Hewlett-Packard (NYSE:HPQ) is the latest large American company to announce it would buyback many more of its shares. This has become popular once again among the cash rich in the Fortune 500. McDonald’s (NYSE:MCD) and IBM (NYSE:IBM) have become particularly aggressive.

The arguments against share buybacks are old and hardly worth repeating except for the fact that as a rising number of companies adopt the practice returning to the case the these harm shareholders keeps the debate fresh.

HP had revenue of $30.8 billion for the period ending October 31. That is a drop of 8%. Earnings rose 14% to $2.4 billion. HP’s chief Mark Hurd has been particularly brutal cutting costs, making him the Jack Welch of the current decade.

HP’s forecast for its current fiscal was unusually strong. The firm estimates fiscal year 2010 revenue to be about $118.0 billion to $119.0 billion. HP is blessed to have more than $13 billion in cash and that number grows each quarter. HP will make use of some of that money to triple its old share buyback program to $12 billion.

The “pro” argument for buying back shares is that the fewer the shares, the higher the EPS. No one who is a sophisticated investor is fooled much by this. Profits are profits no matter how many shares are outstanding. HP is not giving any money to shareholders by sharply increasing its $.32 dividend which is only a measly .6% yield. HP could help the people and institutions that own shares by moving that payout up sharply or issuing a one-time dividend.

The buyback also says, to some extent, that HP does not need its cash for M&A purposes. That is too bad. The company has bought other tech operations. If it buys back too much cash, the next purchase will be with debt or shares. A debt-based M&A purchase negates the reason for keeping cash on the balance sheet. A stock-based acquisition offsets a share buyback with new dilution.

More and more tech firms are becoming remarkable cash rich. Apple (NASDAQ:AAPL) may be the most visible example. It is not buying back shares, buying companies, or paying a dividend. HP call always point to Apple and claim that it at least is doing something with its cash. Even so, it is an inadequate excuse.

Douglas A. McIntyre

Hewlett-Packard Co. (NYSE: HPQ) had already given its guidance for today’s earnings two weeks ago when it announced the surprise acquisition of 3Com Corp. (NASDAQ: COMS).  But that doesn’t keep traders from looking through the numbers.  H-P posted $1.14 EPS on $30.78 billion in revenues. Thomson Reuters had estimates of $1.13 EPS and $30.36 billion in revenues.

The company said it still backs $1.03 to $1.05 non-GAAP EPS and $29.6 billion to $29.9 billion in revenues for the current quarter that it will report in 3 months. Estimates for next quarter are $1.04 EPS and $29.7 billion in revenues.  H-P is also backing $4.25  to $4.35 in 2010 non-GAAP EPS.

The company generated $3.4 billion in cash flow from operations and exited with $13.4 billion in gross cash.

Shares closed up almost 2% at $51.02 today and the 52-week trading range is $25.39 to $51.43.  Shares are down at $50.77 in the after-hours session.  When you compare the company’s take to that of Dell Inc. (NASDAQ: DELL), it is easy to see who is executing better today.

JON C. OGG

Dillard’s Inc. (NYSE: DDS) rose as high as over 10% to a yearly high of $15.79 after the department-store chain was upgraded by Deutsche Bank AG.  

Dress Barn Inc. (NASDAQ: DBRN) rose as high as 9.2% to a yearly his of $22.42 after the women’s clothing retailer announced earnings of $0.37, beating analysts estimates.

The J.M. Smucker Company (NYSE: SJM) rose as high as 6.3% to a yearly high of $56.86  after the jam and peanut butter maker reported earnings of $1.222 per share, beating analyst estimates.  

Merck & Co. (NYSE: MRK) rose nearly 4% to a yearly high of $36.67 after the pharmaceutical company announced that drug Elonva was recommended for treatment of the ovaries in the European Union.

