Earnings Season Gets Off to a Shaky Start

Second-quarter earnings season begins this week and so far, it’s not looking too good. Alcoa (AA) was the first Dow component to report, and despite its record earnings, sales came in below Wall Street’s forecast. The stock opened lower today.
Also Lucent (LU) warned that its earnings would be below expectations. I’ve never understood the appeal of this company. At the end of the 1990s, Lucent reached $84 a share. Soon after, it dropped to 55 cents. Now it’s back to about $2.30 a share. Fortunately, Lucent will soon be someone else’s problem. The company is being bought out by the French firm Alcatel.
EMC (EMC), another star stock from the 1990s, had a dud quarter. Here’s a great example of a company blowing too much of its money on share buybacks. On top of that, the company is paying far too much for RSA Security. I knew there was a problem when they didn’t provide any earnings guidance. Officially, the company blamed its earnings shortfall on “inventory mix.” I have no idea what that means.
Advanced Micro Devices (AMD) has gotten clobbered this year. I have to admit that I missed the AMD story and I didn’t realize how much ground the company had gained. Last week, the company lowered its sales estimate for the quarter, and the stock fell sharply in yesterday’s trading.
The first earnings from our Buy List stocks won’t be until next week. Harley-Davidson (HDI) will start earnings season for us when it reports earnings next Monday.

Posted by on July 11th, 2006 at 9:35 am


The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.