US Earnings Preview For Feb 9-13

Though nearly 400 companies are scheduled to report, traders are going to keep a close eye on Washington. Treasury Secretary Timothy Geithner will announce a revised bank bailout plan on Monday. This plan could include the creation of a bad bank to absorb distressed debts (what TARP was supposed to do) and possibly a change to the mark-to-market accounting practice.

Progress on the stimulus package will also be watched. After a tongue-lashing by President Obama, moderates in the Senate will continue to seek common ground and trim the size of the proposed package. A joint congressional committee will still need to iron differences between the House and the eventual Senate versions of the bill, however.

Earnings season will start to shift away from the blue-chips and move towards companies with smaller market capitalizations. Out of the nearly 400 companies reporting, just 58 are in the S&P 500 (^GSPC). Dow (^DJI) component The Coca-Cola Company (KO) will be among those reporting. Applied Materials, Inc. (AMAT) could impact sentiment towards technology stocks.

The economic calendar is fairly light. The only reports of note are January retail sales and February consumer confidence. Both are likely to contain bearish data.

• Tuesday: December wholesale inventories
• Wednesday: December trade balance, weekly crude inventories
• Thursday: January retail sales, December business inventories, weekly initial jobless claims
• Friday: Preliminary University of Michigan consumer confidence survey

The U.S. markets will be closed on Feb 16 in observance of President’s Day.

Companies That Could Issue Positive Earnings Surprises

Activision Blizzard Inc. (ATVI) has topped expectations for 7 consecutive quarters. Though the track record includes quarters before ATVI became a larger, merged company, it’s “Call of Duty: World at War” was one of the top selling video games last month. The consensus earnings estimate calls for ATVI to have earned 5 cents last quarter. Activision Blizzard is scheduled to report on Wednesday, Feb 11, after the close of trading.

Companies That Could Issue Negative Earnings Surprises

IntercontinentalExchange, Inc. (ICE) recently announced that future contracts volume declined 5% last month. The news follows recent estimate cuts. During the past 30 days, nearly a quarter of the 20 covering brokerage analysts have cut their fourth-quarter profit projections. The negative revisions have resulted in a 6-cent reduction in the consensus earnings estimate to 84 cents per share. The most accurate estimate is more bearish at 83 cents per share. IntercontinentalExchange is scheduled to report on Tuesday, Feb 10, before the start of trading.

Terex Corporation (TEX) recently warned that it expects full-year 2008 earnings to be below its previous guidance for EPS of $5.69 to $5.79. Brokerage analysts reacted by slashing their projections, causing the consensus earnings estimate to fall 14 cents to 67 cents per share. The most accurate estimate is more bearish at 55 cents per share. TEX missed last quarter by a margin of 25 cents. Terex is scheduled to report on Wednesday, Feb 11, after the close of trading.

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