Stocks Face Challenges Today

Several bellweather companies reported earnings that were not quite what Wall Street was looking for after the close of market yesterday and this is certain to have a negative impact on stock market trading as a whole today. Here is a brief rundown of earnings from some of the companies that will move the markets today.

Google (GOOG) 2nd QTR Report -

Google (GOOG) reported net income of $1.25 billion or $3.92 per share, up from $0.93 billion or $2.93 per share in the same quarter last year. Excluding charges, net income would have been $1.47 billion or $4.63 per share, as compared to $1.0 billion or $3.18 per share in the same period last year.

Gross revenues climbed 39% to $5.37 billion from $3.87 billion, while net revenues, excluding Traffic Acquisition Costs or TAC, jumped 43.4% to $3.9 billion from $2.72 billion in the previous year quarter. The revenues for the company, after it paid commissions to its advertising partners, beat analysts’ consensus estimate of $3.87 billion. Sequentially, gross revenues increased 3.5% from $5.19 billion reported in the first quarter.

Negatives:

While Google (GOOG) beat on revenues, it disappointed on the bottom line. Analysts had expected earnings excluding special items of $4.74/share, $0.11 above what the company delivered.

Microsoft (MSFT) 4th Qtr Earnings -

Microsoft (MSFT) reported revenues for the fourth quarter increased 18% to $15.84 billion from $13.37 billion in the same quarter last year. This actually beat consensus revenue estimate of $15.65 billion for the fourth quarter.

The company reported net income for the fourth quarter was $4.30 billion or $0.46 per share, compared to $3.04 billion or $0.31 per share for the year-ago quarter. Consensus estimate was for $0.47 per share for the fourth quarter.

Negatives:

MSFT’s quarterly EPS was below analysts’ expectations. The company is also forecasting Q1 earnings that will come in below current consensus estimate and cut its earnings outlook for fiscal year 2009.

Merrill Lynch (MER) 2nd QTR Earnings -

Merrill Lynch (MER) reported revenues for the second quarter were $7.5 billion. On a comparable basis, the revenues were down 21% from the same period a year ago, but up slightly from the first quarter of 2008. The company lost $4.65 billion, or $4.97 per share, in the second quarter, compared to net income of $2.14 billion, or $2.24 a share, in the same period a year earlier. Excluding discontinued operations, the net loss was $4.6 billion, or $4.95 a share.

Negatives:

Merrill (MER) took $9.7 billion of credit-market write-downs in the quarter and analysts are expecting even more write-downs in the near future. Moody’s Investors Service cut Merrill’s credit rating after the earnings release on these and other concerns.

IBM (IBM) 2nd QTR Earnings -

But for IBM (IBM), today’s trading would probably have been a blood bath, with Google (GOOG) and Microsoft (MSFT) both disappointing with their earnings.

IBM (IBM) reported it earned $2.77 billion, or $1.98 per share, in the quarterly period ended June 30. This was 16 cents above the average per share estimates of analysts following the company. On a comparative basis, IBM earned $2.26 billion, or $1.55 per share in the same period last year.

Revenues rocketed nearly 13 percent to $26.8 billion. This was about $900 million more than analysts were expecting. Weakness in the dollar played a great part in that big jump. Without the slide in the dollar, revenues would only have risen six percent.

Negatives:

None in the earnings release really, but Wall Street is quite insatiable and while overseas revenues play a great part in IBM’s performance and export oriented companies have been doing quite well because of the weaker dollar which makes high-quality US goods and services much cheaper, analysts are worried the slowing economy will hinder the company’s earnings.

ibm ibm earnings msft microsoft microsoft earnings mer merrill lynch earnings goog google earnings