Earnings season will continue to flood Wall Street with results from the fourth quarter, but it may become a sideshow, depending on what the Federal Reserve decides to do about interest rates.
Earnings from AOL Time Warner, AT&T, Xerox, Texas Instruments and Qwest Communications International will keep investors busy pondering throughout the week over what does the New Year hold for the U.S. companies
With a little over half of the 500 companies in the Standard and Poor's 500 index having reported so far, First Call research indicates that earnings have declined about 19.4 percent from last year's fourth quarter and anticipates that earnings will decline 21.5 percent when all the companies report
The performance falls shy of the 21.6 percent slide in the third quarter from last year, but it is still anemic since earnings from the fourth quarter of 2000 were also down from a year ago. The earnings drop, therefore, in the most recent quarter is coming on top of a previous decline.
First Call believes S&P 500 technology companies will be the laggards of the fourth quarter, with earnings down 59 percent from a year ago, only exceeded by transportation companies who will experience higher declines. On the bright side, earnings from S&P healthcare and consumer staples companies will grow 11 percent and 4 percent, respectively, from last year's fourth quarter.
Federal Reserve Chairman Alan Greenspan and other members of the Federal Open Market Committee will adjourn their two-day meeting Wednesday and announce their decision on interest rates.
The policy setting body of the Fedinterest rates 11 times last year in an effort to shore up a sagging economy, and it seems to think that the economy is responding positively judging by the positive remarks Greenspan made in a speech last Thursday.
Government economic data might dampen the mood, however, as the Commerce Department issues an advance release on fourth-quarter U.S. gross domestic product, the value of all goods and services produced in that quarter.
GDP fell 1.3 percent in the third quarter and only managed to grow 0.3 percent in the second quarter. Economists are expecting a fourth-quarter slide of 1.1 percent.
Other events scheduled this week:
- CIO magazine will hold a conference for private and government sector senior executives at the Loews Ventana Canyon Resort in Tucson, Ariz., Jan. 27 to Jan. 30. The event will address how chief information officers can help their companies control costs, find new revenue streams and reposition their companies in the current economy.
- The Information Security Forum takes place at the Four Seasons Hotel at Canary Wharf in London, Jan. 28 to Jan. 29. The conference will address how businesses can protect their networks and data from hackers and features panel presentations by representatives from 3Com and Cable & Wireless.
- Banc of America Securities will host its 19th annual technology conference at the Ritz Carlton Hotel in San Francisco, Jan. 28 to Jan. 30. Featured speakers include Compaq Computer CEO Michael Capellas, Juniper Networks CEO Scott Kriens, VeriSign CEO Stratton Sclavos and Richard Templeton, COO of Texas Instruments. Call 415-913-6851 for more information.
- Comnet kicks off at the Washington Convention Center in Washington, D.C., Jan. 28 to Jan. 31. The event is geared toward networking and communications professionals who want to explore the latest gear and gadgets for carriers and large businesses. Companies like Cisco Systems, Avaya and Agilent Technologies are scheduled to stage exhibits, and keynote speakers include Verizon Communications co-CEO Ivan Seidenberg, CEO Wolfgang Kemna, of SAP America, and Ciena Chairman Patrick Nettles.
- The Institute for International Research will hold a course in San Francisco, Jan. 28 to Jan. 30, that will teach executives the financial skills needed for senior management positions.
- The Institute for International Research will conduct a conference for wireless industry executives on the prepaid wireless consumer market at the JW Marriott Hotel in Miami, Jan. 28 to Jan. 30. Firms and companies like Cingular Wireless, Telcel Mexico, Boston Communications Group, Yankee Group, Narus, ReCellular and Strategis Group are scheduled to make presentations.
- Marcus Evans will host a security conference at the Marriott East Side in New York City, Jan. 28 to Jan. 30. The event will focus on how financial companies can improve the security of their computer networks. CitiGroup, Fannie Mae, State Street Global Advisors, Capital One, CIBC, Prudential and the Federal Reserve Bank of New York will share case studies.
- Active Communications International will hold a conference at the Sheraton Hotel & Marina in San Diego, Jan. 29 to Jan. 30. The event will focus on branding and customer service strategies and touch upon how to use the Internet to help achieve these functions.
