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Several fresh examples of weakened profit pictures: FedEx lowers its 2008 earnings forecast to $4.
75 per share per share for the fiscal year ending in May.
Texas Instruments and Danaher also said that their profits will be lower than previously thought.
Texas Instruments, the second largest US chipmaker, says the fourth quarter revenue is expected between $2.
3 billion and $2.
5 billion (previous range was of $2.
87 billion and $3.
07 billion).
Company said it expects fourth quarter EPS of $0.
1-$0.
16, compared with previous range of $0.
30-$0.
36 (analysts were looking for $0.
31 figure).
If the revenue drops below the lower end of the forecast, it would be the lowest 4th quarter revenue since 2002.
Ron Slaymaker, a company vice president said that revenue will also fall "significantly" in the first quarter, although not as steeply as in the fourth quarter.
With companies cutting estimates analysts are doing the same.
Last month Goldman Sachs said it expects S&P companies to earn $53 per share next year, that's down from $78 estimate in April.
It's much lower than industry analysts expect (average estimates are $74 for the current year and $83 for the next year).
If we continue to see profit estimates to come down, it's a big question what it's going to be in future with the stock market.
If S&P stays around 900, that would suggest 2009 P/E ratio of 17, Goldman Sachs estimates suggest P/E of more than 20.
It's, actually, usual for US stock market level of P/E ratio when the crisis is not around.
But is it OK for crisis time? We will investigate the situation further in our articles, so stay tuned.
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