4th-Quarter Results Should Wrap ’99 Up Nicely, Analysts Say

Earnings may not seem to matter much these days for the technology companies everybody wants to own, but they do for the rest of the market. And on that count, expectations for fourth-quarter results should bring holiday cheer to Wall Street.

Earnings tracker First Call/Thomson Financial says profits of the largest U.S. companies are expected to rise 19% for the current quarter from a year ago, on average, as continued strong consumer spending boosts sales at many businesses.

The economic recovery in Asia also is expected to help many U.S. companies’ bottom lines.

“Universal euphoria seems to have carpeted the land,” said David Blitzer, chief economist at Standard & Poor’s Corp. “From the consumer’s point of view, this is the best economy he’s seen in 30 years.”

The expected 19% fourth-quarter profit gain for the Standard & Poor’s 500 companies, although below the third quarter’s 23% year-over-year rise, will nevertheless be enough to boost total 1999 S&P; earnings 17%, First Call said. That would mark the best gain since 1995, when profits rose almost 19%.

First Call tallies its numbers from earnings estimates provided by Wall Street analysts.

For 2000, analysts expect S&P; earnings to rise 17%--a major vote of confidence in the global economic expansion.

Signs of earnings strength run from retailers to oil companies.

U.S. retail sales at stores open at least a year rose 7.9% last week, indicating that the holiday shopping season is on track to meet forecasts and be a boon for retailers.

“It’s a hell of a good Christmas--for retailers, car makers, across the board,” said Diane Swonk, chief economist at Bank One Corp. in Chicago.

In the energy sector, higher crude prices will lift results for such giants as Exxon Mobil and Texaco. Energy-sector earnings overall will double from a year ago, First Call estimates.

In the securities industry, the ongoing bull market should mean healthy earnings gains for most brokerages.

Many software and telecommunications companies also are expected to report higher earnings--even amid concerns that purchases would decline because of the Y2K computer bug.

Profit at Oracle, the largest maker of database software, rose a better-than-expected 40% in the quarter ending Nov. 30, driven by sales of software that let companies do business over the Internet.

Oracle’s gain illustrates the continuing paradox of Internet investing: While most companies that provide services on the Web, such as Amazon.com, are still losing massive sums, companies that build the Internet’s infrastructure are prospering.

“The money’s not in the sex appeal; it’s in the really mundane stuff, like fiber-optic cable by the mile,” said S&P;’s Blitzer. “All those strange switches and routers that most of us never see are turning in much better profits.”

Meanwhile, in the consumer-products sector, U.S. blue-chip companies heavily reliant on foreign sales should reap some benefit from East Asia’s economic recovery and strength in Europe’s major economies, analysts say.

Coca-Cola is expected to post its first quarterly earnings gain since the second quarter of 1998. Procter & Gamble is expected to earn 88 cents a share this quarter, up 13% from 78 cents a year ago.