Garrett W. McIntyre

Earnings season has mostly wound down, but as always at least some major companies are reporting earnings.  Some are actually market-movers as well and it is a short week with earnings out only Monday and Tuesday, with a few on Wednesday.  On deck are Hewlett-Packard Company (NYSE: HPQ), Tyson Foods Inc. (NYSE: TSN), Campbell Soup Co. (NYSE: CPB), LDK Solar Co. Ltd. (NYSE: LDK), Tech Data Corp. (NASDAQ: TECD), Barnes & Noble, Inc. (NYSE: BKS), Borders Group, Inc. (NYSE: BGP), J. Crew Group, Inc. (NYSE: JCG), Dollar Tree Inc. (NASDAQ: DLTR), and Deere & Co. (NYSE: DE).

We have included estimates from Thomson Reuters, relative data on peers and recent developments, and relative performance on each where it was applicable.

The biggest on Monday is Hewlett-Packard Company (NYSE: HPQ) in the PC and It services sector.  We would note that estimates may have just been unofficially guided down after Dell’s rotten quarter, but we already have recent guidance from H-P.  Thomson Reuters has estimates of $1.13 EPS and $30.36 billion in revenues.  Estimates for next quarter are $1.04 EPS and $29.7 billion in revenues.  We are going to hold off on most data going into H-P earnings at least before Monday morning because of last-minute estimate changes based on Dell.  We would note that some of Dell’s woes are due to H-P, and then the Acer netbook and whatever you want to tie into Apple’s gains.  H-P is also really marginalized about what it says Monday because it already lifted guidance when it announced its buyout of 3Com (NASDAQ: COMS).

Tyson Foods Inc. (NYSE: TSN) is on deck Monday.  This may not seem important, but it is to the meat and food supplier companies.  Estimates are $0.26 EPS and $6.89 billion in revenues, and next quarter estimates are $0.15 EPS and $6.59 billion in revenues.  As a producer of chicken, beef, pork, and prepared foods, it will be interesting to see if the H1N1 fears by the public have finally worked themselves out.  The company just named a new CEO this week, which always makes for a wild card report or conference call.

Campbell Soup Co. (NYSE: CPB) has finally gotten off the floor after not participating in the rally.  At $34.13, its 52-week trading is $24.63 to $37.58.  Estimates are $0.81 EPS and $2.28 billion in revenues.  The big question here is what the company sees ahead for off-brand and private-label competition from grocery stores looking for more of the profits to stay in their pockets.  It turns out that Campbell Soup is not recession-proof and has some aspects of a luxury brand when it comes to pinching pennies.  Interestingly enough, this one just raised its dividend by 10%.

LDK Solar Co. Ltd. (NYSE: LDK) is also on deck Monday, and by now may just be a me-too solar earnings report.  It is a loser too as estimates are -$0.10 EPS and $277.2 in revenues.  Next quarter is expected to show -$0.05 EPS and $258.7 million in revenues.

Tech Data Corp. (NASDAQ: TECD) is often overlooked as a key company, but the company offers a broad insight on what is happening in the world of technology products as it gets all the goods from the factories to the end retailers around the globe.  Estimates are $0.70 EPS and $5.31 billion in revenues, and next quarter estimates are $0.82 EPS and $5.63 billion in revenues.  At just under 15-times expected Jan-2010 fiscal earnings, this isn’t expensive, but the performance is high: At $42.08 this one has a 52-week trading range of $14.14 to $44.63.  We’d watch Ingram Micro (NYSE: IM) for a chaser move either way.

We have the big book earnings war on Tuesday with both Barnes & Noble, Inc. (NYSE: BKS) and Borders Group, Inc. (NYSE: BGP) and we’d be sure to make note that these are thinly followed compared to most big retailers.  Barnes & Noble is expected to post -$0.33 EPS and $1.16 billion, but the coming holiday quarter estimates are $1.52 EPS and $2.18 billion in revenues.  Borders Group, Inc. (NYSE: BGP) is expected to post -$0.46 EPS and $630 million in revenues, and the coming important holiday quarter is expected to be $0.92 EPS and $987.9 million in revenues.  While both stocks are up significantly from the lows, neither stock is anywhere close to being a top performer and neither is close to 52-week highs.  There is a move to digital books on e-readers and online pure-plays for selling books or readers buying at Costco, Wal-Mart, and elsewhere.  And dare we say… Most Americans do not read books anymore anyway.  It looks like there are fresh reports that the Nook e-reader from Barnes & Noble is also getting delayed and might not make the Christmas deadline… a win for Amazon and the Kindle.