- The LinuxWorld conference and exposition takes place at the Jacob J. Javits Center in New York City, Jan. 29 to Feb. 1. The event is for fans and users of Linux open-source software. The event features keynote speeches by Hewlett-Packard CEO Carly Fiorina, Computer Associates CEO Sanjay Kumar and William Zeitler, senior vice president, group executive of IBM's server group.
- Marcus Evans will conduct a conference on VPNs (virtual private networks) at the Swissotel, The Watergate in Washington, D.C., Jan 29 to Jan. 31. Companies like Sprint, Juniper Networks, Cisco Systems, AT&T and WorldCom will make presentations. VPN uses encryption to securely connect private networks over the Internet. The technology is more secure than a dial-up connection and cheaper than buying a dedicated communications line.
- The Insuring E-Business Summit takes place at Fisherman's Wharf Marriott in San Francisco Jan. 30 to Jan. 31. The conference will bring together insurance industry professionals with representatives from other business to explore how companies can insure the e-commerce component of their business. Representatives from Yahoo and Hewlett-Packard are scheduled to attend.
- Marcus Evans' Cyber Sabotage conference launches at the JW Marriott in Miami, Jan. 30 to Feb. 1. The event is for e-commerce professionals who want to learn more about how to combat online fraud and computer crime. Representatives from Visa and Fidelity will make presentations along with presenters from the U.S. Department of Justice, Secret Service and U.S. Postal Service.
- PriceWaterhouseCoopers, Propel Partners and Silicon Valley Bank will hold a fundraising forum in Palo Alto, Calif., on Jan. 31. The hosts will select 10 private companies to make a funding pitch to an audience of venture capitalists and investors.
Monday, Jan. 28
- Drugstore.com sells pharmacy products to consumers online. Per-share consensus estimate for the fourth quarter: loss of 28 cents.
- Expedia sells airline tickets, hotel reservations and car rentals online. Per-share consensus estimate for the second fiscal quarter: profit of 10 cents.
- Gadzoox Networks makes equipment for storage networks. Per-share consensus estimate for the third fiscal quarter: loss of 25 cents.
- Ticketmaster runs an e-commerce Web site that sells tickets to entertainment events. Per-share consensus estimate for the fourth quarter: profit of 4 cents.
- Texas Instruments makes chips for electronics equipment. Per-share consensus estimate for the fourth quarter: loss of 9 cents.
- Xerox makes copiers and computer printers. Per-share consensus estimate for the fourth quarter: loss of 1 cent.
- AT&T Wireless offers wireless phone service to consumers. Per-share consensus estimate for the fourth quarter: loss of 6 cents.
- CNET Networks, the publisher of News.com, operates Web sites that provide news and information about technology. Per-share consensus estimate for the fourth quarter: loss of 12 cents.
- Foundry Networks makes Internet switches and routers. Per-share consensus estimate for the fourth quarter: profit of 3 cents.
- Intersil makes chips for home and business wireless networking equipment. Per-share consensus estimate for the fourth quarter: profit of 11 cents.
- Legato Systems makes storage software. Per-share consensus estimate for the fourth quarter: loss of 5 cents.
- NetRatings evaluates Web site and Internet traffic. Per-share consensus estimate for the fourth quarter: loss of 4 cents.
- Qwest Communications International offers local and long-distance phone service. Per-share consensus estimate for the fourth quarter: loss of 6 cents.
- RealNetwork makes Internet audio and video software. Per-share consensus estimate for the fourth quarter: profit of 1 cent.
- SportsLine.com operates a sports news Web site. Per-share consensus estimate for the fourth quarter: loss of 65 cents.
- Veritas Software makes database and storage software. Per-share consensus estimate for the fourth quarter: profit of 13 cents.
- AOL Time Warner is a media conglomerate with interests in publishing, film and music, which also offers Internet access to consumers and runs a Web site. Per-share consensus estimate for the fourth quarter: profit of 33 cents.
- AT&T offers long-distance phone service to consumers and businesses. Per-share consensus estimate for the fourth quarter: profit of 4 cents.
- Canon makes copiers, printers, scanners, camera and computer peripherals. No estimates were available for the fourth quarter.
- Electronic Arts is a major developer of home video games. Per-share consensus estimate for the third fiscal quarter: profit of 89 cents.
