money.cnn.com

Looking to cut through the earnings fat to get to the meat? Here are next week's top reports. January 10, 2003: 1:19 PM EST By Justin Lahart, CNN/Money Staff Writer

NEW YORK (CNN/Money) - Starting Monday, Wall Street is going to be awash in earnings reports -- and investors trying to make sense of them.

The earnings season kicked off badly, when Alcoa posted fourth-quarter results that were far worse than expected, but the overall earnings picture looks like it could be kind for the market. Analysts are expecting an 11 percent increase in earnings from a year ago, the third consecutive quarter of year-over-year earnings growth, following five consecutive quarters of declines. What's more, profit warnings have been on the light side this time around. That is often a sign that earnings will come in significantly better than expected.

So which reports should you focus on? If you're a market junkie like we are, the answer is easy: All of them. If, on the other hand, you have a life, take a look at these seven reports and let the rest of the earnings noise pass you by.

Companies to watch: Intel; FleetBoston; General Motors; Sears; Microsoft; IBM; General Electric. Intel

Intel (INTC: Research, Estimates) reports late Tuesday. The chipmaker caused a little flurry of excitement in early December when it said that it expected better revenues for its latest quarter than it had previously forecast.

But Intel's shares have slipped since then and just this past Wednesday a company official was quoted as saying Intel expects the sales environment to be tough through the first half of this year. Maybe that was just an attempt to curb investor enthusiasm and set the stage for positive surprises -- many analysts expect a long-overdue upgrade cycle to boost computer sales in 2003 and the Semiconductor Industry Association forecasts chip sales will increase by 20 percent.

Why it matters: The world's largest chipmaker, Intel can serve as a proxy for the entire computer hardware sector.

Analysts think that Intel earned 14 cents a share in its latest quarter, compared to 15 cents a year earlier FleetBoston

For FleetBoston (FBF: Research, Estimates), which reports before the open on Thursday, 2002 was a year to forget. The nation's seventh-biggest bank was forced to shutter Robertson Stephens after it was unable to find a buyer for the once-hot investment house. It's had to take a big write-off of its Argentine loan portfolio. The election of the left-wing Luiz Inacio Lula da Silva in Brazil raised the specter of a Brazilian default, and more loan worries for Fleet. Friday the bank said that it added another $350 million in loan provisions for the ailing airline and energy industries for the fourth quarter

Another year like that, and Fleet would be in mortal danger. Fortunately for Fleet, a repeat of such a horrible year seems unlikely. Still, Fleet has been badly weakened, and many investors expect it to be swallowed up by some larger competitor. The problem with that, however, is that Fleet's larger competitors have problems of their own.

Why it matters: If the banking sector has the sniffles, Fleet has the flu. If it can return to health, that will be a good sign for the entire industry. And if it does end up getting taken over, that could indicate that banks are getting back into the merger game.

Analysts expect Fleet to have earned 57 cents a share (excluding those new loan provisions) versus 3 cents in the year-ago period. General Motors

Investors worry that General Motors (GM: Research, Estimates), scheduled to report earnings Thursday morning, has become a zero-percent addict.

Early this month the No. 1 car maker said (again) that it planned to offer new cash rebates and interest-free loan incentives in an extension of its efforts to boost sales and take market share. To some it looks like a demolition derby, with GM bearing down on the badly battered Ford in a bid to be the last independent U.S. automaker whose engine still runs at the end of the day. Such games can be dangerous. It may have gotten to the point where U.S. consumers simply expect rebates and zero-percent financing plans. Take them away, and sales will suffer. Leave them in place, and profit margins are permanently compressed.

GM has also had its share of pension woes. Thursday the company said underfunding of its pension plan soared to $19.3 billion at the end of 2002, more than double the $9.1 billion underfunding a year earlier, as the plans' assets lost 7 percent of value due to stock market declines. GM said its pension expense should be about $3 billion before taxes in 2003, up from $1 billion before taxes in 2002. As a result, GM expects to earn just $5 a share in 2003 versus an estimated $6.54 in 2002.

Why it matters: In the 1950s, GM Chairman "Engine Charlie" Wilson used to say, "What's good for GM is good for America." As the United States switched from a smokestack to a service economy that became less true, but the nation's manufacturers remain heavily dependent on GM. If the big car company can't turn it around, neither could they.

Analysts expect GM to report it earned $1.54 per share in the latest quarter, compared with 60 cents a share in the year-earlier period. Sears

The softer side of Sears (S: Research, Estimates)? Lately the department store, due to report Thursday morning, has been showing nothing but soft underbelly.

