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February 11, 2013
Companies fret over outlook
Posted by Staff
The Wall Street Journal reports:

Sensing better times ahead, investors have pushed the Dow Jones Industrial Average up this year near its record high. But a different mood is pervading U.S. companies, where executives are less optimistic about the global economy and their own prospects, and many are lowering financial forecasts.

Fourth-quarter operating earnings topped diminished expectations, rising 7.3% at the 339 members of the Standard & Poor's 500-stock index that have reported results, while revenue rose 5.9%, according to Thomson Reuters. But the companies warn that the current quarter will be more challenging, and analysts project first-quarter earnings at S&P companies will rise just 1.7%, Thomson Reuters says, or less than half what they were predicting at the beginning of the year.

Fourth-quarter operating earnings topped diminished expectations, rising 7.3% at the 339 members of the Standard & Poor's 500-stock index that have reported results, while revenue rose 5.9%, according to Thomson Reuters. But the companies warn that the current quarter will be more challenging, and analysts project first-quarter earnings at S&P companies will rise just 1.7%, Thomson Reuters says, or less than half what they were predicting at the beginning of the year.

Sixty-three S&P companies have lowered their forecasts for first-quarter earnings, according to FactSet Research, while 17 have raised them, the largest disparity since the firm began tracking the data in 2006.

Many executives see shrinking economies in Europe. Closer to home, they worry about hesitant U.S. customers, chilled by continued Washington gridlock.

In a sign of executive caution, a Wall Street Journal survey of 50 S&P companies found they plan to increase investment this year by 2%, signaling a dearth of big growth opportunities. Through the first nine months of 2012, S&P companies boosted investment 8%, following a 20% increase in 2011.

Consider Corning Inc. The glassmaker said on Jan. 29 that it plans to cut spending on new plants and equipment this year by 28%, to $1.3 billion from $1.8 billion, with most of the decline at its LCD operations. Corning reported a 42% drop in fourth-quarter net income and forecast lower sales and earnings in the current quarter.

02/11/13 4:35 AM
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