- Read-Rite makes components for hard disk drives. Per-share consensus estimate for the first fiscal quarter: profit of 3 cents.
- Alcatel makes communications gear for telecom carriers. Per-share consensus estimate for the fourth quarter: loss of 35 cents.
- Broadwing provides local phone service in the Cincinnati area as well as data services to carriers and Internet service providers in other parts of the U.S. Per-share consensus estimate for the fourth quarter: loss of 29 cents.
- Sapient offers Internet, business and technology consulting services to companies. Per-share consensus estimate for the fourth quarter: loss of 13 cents.
- Tellium makes optical switches for telecom carriers. Per-share consensus estimate for the fourth quarter: loss of 4 cents.
- Verizon Communications is s regional phone carrier that offers local service in the Northeastern U.S. Per-share consensus estimate for the fourth quarter: profit of 77 cents.
Monday, Jan. 28
- The Commerce Department will release New Home Sales figures for December, which represents the number of new homes sold in the United States. The data is another measure of demand in the economy. Wall Street expects sales to fall to 923,000 from November's 934,000.
- Durable Goods Orders represents the percentage increase or decrease of big ticket items purchased, such as washing machines and refrigerators, as reported monthly by the Commerce Department. Economists use the number to measure demand in the economy and expect orders to rise 1 percent during December versus November's drop of 4.8 percent.
- Consumer confidence will be reported by the Conference Board for the month of January. This figure, measured by an index, represents consumer sentiment towards the economy. Analysts expect confidence to rise to 95 from December's 93.7
- The Commerce Department will report advance Gross Domestic Product numbers for the fourth quarter of 2001. GDP represents the value of U.S. goods and services produced within a certain time frame and is a measure of the nations overall economic health. Economists expect GDP to shrink by 1.1 percent in the fourth quarter. The government previously reported that GDP fell 1.3 percent for the third quarter and rose just 0.3 percent for the second quarter.
- The Federal Open Market Committee, the policy-setting arm of the Federal Reserve, concludes its two-day meeting to discuss interest rates. The Fed lowered interest rates 11 times last year in an effort to prop up a sputtering U.S. economy.
- Initial Claims refers to the number of people who filed for unemployment benefits each week as reported by the Department of Labor. Claims will be reported for the week ending Jan. 26.
- The Labor Department's Employment Cost Index measures monthly changes in compensation costs, including wages, salaries and costs to employers for employee benefits. Analysts expect the index to rise 1 percent for the fourth quarter versus the previous quarter's increase of 1 percent.
- Personal income shows the monthly percentage change in household income from the Commerce Department. Wall Street expects income to rise 0.2 percent for December versus a drop of 0.1 percent during the previous month.
- The Commerce Department will also release data on personal consumption expenditures, or PCE, which measures purchases of goods and services. Analysts expect PCE to fall 0.2 percent in December versus a 0.7 percent drop in the previous month.
- The Help Wanted Index for the month of December is a monthly survey by the Conference Board of the volume of help-wanted advertising in major national newspapers. Wall Street uses the index to measure trends in job growth. In November, the index fell to 45 from October's 46. The index was at 75 during November 2000.
- Construction spending tabulates the dollar amount of newly completed building structures in a month as reported by the Commerce Department. Analysts expect spending to increase 0.2 percent in December compared to November's rise of 0.8 percent.
- Unemployment rate is the percentage of unemployed adults, as estimated monthly by the Labor Department. Wall Street forecasts unemployment of 5.9 percent for January, up from 5.8 percent in December.
- Nonfarm Payrolls represents the change in total nonfarm employment from the Labor Department. Economists expect payrolls to contract by 60,000 in January versus a drop of 124,000 in December.
- The Labor Department also follows the monthly percentage change in hourly earnings in the private sector. Economic sleuths foresee a 0.2 percent rise in earnings for January compared to an increase of 0.5 percent the previous month.
- Average workweek for January is the average amount of hours worked per week in the private sector, as estimated monthly by the Labor Department. Economists expect hours worked to stay unchanged at 34.2 hours compared with December.
- The Michigan Consumer Sentiment Index is a measure of consumer confidence as reported monthly by the University of Michigan. Economists expect the index to stay unchanged in January at 94.2 from the month's advance release.