The last time Sears reported results, back in October, it missed already-lowered expectations badly and sent its shares tumbling. Sears had run into credit-card trouble, extending its MasterCard to many customers whose ability to pay back their debt didn't keep pace with their ability to run it up. The result was that Sears had to add $189 million to its reserve for bad loans, accounting for much of the earnings miss.

On top of that, sales are suffering. Thursday Sears said that same-store sales -- sales at stores open for a year or more -- fell 4.6 percent in December. That wasn't quite so bad as Wall Street expected. But still...

Why it matters: Of the nation's major retailers, Sears is perhaps the one most at risk. Some of that has to do with its credit card woes, some with problems with the department store model, but mostly it's about difficult economic times. If Sears can fight its way to health, that will be a sign of an economy on the mend.

Analysts expect Sears earned $1.94 a share for its latest quarter, compared with $2.02 a year ago. Microsoft

Microsoft (MSFT: Research, Estimates) -- everybody's favorite 800-pound gorilla -- posts results after the close Thursday. As a company, the software maker has done remarkably well during the three-year tech wreck, continuing to grow earnings and revenues (albeit not at the 1990s go-go pace). But its stock has suffered mightily, falling by more than half since early 2000. Part of that was its drawn-out legal battle, but mostly it was investors deciding that the Microsoft of the future wasn't going to grow as quickly as the Microsoft of the past.

And now? Microsoft still trades at a rich P/E -- 29 times 2002 earnings. That seems expensive given that profits are only expected to grow by 4.7 percent this year. But Microsoft could do better than the analysts think. Many companies are still relying on the computers and servers they bought ahead of the year 2000. The dominant operating systems during that Y2K buildout were Microsoft's Windows 98 and NT 4.0. On June 30 next year both are going to enter what Microsoft calls the "non-supported phase" (translation: Don't call Microsoft with your problems). That could lead to a meaningful (though perhaps just temporary) bump in Microsoft's sales.

Why it matters: With the second-highest market capitalization, Microsoft is widely held by U.S. investors. One of the so-called "four horsemen" during the go-go years (the others were Intel, Cisco and Oracle) it has been the least scathed by the tech rout.

Analysts polled by Multex expect Microsoft to report earnings of 47 cents a share compared to 49 cents in 2001's fourth quarter. IBM

IBM (IBM: Research, Estimates), which reports after the close Thursday, is trying to keep up with the times. Investors want to know if the company will be able to pull off.

When most of us think of IBM, we think of HAL-sized mainframes, Deep Blue, and personal computers, but over the past year it has been scuttling its hardware operations, focusing on its services and software businesses. To that end, it's been on something of a buying binge lately, acquiring companies like Rational Software and the consulting business of PricewaterhouseCoopers.

Seems like a great plan, given that computer hardware is acting more and more like a commodity. But there is a world of difference between saying you're going to do something and actually doing it. IBM CEO Samuel Palmisano is still rather untested, and investors remember that while the company has made some terrifically good moves in its past, it's also made some terrifically bad ones.

Why it matters: The leading edge of technology is moving away from hardware to software and services. Will today's leaders will be able to keep pace with that change, or are tomorrow's tech juggernauts still nascent, walking around in people's heads, getting cooked up in the nations' garages? Big Blue could provide the blueprint for where we're headed.

Analysts expect IBM earned $1.30 a share in its latest quarter, compared with $1.33 in the year-ago period. General Electric

It used to be that investors always knew exactly what to expect when General Electric (GE: Research, Estimates) reported earnings: It would beat estimates by one penny a share, and promise to continue to give them steady growth, year in and year out.

And heck, maybe GE will beat by a penny when it reports Friday -- but it seems unlikely that the promise of a return to the old growth will still be there. Although GE's results held up well initially, the lousy business environment eventually caught up with it. In particular, the customers of its the power and jet divisions, which accounted for about a quarter of GE's sales in 2001, have fallen on hard times. It could be a long time before the company is able to post substantial profits growth.

Why it matters: GE is the world's most highly capitalized company, and it does just about everything -- from making lightbulbs, to financing new companies, to building jet engines, to making CAT scan machines.

