronoss were today's noteworthy downgrades:

• Thomas Weisel downgraded Motorola Inc (NYSE: MOT) to Market Weight from Overweight based on the general uncertainty in the company's core markets and the likelihood that the spin off may not occur for several quarters.
• Piper believes Williams-Sonoma Inc (NYSE: WSM) faces a challenging environment, and their checks reveal weakness at Pottery Barn. Shares were cut to Neutral from Buy.
• ThinkPanmure downgraded Synchronoss Technologies Inc (NASDAQ: SNCR) to Accumulate from Buy. The firm expects a strong Q1 report but expects shares to sell-off following the Q1 conference call due to modest guidance and the lack of a major customer win announcement.

OTHER DOWNGRADES:

• RBC Capital downgraded Bank of Nova Scotia Halifax (NYSE: BNS) to Underperform from Sector Perform.
• JP Morgan cut The Goodyear Tire & Rubber Company (NYSE: GT) to Neutral from Overweight.
• Goldman removed Potash Corporation of Saskatchewan Inc (NYSE: POT) from its Conviction Buy List.

It is possible to pick up a few home furnishing accessories at most any department store, but the list of well-recognized chain store specialists in that arena is rather exclusive. There is a San Francisco outfit that very likely ranks near the top of any such list.

Williams-Sonoma (NYSE: WSM) is a specialty retailer of home products. The firm operates about six hundred North American stores, offering culinary and serving equipment, home furnishings, accessories for the bed and bath; and bridal and gift items. It works through five retail store concepts, including Williams-Sonoma, Pottery Barn, Pottery Barn Kids, West Elm, and Williams-Sonoma Home. It also sells through seven direct-mail catalogs and six e-commerce websites. Bed Bath & Beyond (NASDAQ: BBBY) is a major competitor.

The company pleased investors last week, when it reported solid Q2 numbers, reaffirmed guidance for both Q3 and Q4, and offered in-line to better than expected guidance for FY08. The CEO said he was particularly encouraged about "the strong performance of our emerging brands and the improving trend we saw in Pottery Barn."

Williams-Sonoma, Inc. (NYSE: WSM), parent of the Pottery Barn chain of home furnishings as well as the eponymous kitchen-goods retailer, said this morning that a challenging sales environment resulted in falling profits.

The firm's first-quarter net income slid lower to $18.2 million, or 16 cents per share, from $23.1 million, or 20 cents per share, in the year-ago period. On the plus side, the latest results were above analysts' expectations of 13 cents per share.

Sales edged up 2.7% during the three-month period to $816.1 million.

WSM Chief Executive noted that company officials remain cautious for the future, noting "higher inventory levels" among competitors and "rising raw material costs."