J. Crew Group, Inc. (NYSE: JCG) is far from a systemic stock, but it will be all over the media when it reports on Tuesday because of the Obama effect.  Michelle Obama has been a boom for J. Crew… to the point that you can’t not notice the premium valuations over other clothing retailers.  Estimates are $0.58 EPS and $407.99 million in revenues, and the estimates for the ever-important holiday season are $0.40 EPS and $435.48 million in revenues.  As far as how this translates to forward numbers, J. Crew trades after a 1.6% drop today to $40.45 at over 25-times the $1.60 EPS estimate for Jan-2010 FY and trades at 21-times the $1.93 EPS estimate for Jan-2011 FY.  With a $40.45, it is also at the top of the $8.02 to $44.29 trading range over the last 52-weeks.  This stock was at $50.00 briefly in early 2008 and above $50.00 in 2007 before the great bear market came to town before Santa.

Dollar Tree Inc. (NASDAQ: DLTR) is also on deck Tuesday, and this can influence all the other dollar stores.  By now you have figured out that dollar stores were the winner in the trade-down economy during the recession.  Estimates are $0.66 EPS on $1.24 billion in revenues.  The coming holiday quarter estimates are $1.35 EPS and $1.53 billion in revenues.  At $48.70 today, its 52-week trading range is $27.61 to $51.72.  That being said, there is little else to watch except for keeping an eye on Dollar General (NYSE: DG), 99 Cents Only Stores (NYSE: NDN), and Family Dollar Stores Inc. (NYSE: FDO).

Deere & Co. (NYSE: DE) has already recovered handily to the point that it is close to 52-week highs.  It reports Wednesday morning, right before everyone disappears to go eat Turkey with their families in America.  Estimates are $0.03 EPS and $4.44 billion in revenues.  Next quarter estimates are $0.23 EPS and $4.06 billion.  At $50.00, it is at the top of the $24.51 to $52.28 trading range over the last 52-weeks. Deere has already announced that it was recalling 452 laid off workers for an Iowa plant, so it would be a shock if suddenly the company announced that business was rolling back over hard.  We will be hoping for raised guidance for its fiscal October-2010 because the $2.68 estimate above the $2.61 EPS estimate for fiscal October-2009, but more importantly because that is 18.6-times forward earnings.  Anything short of raised guidance, by a handy amount, will be a disappointment to us.

We will follow-up on some of these each day next week with much more detailed earnings previews and some earnings reports in the key names.

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JON C. OGG
NOVEMBER 19, 2009

Donaldson Company Inc (NYSE: DCI) rose over 8.5% to a yearly high of $45.19 after the air filter maker reported 3Q earnings of $0.45 per share, beating analyst estimates.  

NetApp Inc. (NASDAQ: NTAP) rose over 5.5% to a yearly high of $31.25 after the server maker reported profits of $0.37 per share, beating analysts estimates.  

Trina Solar Limited (NYSE: TSL) rose over 9.5% to a yearly high of $46.80 after the Chinese solar company reported 3Q profits of $1.29 per share, beating analyst estimates by nearly 50%.  

Garrett W. McIntyre

Dell Inc. (NASDAQ: DELL) reported earnings of $0.17 EPS as a headline, but the clean number is $0.23 EPS on a non-GAAP basis and $12.9 billion in revenues.  Thomson Reuters had estimates pegged at $0.28 for non-GAAP EPS and $13.18 billion in revenues.