Analysts expect GE earned 31 cents a share in the fourth quarter of 2002, compared with 2001's 39 cents.  

www.thestatesman.net By JONATHAN POWER

WASHINGTON and its closest allies — at least those who try to put themselves in Washington’s shoes — now realise they are beleaguered by the Pandora’s Box of nuclear and missile proliferation and that they have no adequate policy to deal with them. Their moral authority is all but used up, just when they need it most, to deal with Iraq first and now North Korea. George Bush must be wishing he were Lula in Brazil — cancel the order for new military jets, tell the nation the money is going to relieve poverty and meanwhile use the credibility earned to keep the Brazilian economy on a responsible course, even though that will incur quite a bit of belt-tightening for everybody. Lula, a week into office, must be already set to win re-election. But what equivalent moral authority does George Bush have in order to win over the hearts and minds of both his electorate and the UN Security Council? Could he really persuade either his voters or his closest allies to go to war simultaneously with Iraq and North Korea? Yet just to launch an invasion of Iraq, when it is the lesser sinner, seems by the day increasingly irrational. It is North Korea that has the missiles, the bombs, and the possibility for producing quickly more plutonium and more bombs. Clearly something has to be done with both. But as word leaks out that under a previous Republican administration a blind eye was turned to Iraq’s development and use of weapons of mass destruction in its war with Iran the Bush administration (containing people like Defence Secretary Donald Rumsfeld who was party to these previous decisions) finds it difficult to summon up sufficient credible moral authority to deal effectively with what has now become an exceedingly complex three-ring circus.

Washington, London, Paris and Berlin are all culpable in their various ways for letting the nuclear genie out of the bottle. It is no use blaming North Korea, China and Russia when Western companies have been making a fortune over the years out of proliferation. Look at the case now being brought against Boeing Co and Hughes Electronic Corps for selling forbidden rocket knowledge to China. It is good to see the case becoming so public as it reminds us what has been going on for decades. But for much of the time too little was done. As for government policy towards the proliferators it has been, as Michael Klare wrote in his book Rogue States and Nuclear Outlaws, “ambivalent, indecisive and inconsistent”.

A prime example of this is America’s attitude towards Pakistan. In April 1979 the Carter Administration, convinced that Pakistan was secretly building a nuclear weapon, suspended military aid, in a move mandated by Congress’s Symington Amendment. However, when Soviet troops invaded Afghanistan in December 1979 the Administration persuaded Congress to overrule the amendment and a large arms aid program was started up again. For the next decade, in return for Pakistan’s help in building up the mujahidin fighters in Afghanistan, who later turned into Osama bin Laden’s storm troopers — Washington turned a blind eye to Pakistan’s nuclear bomb efforts. Only in 1990 with the Soviet occupation of Afghanistan defeated did President George Bush, the father, belatedly cut off military assistance. Even today, after all the lesson’s learnt, in return for winning Pakistan’s support in defeating the Taliban and pursuing al-Qaeda Washington appears to be turning yet another blind eye to Pakistan’s latest acquisition of missiles from North Korea.

It was the same with Israel. Although senior US officials (and probably those of other Western countries too) were aware in the early 1960s of the secret Israeli nuclear reactor and weapons plant at Dimona in the Negev desert, they chose to connive in concealing it from public knowledge. Nothing was allowed to interfere with Washington’s “strategic relationship” with Tel Aviv, a policy whose chickens are now coming home to roost.

The issue of credibility also runs right through two important international agreements. The Nuclear Non-Proliferation Treaty permits five already declared nuclear weapon states — the US, the UK, Russia, China and France — the right to maintain their nuclear arsenals while denying this privilege to other countries. On the last occasion the treaty was renewed these nuclear-haves solemnly promised to start getting rid of their nuclear weapons in return for most of the rest of the world remaining signatories. The promise has been clearly and unambiguously flouted.

Similarly, the Missile Technology Control Regime allows member states — mainly the most advanced industrial powers — to possess unlimited numbers of ballistic missiles. But it bans sales of missile technology to non-members.

Maybe all this hypocrisy and doublethink had some justification when the West was locked in a life and death struggle with the Soviet Union. But for the last ten years it has become visibly intellectually unsustainable. If President Bush feels that events are propelling him into a no-win situation with Iraq and North Korea then here in 40 years of dissembling and double dealing is at least some part of the explanation.

www.forbes.com Reuters, 01.09.03, 9:42 AM ET By Karen Iley and Peter Nielsen

GENEVA/LONDON, Jan 9 (Reuters) - Wanted: Well-connected, market-savvy financier with superb diplomatic and social skills who can command the respect of the world's top central bankers.

That was the challenge facing the Bank of International Settlements (BIS) as it secretly scoured the globe over the last four months for a successor to general manager Andrew Crockett.

Poised to name its new boss on Monday, the typically low-key BIS is tight-lipped on who has even made it to the short-list.

But finding a successor to Crockett, who will step down at the end of March, will be no easy task, given the Briton's good record, the daunting job description and the "musical chairs" going on elsewhere in the central banking and supervision arena.

Crockett, who moved to the BIS in 1994 from the Bank of England, is widely credited with transforming the BIS from a European-dominated body to a global institution.

