A New Round of Earnings Warnings Expected

Wall Street will be stuck under a storm cloud this week with investors expected to run for cover, pushing stocks lower, if the sprinkle of corporate profit warnings becomes a torrent yet again. The latest earnings reporting period gets underway this week, and investors are bracing themselves, concerned there could be more warnings on the way and little indication of when they can expect better grades on America’s corporate scorecards. “Even though there are reduced expectations, there is certainly some room for some surprises,” said Peter Gottlieb, portfolio manager at First Albany Asset Management. “I’m not sure if companies are willing to stick their necks out and give really upbeat outlooks when they’re looking month-to-month or week-to-week to see how their businesses are doing.”

Earnings forecasts have fallen sharply--along with stock prices--as company after company has confessed that soft economic growth has dented their bottom lines. Of the 984 companies that have issued first-quarter earnings outlooks, a record 682 said their earnings would be worse than expected, according to First Call/Thomson Financial. Another 164 said their earnings would be on target, and 138 said they would surpass expectations. A number of high-profile retailers are scheduled to issue their corporate scorecards this week, and analysts hold out little hope for signs of a turnaround to show up yet after last year’s bleak performance by the sector. Circuit City Stores Inc. kicks off the week when it reports its earnings today. Consumer electronics retailer Best Buy Co. releases earnings Tuesday, followed by home furnishings retailer Bed Bath & Beyond on Wednesday. On Wednesday, aluminum giant Alcoa Inc. is set to become the first blue-chip company to issue its results this earnings reporting season.