Earnings Review: Lots Of Mediocrity

The just completed week wasn’t terrible for U.S. stocks, but it wasn’t great, either as the Dow Jones Industrial Average and the S&P 500 gained, but the Nasdaq both lost ground on the week. Per usual, there were multiple reasons for the declines. Economic data in the U.S. was a real mixed bag and that’s putting things kindly.

Of course, Europe played the part of Public Enemy Number One once again as global investors once again fretted over just how deep the continent’s sovereign debt crisis is. Yields on Italian and Spanish 10-years blew out, elevating the borrowing costs for both countries. Additionally, there is rampant speculation Spain will need a bailout and France, the Euro Zone’s second-largest economy, will see its credit ratings downgraded.

Also casting a pall over stocks this week were a slew of earnings reports that just aren’t giving investors a lot of reasons to be excited. So far, with 23% of S&P 500 companies having reported results, more than four-fifths have beaten expectations, topping consensus forecasts with an average surprise factor of 8.8%, according to Reuters. In other words, the bar was set low, companies are clearing the bar, but investors want more.

Still, there were some decent reports on the week. Halliburton HAL, the second-largest provider of oilfield services in the world, said its first-quarter profit rose 23% to $627 million, or 68 cents per share, from $511 million, or 56 cents per share, a year earlier. Revenue rose 30% to $6.87 billion. On an adjusted basis, Halliburton earned 88 cents. Analysts expected a profit of 85 cents on revenue of $6.79 billion.

Rival Schlumberger SLB, the world’s largest provider of oilfield services, reported first-quarter results on Friday, posted a first-quarter profit of 98 cents on revenue of $10.6 billion. A year earlier, the company earned 71 cents on revenue of $8.7 billion. Both reports bode well for the near to medium-term outlook for the high-beat oil services sector.

Things were a bit different in tech land as investors are demanding more, but not getting it. Intel INTC, the world’s largest semiconductor maker, said its first-quarter profit fell 13% to $2.74 billion, or 53 cents per share, from $3.16 billion, or 56 cents per share, a year earlier. Revenue came in flat at $12.9 billion. Analysts expected a profit of 50 cents a share on revenue of $12.8 billion. The company said it expects second-quarter revenue of $13.1-$14.1 billion. Analysts are expecting $13.4 billion. 

Fellow Dow component IBM IBM said its first-quarter profit rose to $3.07 billion, or $2.61 per share, from $2.86 billion, or $2.31 per share, a year earlier. Revenue was flat at $24.7 billion. On an adjusted basis, IBM earned $2.78 a share. Analysts expected a profit of $2.66 a share on revenue revenue of $24.82 billion. IBM raised its full-year profit guidance to $15 a share from $14.85. Analysts are expecting $14.93 a share. Neither Intel nor IBM saw much of positive reception following their earnings updates.

One growth stock pleased investors, that being medical device maker Intuitive Surgical ISRG. The company said its first-quarter profit soared 38% to $143.5 million, or $3.50 per share, from $104.1 million, or $2.59 per share, a year earlier. Revenue climbed to $495.2 million from $388.1 million. Analysts expected a profit of $3.09 per share and $466.7 million in revenue. The stock broke out to a new all time high and gained over 5% on the week as a result.