The BIS, which now has offices in Hong Kong and, since November, Mexico, may want to continue his work by looking to a non-European for the first time in its 70-year history.

For sure, the search committee, headed by BIS Chairman and Dutch Central bank Governor Nout Wellink, wants a high-calibre candidate -- someone with a track record of "proven independence and personal integrity...outstanding management skills and have high stature in the international financial community."

"We are simply looking for the best candidate in a broad field," Wellink said in September.

NON-EUROPEAN? Set up in 1930 to deal with German war reparations, the BIS has only had Europeans at its helm: Five Frenchmen, one German, one Belgian and a Briton.

The BIS serves a variety of roles, including fostering international monetary and financial cooperation, serving as a bank for central banks, a research centre, a prime counterparty for central banks' financial transactions, and an agent or trustee with regard to international financial operations.

However, the BIS has taken on a much more global role in recent years and if it were to pick an "outsider" it would certainly hammer home the message that its role has expanded to one of a truly international body.

Two Latin American names have cropped up.

Arminio Fraga, the former President of the Central Bank of Brazil and ex-hedge fund manager for billionaire George Soros, was applauded for keeping Brazil's economy on track during the Latin American crisis of the late 1990.

Fraga, replaced at the central bank at the start of 2003 by Henrique Meirelles under new president Luiz Inacxio Lula da Silva, is seen as competent and investor-friendly.

Guillermo Ortiz, Mexican central bank chief, ends his term in December, and has presided over a booming recovery in the domestic economy.

Both have superb track records and perhaps more importantly, both are members of the prestigious Group of Thirty so would certainly qualify as well-connected to the elite of the international financial establishment.

The BIS, however, is more likely to play it safe.

Global financial stability, one its main concerns, mainly involves the major developed economies, not emerging markets. It may thus be too soon for the BIS to pick someone outside the realm of the Group of 10 leading economies.

Among such candidates are former Swedish central bank governor Urban Backstrom, out of work after resigning at the end of 2002. He is still young, has solid contacts, is well-respected and a former BIS president.

Other possibilities among the Group of Thirty members include Jacob Frenkel, former governor of the Israeli central bank and current chairman of Merrill Lynch International (nyse: MER - news - people), and Gerd Hausler, counsellor and director of the IMF's international capital markets department.

The search committee includes Bank of France chief Jean-Claude Trichet, who is hoping to switch to the European Central Bank to take over from Wim Duisenberg, provided he emerges unscathed from a banking scandal trial.

It also includes Bank of Japan deputy governor Yutaka Yamaguchi, who is set to lose his boss Masura Hayami, at the end of March, as well as the Bank of Italy's Antonio Fazio, the Federal Reserve's Roger Ferguson and Jean-Pierre Roth of the Swiss National Bank. The inclusion of Yamaguchi and Ferguson suggests that the BIS is not restricting its search to Europe, but it does not shed light on whether it would consider a non-G10 candidate.

As for Crockett, he is continuing to play a role in the high-finance job swap.

His departure nine months ahead of schedule sparked talk he may take over from Sir Edward George as Governor of the Bank of England. But Deputy Governor Mervyn King got that job and Crockett is now tipped to replace Howard Davies as chairman of Britain's Financial Services Authority (FSA).

Crockett's resignation also means the Financial Stability Forum, a body set up in 1997 to promote international financial stability, is likely to be looking for a new chairman.

english.pravda.ru

The Russian defense establishment offers Arabs the newest weapons for special operations

The Arab state of Qatar is currently especially popular for its particular connection with the Iraqi problem and indirectly, with the international terrorism. Qatar’s television al-Jazeera almost regularly broadcasts Osama bin Laden’s threats and revelations.

Moreover, Qatar Foreign Minister Hamad Bin Jassim Al Thani is categorical against the war against Iraq. He thinks the idea of Saddam Hussein overthrowing is a complete mistake; he is sure that actions of this kind require sanctions of the world community.

International exhibitions of specific armament MILIPOL are regularly held in the country. Today, the fourth exhibition, MILIPOL QATAR 2002 opened there. It is quite natural that Russia’s state arms exporter Rosoboronexport brought the newest samples of the Russian special purpose weapons to Qatar More details... Pravda.RU:World:More in detail 20:14 2002-10-28 Does Money Smell? The Russian defense establishment offers Arabs the newest weapons for special operations

The Arab state of Qatar is currently especially popular for its particular connection with the Iraqi problem and indirectly, with the international terrorism. Qatar’s television al-Jazeera almost regularly broadcasts Osama bin Laden’s threats and revelations. Moreover, Qatar Foreign Minister Hamad Bin Jassim Al Thani is categorical against the war against Iraq. He thinks the idea of Saddam Hussein overthrowing is a complete mistake; he is sure that actions of this kind require sanctions of the world community. International exhibitions of specific armament MILIPOL are regularly held in the country. Today, the fourth exhibition, MILIPOL QATAR 2002 opened there. It is quite natural that Russia’s state arms exporter Rosoboronexport brought the newest samples of the Russian special purpose weapons to Qatar.

