As
Goldman Sachs ' chief U.S. equity strategist
rightly pointed out in a client note last week: "As investors
attempt to gauge the depth of final demand in the economy,
market focus will shift to top-line results. Firms will have
to report strong [third-quarter] revenue and positive
top-line surprises ... for equities to resume their upward
trajectory." In that context, third-quarter results from the
granddaddy of bellwether companies --
General Electric (NYSE: GE) -- were
hardly reassuringfor investors who are banking on the
stock rally to continue.
Bottom line: mixed
Earnings from continuing operations came in at $0.22
per share, $0.02 ahead of the analyst consensus figure. Not
surprisingly, GE's lending arm was the worst drag on
performance, with an 87% year-on-year drop in profits. The
standout segments were Energy Infrastructure (+11%) and NBC
Universal (+13%).
Top line: unambiguous
However, the top line clearly highlights a
weak economy, with every company segment recording a
year-on-year revenue decline; the best performer, Energy
Infrastructure, experienced a 9% drop. All in, GE's revenues
fell 20%, missing the consensus estimate by 4%. These numbers
point to a U.S. economy that is still struggling mightily,
and they are consistent with many companies' experiences.
Indeed, of the 131 firms in the S&P 500 that have
reported fiscal-third-quarter results, 57% missed their
consensus revenue forecast, including bellwether companies
such as:
Company
Q3 Revenue Miss (Actual vs. Consensus
Estimate)
Q3 Revenue Miss
(Actual vs. Low Estimate)
Air Products & Chemicals (NYSE:
APD)
(7.5%)
(4.8%)
Dell (Nasdaq: DELL)
(6.8%)
(1.3%)
FedEx (NYSE: FDX)
(6.3%)
(1.4%)
Campbell Soup (NYSE: CPB)
(6.0%)
(0.8%) Continued... |