www.reuters.com/article/businessNews/idUSN3155842820071231
The sharp decline comes as financial write-downs and an economic slowdown take their toll on corporate results, pushing down forecasts for the fourth quarter. First- and second-quarter estimates have also fallen significantly. Analysts now expect first- and second-quarter earnings to rise just 51 percent and 5 percent, respectively, according to Ashwani Kaul, senior market analyst at Reuters Estimates. "The surge in analysts' conservatism is primarily the result of the subprime crisis in the US and globally and its impact on the write-downs in the financial sector," said Ned Riley, chief investment officer at Riley Asset Management. The financial sector, which has been battered by losses tied to subprime mortgages, is expected to see year-over-year earnings down 62 percent in the fourth quarter. "Forecasters are also becoming more sensitive to the possibility of recession in the United States, and those macro forces will exert huge influence over consumer spending in the United States as well as globally," Riley said. There were more profit warnings than positive pre-announcement statements in December, according to Reuters Estimates. Of the companies that gave forward-looking guidance statements, 193 companies gave negative guidance compared with 161 that gave positive guidance.
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