Earnings Season Has Just Begun: Crucial Earning Reports Coming In WEAK!!! IBM, Intel, Google, Microsoft And McDonald All Came In Worse Than Expected!!! The Market Sell-Off Is Accelerating!!
A MASSIVE collapse of the stock market lies ahead!!!
Three technology bellwethers missed income or revenue expectations in the past few days. Let’s take a quick look at IBM (IBM), Intel (INTC), and Google (GOOG).
TechCrunch reports “IBM Q3 Earnings Mostly In Line With Expectations”:
IBM just released its Q3 2012 financials. Big Blue’s GAAP earnings came in at $3.8 billion, up 3% from the last quarter. Non-GAAP earnings were $4.2 billion. Overall, the company reported revenue of $24.7 billion, down from $25.8 billion in Q2.
Ahead of the earnings release, most analysts expected that Big Blue would report robust earnings. The consensus was that earnings per share would increase to around $3.62 (up from last quarter’s $3.51 non-GAAP EPS), but that overall revenue would decline to about $25.4 billion from $25.8 billion last quarter. With $24.7 billion, the company missed the analysts’ expectations.
On Thursday, Google accidentally posted incomplete earnings four hours early and its shares were halted following a huge plunge.
Yahoo Finance has the details in “Google Shares Slammed! Company Misses Estimates in Premature Earnings Release”…
Microsoft Corp. (NASDAQ:MSFT) on Thursday reported a fiscal first-quarter profit of $4.47 billion, or 53 cents a share, on revenue of $16 billion. During the same period a year ago, the software giant earned $5.74 billion, or 68 cents a share, on $17.37 billion in revenue. Analysts surveyed by FactSet had forecast Microsoft to earn 56 cents a share on $16.5 billion in sales for the quarter ended Sept. 30. The results came out ahead of Microsoft’s upcoming release of the Windows 8 operating system, set for Oct. 26.
Read the full story:
Microsoft earnings fall ahead of slate of releases
Advanced Micro Devices Inc. said Thursday afternoon that it sank to a big net loss in the third quarter and plans to lay off 15% of its workforce — about 1,770 people — by the end of the year.
News of the cost reductions gave small boost of about 1% to AMD’s shares in after-hours trading on Thursday.
The chipmaker has been hit hard by the slowdown in demand for PCs, which are feeling the effects of competition from newer mobile devices such as tablets as well as a pause in buying ahead of the launch of the Windows 8 operating system from Microsoft Corp. next week.
“The PC industry is going through a period of very significant change that is impacting both the ecosystem and AMD,” said Rory Read, AMD president and CEO. “It is clear that the trends we knew would reshape the industry are happening at a much faster pace than we anticipated. As a result, we must accelerate our strategic initiatives to position AMD to take advantage of these shifts and put in place a lower-cost business model.”
McDonald’s profit falls 3%; books currency loss. Looking ahead, McDonald’s said it expects revenue and profit growth “to remain pressured” in the near-term.
McDonald’s Corp. MCD -2.99% said Friday its third-quarter profit fell 3% to $1.46 billion, or $1.43 a share, from $1.51 billion, or $1.45 a share, in the year-ago period. Currency translations impacted the latest quarter’s results by 8 cents a share. Revenue edged down slightly to $7.15 billion from $7.17 billion. Wall Street analysts expected McDonald’s to earn $1.47 a share on sales of about $7.17 billion, according to a survey by FactSet. Looking ahead, McDonald’s said it expects revenue and profit growth “to remain pressured” in the near-term. October’s global comparable sales are currently trending negative, the company said. Shares of McDonald’s, which is a component of the Dow Jones Industrial Average DJIA -0.75% , fell 2.5% in premarket trades.
While as Bloomberg reports the EPS beat to miss ratio so far is 68%:32%, the scariest statistic of the day goes to Deutsche Bank who said that “The beat-to-miss ratio… is running 41%:59% for revenue.” This means nearly 50% more misses than beats in the earnings season so far. DB continues: “Recall that Q2 was also one where we saw better EPS beat but weaker revenue performance so it seems that companies have been eking out earnings by squeezing costs and wages.” Now as every entry level analysts, Treasurer and CFO knows, there are 1001 ways to boost ESP cut corporate overhead (and those exclude accounting gimmicks, ahem all banks and GE), chief among them of course is laying people off and replacing them with part-timers and temps (something that has been going on in the US for 3 years now as we first showed in 2010), there is precisely zero way to hide the fact that there is simply less demand for products and services at the very top level in a world in which 2% growth, formerly known as stall speed, is the New Killing it, and in which real disposable income just turned negative once again, not to mention the endless collapse in average hourly earnings.
Springer: ‘When expectations have been pushed down and they still miss – that is when you’ll see the market start to fall apart’
Sales stumbles raise fresh worry for corporate America
Reuters: A flagging world economy took a toll on much of Corporate America in the third quarter, leading the likes of eBay Inc, American Express, IBM and Textron Inc to miss Wall Street’s sales targets or warn that spending was slowing into the holidays.
Those misses sparked concerns among investors that corporate America’s year-long streak of profit growth could be nearing an end as CEOs run out of costs to cut and customers are increasingly wary about spending.
A majority – 54.3 percent – of the 70 companies in the widely watched Standard & Poor’s 500 Index that have reported results so far have missed analysts’ revenue forecasts, according to Thomson Reuters I/B/E/S.
The list of companies’ reasons for weak performance has expanded, with some citing a decline in demand in the United States...
“Once we start to see earnings miss – when expectations have been pushed down and they still miss – that is when you’ll see the market start to fall apart,” Springer said.
The economy and financial markets have split paths, with markets, particularly stocks, soaring, while economies languish.
That won’t last much longer, says prominent economist Gary Shilling.
“Either the economies of the world have got to come to life and rise to meet investor expectations, or investors have got to come down to earth,” he tells Yahoo. “The latter is more likely.”
“We certainly have had a lot of false starts,” Shilling says. “The overarching reality is that we’re going through a massive deleveraging.”
Dow down nearly 100 points; McDonald’s paces pullback, retreating more than 3%