Corporate Q1 warnings increase sevenfold

NEW YORK: Sixty-one US companies warned of lower than expected first-quarter

earnings this week, bringing the total number of earnings warnings to almost

seven times the level this time last year.

The new warnings bring the total number of US companies to warn of

lower-than-expected profits for the first quarter to 115, up from 16 last year,

First Call/Thomson Financial said.

A total of 197 companies have issued first-quarter outlooks. Of these, 52 or

26 per cent were positive, while 115 or 58 per cent were negative earnings

warnings. Of the 43 Standard & Poor's 500 index companies that had issued

outlooks, 32, or 74 per cent, were negative.

"The point is we are off to a start that says 'hey, maybe this will be a

repeat of the fourth quarter,'" said Charles Hill, director of research at

FirstCall/Thomson Financial.

For the fourth quarter, the number of warnings of lower-than-expected profits

came to a total of 726 this week, with 25 new warnings, up more than 52 per cent

from a year ago.

So far, 1,348 public companies have issued earnings guidance for the fourth

quarter, up more than 40 per cent from 958 last year at this time, First

Call/Thomson Financial said.

As might be expected, not all sectors have been hit equally hard, and the

technology sector is suffering the most.

Less than four weeks ago, on Jan. 1, the profit estimates for the fourth

quarter was a respectable 11 per cent earnings growth, it is now down to 2 per

cent - a major drop and a very long way from the 42 per cent growth the sector

reported in the third quarter.

"For the tech sector, the estimates are just in freefall," said

Hill. The bad news seems to continue for the technology sector. According to

FirstCall/Thomson Financial, estimates for both the first and second quarter of

this year are negative growth of 8 per cent. If that estimate holds true, it

would make them the first negative quarters for the sector since 1998 said Hill,

adding that "the real question is whether the lowering of estimates we see

now is a trend."

(C) Reuters Limited 2001.