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By Jason Stipp | 01-13-2012 04:00 PM

Dorsey: What to Watch in Earnings

Keep these potential opportunities, data points, and issues on your radar during earnings season, says Pat Dorsey of Sanibel Captiva Investment Advisers.

Note: Pat Dorsey is the former director of equity research at Morningstar. He is now the president of Sanibel Captiva Investment Advisers.

Jason Stipp: I'm Jason Stipp for Morningstar. As earnings season kicks off, we're checking in today with Pat Dorsey, president of Sanibel Captiva Investment Advisers, to get his take on what should be on investors' radars.

Thanks for joining me, Pat.

Pat Dorsey: Always happy to be here, Jason.

Stipp: So, we're getting ready to see all the earnings report from companies for the fourth quarter of 2011. What broad trends are you going to be looking for? What do you think should be on investors' radars?

Dorsey: Well, one interesting question happening right now is tech spending, especially at the big enterprise level. Of course, we had that big warning, well, not warning but miss really from Oracle recently. Oracle is the quintessential enterprise software provider, big-ticket items, such as data bases. And there is a risk that demand for that may be slowing down, partially because of uncertainty in Europe. But also, as part of the stimulus package some years ago, basically gave companies incentives to make big investments in software and capital spending because they could depreciate it faster. So it's possible that pulled forward some demand, which would make 2012-2013 softer than the robust results we've seen for big tech companies like Oracle and IBM over the past couple of years. So, I think it's a big trend to watch, especially given how well those companies have performed.

Stipp: Also, we know that there are a lot of wildcards that are still out there, and a couple of them happen to be global in nature. Can you talk about what you'd be looking for in company reports to get some insight on some of the global problems that we are seeing?

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