According to the Russian online source, REGIONS.Ru, the Russian federal state unitary enterprise Rosoboronexport presented several Russian achievements designed for protection of objects and territories, and also arms for special operations. A Rosoboronexport spokesperson informs, special shooting and silent arms designed for special operations and for public order protection, and also hunting rifles are presented on the Russian exposition at MILIPOL QATAR 2002. Majority of the exhibits were developed at the arms concern Izhmash and in the design bureau of fine machinery in Russia.

The Moscow State Research and Production Enterprise Bazalt has brought an anti-diversion hand grenade cup discharge DP-64, small-size anti-diversion grenade cup discharge complex DP-65 and multi-barreled missile emplacement MRG-1 to the exhibition. The equipment is designed for protection of vessels, hydraulic structures, offshore platforms and other offshore and coastal objects from any kind of underwater attacks. According to a spokesperson of the enterprise, “the equipment can strike any kind of existing armored targets and those one which may appear in the future.” Bazalt also exhibits hand antitank grenade weapons of the RPG-26 and RPG-27 type, attack grenades and new ammunition for the RPG-7 hand grenade cup discharge, which are adopted by the armies of over 40 countries of the world.

Federal enterprise Strela exhibits the Fara-1 portable radar station. Rosoboronexport representatives say that the radar station “is the world’s only which can be mounted as a heavy gun.” Fara-1 weighs 16,5 kg, it can be joined with automatic shooting arms (machine-guns or grenade cup discharges); it can be completed with night vision equipment. The station’s detection range is up to 5 kilometers. REGIONS.Ru informs, the Fara-1 radar station suits for fighting under conditions when targets cannot be seen, in the mountains for instance.

Enterprise Fraktal-SB from the Russian city of Serpukhov represents security system Gyurza designed for detection of violators. Lenta.Ru informs, Russian enterprise Eleron from Moscow exhibits a wide range of fast deployment facilities for protection of especially important objects.

It is obvious that almost all exhibits that Rosoboronexport has brought to Qatar this year are special equipment designed for the struggle against diversion groups, however, everything can be successfully used for organization of diversions. In other words, the Russian exhibits are also good weapons for small mobile terrorist groups. All arms presented at the exhibition may serve for realization of the terrorist objectives and for their retreat as well.

That is why it’s no wonder that the Arab world is very much interested in the Russia-produced weapons. It is very likely that Rosoboronexport will be a success in Qatar and conclude contracts for supply of Russian weapons to some Arab countries. Unfortunately, nobody can guarantee that these very weapons won’t be tested on the Russian territory some day, no Arab clients can guarantee this.

Dmitry Slobodanuk PRAVDA.Ru

Translated by Maria Gousseva

Read the original in Russian: pravda.ru

abcnews.go.com Jan. 10

— WASHINGTON (Reuters) - Home heating demand and utility bills are expected to soar as a blast of Arctic air sweeping over the United States will create the coldest two-week period from the Rockies to the Atlantic coast since the winter of 1995-96, forecasters at AccuWeather Inc. said on Friday.

The cold weather could compound low U.S. crude oil inventories caused by a workers strike in Venezuela, the fourth largest oil supplier to the United States, the forecasting company said.

Joe Bastardi, who is AccuWeather's long-range forecast expert, said the Jan. 10 to Jan. 25 period will be the coldest two-week period in seven years for a large part of the United States and will probably last for the remainder of January.

Many areas that have experienced mild weather so far this winter, such as the Upper Mississippi Valley and the Plains, will receive a wake-up call that the cold season is not going to pass them by, according to Bastardi.

"For people who have been enjoying warmer-than-normal temperatures and lower energy costs, these cold winds will be a slap in the face when they step outside, and a kick in the wallet when they get their heating bills," he said.

"The mild weather in the Plains and Midwest will be a memory," Bastardi added.

The specter of a prolonged cold snap is even more significant because the U.S. Energy Department predicts that, even if temperatures are normal the rest of the winter, home heating bills will still remain high.

The department forecasts that winter heating bills will be up 43 percent for heating oil, 34 percent for natural gas and 12 percent for electricity compared with last winter.

This does not take into account the impending cold snap, which could increase energy bills even further, Bastardi said.