Video Reports

Embed this video

Copy Code

Link to this video

Get LinkEmbedLicenseRecommend (-)Print
Bookmark and Share

By Jason Stipp and Jeremy Glaser | 10-25-2012 04:00 PM

Soaring or Sinking?

This is not the kind of earnings season investors have gotten used to, but some companies are faring better than others.

Jason Stipp: I'm Jason Stipp for Morningstar, and welcome to The Friday Five.

We had a week of ups and downs in corporate America, so who is soaring and who is sinking?

Here to offer the details is Morningstar markets editor Jeremy Glaser.

Jeremy, thanks for being here.

Jeremy Glaser: Jason, always a pleasure.

Stipp: What you have for The Friday Five this week?

Glaser: It was a certainly a busy week, but we are going to talk about DuPont, Facebook, Procter & Gamble, Boeing, and finally Bank of America.

Stipp: We've had a lot of disappointing earnings so far this earnings season. DuPont was one that sticks out for a number of reasons. What's your take on some of the reasons why earnings have let us down this time around?

Glaser: You are absolutely right. This is not the blockbuster earnings quarter that we've gotten used to throughout this recovery. I think DuPont really is a clear example of that.

They saw their revenue drop about 9%, much worse than analysts had expected, and a lot of the blame was put on foreign markets, particularly in Asia and in China. DuPont's management says that China's economy is stalling, that manufacturers there are really in an inventory destocking mode. They are not building up even more stockpiles of whatever chemicals they might need for their manufacturing processes, and that's really hurting DuPont's top line.

And certainly, even though we are seeing OK growth out of China's GDP, according to the official statistics, that's just not what they're seeing on the ground. They're really seeing a lot of weakness there.

This echoes the comments we've heard from a lot of management teams that revenues just aren't meeting their expectations and weren't meeting analyst expectations. A lot of that is coming from foreign currency exchange, which is certainly a big headwind. A lot of that is from Europe, which is certainly a headwind with the recession they are having there. But it's a big turnaround from [firms] just continually beating on revenue that we've seen in the past. It's a trend we started to see a little bit last quarter, now really accelerating into this quarter.

Read Full Transcript
{0}-{1} of {2} Comments
{0}-{1} of {2} Comment
  • This post has been reported.
  • Comment removed for violation of Terms of Use ({0})
    Please create a username to comment on this article