Earnings Warning

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Earnings Warning

An announcement by a publicly-traded company, often over a conference call, that its earnings will not be as high as previously expected. Earnings warnings give investors and analysts a basis from which to make their investment decisions and recommendations. It also helps the company price out the bad news so its share price is not subject to wild drops when the earnings are actually announced.
References in periodicals archive ?
Empirical evidence supporting this contention is from Conrad, et al (27) and Bernard and Thomas (28) whereas Tawatnuntachai and Yaman (29) presented data of no overreaction to earnings warnings. More specifically, Destefano (30) discovered stock returns decrease throughout economic expansion and turn negative during the initial stage of recession until the midpoint.
Earnings warnings from companies for the second quarter outnumber positive outlooks by 6.5 to one, the most negative ratio since the first quarter of 2001, according to Thomson Reuters data.
The decision also requires companies to provide shareholders with accurate information about dividends payment, profit and loss forecasts and earnings warnings.
In the most recent earnings conference calls, macroeconomic worries were cited by 10 companies while the United States 'fiscal cliff' was cited by at least nine as reasons for their earnings warnings. "The number of things that could go wrong isn't so high, but the magnitude of how wrong they could go is what's worrisome," said Kurt Winters, senior portfolio manager for Whitebox Mutual Funds in Minneapolis.
After last month's meeting, the Fed announced its third round of aggressive economic stimulus, causing stocks to rally despite a slew of earnings warnings.
EARNINGS WARNINGS Tokyo's Nikkei share average fell to its lowest close since early August, while MSCI's broadest index of Asia Pacific shares outside Japan fell 0.5 percent.
Also expect an increasing number of earnings warnings. Consequently, the stock market will continue to experience downward pressure through the election.
Ahold, which issued two earnings warnings last year, says its 2002 net profit will be significantly lower than expected following the earnings overstatement at the food service unit.
health insurer by market value also declared its shares undervalued and offered no negative surprises ae" relief for investors who have endured a spate of earnings warnings this year from the industry.
Take what happened in early July: Jitters over the rising rate of foreclosures, coupled with a few surprise earnings warnings, prompted a one-day drop of 148 points in the Dow.
A range of earnings warnings and resurging oil prices added to uncertainty over the U.S.
The company's second quarter was the latest in a string that have bested Wall Street expectations; at the same time, many of PeopleSoft's competitors have been issuing earnings warnings. You could say that Conway and PeopleSoft have been enjoying a remarkable roll of sevens in the dice game that the software industry often resembles.