Dell had previously noted that it did not expect the commercial refresh and upgrade cycle to come into play until 2010.  Michael Dell noted, “We are seeing improvement in overall underlying IT demand that is continuing into the fourth quarter. The same is true with momentum in Dell’s business, specifically in our Large Enterprise and SMB segments. The launch of Windows 7 is being very well received by SMBs and consumers, and we’ll see the benefits of that more fully in our fiscal Q4.”  Unfortunately, that is where the decent to good news stops and is nowhere near good enough for the show-me attitude of investors now.

The company’s guidance at the last earnings date was for seasonal demand increases and sees revenue improving sequentially.  Shipments were flat sequentially, but -5% from a year ago; revenue was a 1% gain sequentially but -15% from last year.  Gross margin was 17.3% and cash flow from operations was $801 million (under closer to $1 billion we were expecting).  While much of the issues might not all be Dell’s fault, this is a huge disappointment compared to what we have seen from other tech giants.

Dell was under pressure partly with the market, but that Bank of America Merrill Lynch downgrade for Intel Corp. (NASDAQ: INTC) and major chip stocks was not enough to offset Microsoft’s (NASDAQ: MSFT) Steve Ballmer’s noting that Windows 7 was the best operating system sales ever this soon into the cycle.  Unfortunately it is just too soon to have any real feel for how the smartphones in China will add to the company.

Dell’s 50-day moving average today was $15.51, and for whatever it is worth tomorrow is options expiration date.  We had recorded an open interest of 85,000 options contracts in the open interest for tomorrow’s NOV09 CALL OPTIONS in the 5 closest strike prices, but that shouldn’t be enough to rock the boat too much.

The only impressive notion we had was that Goldman Sachs picked up coverage earlier this week with a “Buy” rating and a $19.00 target, and it has a history of making the right calls ahead of earnings.  Unfortunately, that looks like a skunk call or at least egg on the face.

Dell shares closed down 1.2% at $15.87 and the 52-week trading range is $7.84 to $17.26.  In the after-hours, shares are trading down close to $14.60. Ouch. Big disappointment here.  And a bad call from Goldman Sachs.

JON C. OGG

Dell Inc. (NASDAQ: DELL) is set to report earnings after the closing bell today.  Thomson Reuters has estimates pegged at $0.28 EPS and $13.18 billion in revenues.  For the coming quarter those estimates are $0.30 EPS and $13.54 billion in revenues.  We have heard whisper numbers of $0.29 EPS and even higher, and the highest estimates look to be $0.30 EPS and just over $13.5 billion in revenues.  The numbers and guidance are going to be closely looked at, perhaps even more than the bulk of the rest of the commentary.

Dell previously noted, “Dell believes a refresh cycle in commercial accounts is more likely to occur in 2010, with IT spending improving first in the United States. The company continues to see pressure in the form of component costs and areas of aggressive pricing in the near term, and continues to take actions to offset these items.”

One of the issues that is adding pressure to technology today is not just a down stock market.  The B of A Merrill Lynch downgrade of the semiconductor sector on restocking and oversupplying is coming to an end.  This was noted in the key downgrades this morning, although it is not a direct reflection of Dell.

The options trading is interesting because options expire tomorrow. That puts all the option value almost entirely on the event rater than on time value.  By my calculation with a static snapshot at Noon EST and without knowing what the options traders’ order books are, options traders seem to be braced for a move of less than $0.50 or about 3%.

The chart is also at an interesting juncture.  Dell just crossed back over its 50-day moving average in recent days, and that level today is $15.51.  The 200-day moving average is all the way down at $12.71.  It is also hard to not  notice how $16.00 has acted as key resistance on four different cycles since the end of September.  Shares had been higher than that in mid-September at $17.00 before many names started to peter out.

While the analyst calls are important to look at ahead of earnings, it is odd that Dell was just this week started (or re-initiated) with a “Buy” rating at Goldman Sachs and with a $19.00 target.  Goldman Sachs has a history of upgrading stocks ahead of a solid earnings report.  The average price target is just above $17.00 if you look at the whole pack of analysts.  And the 52-week trading range is $7.84 to $17.26, but that is well under the brief return to $30.00 in late 2007 before the great bear market started.

The recent launch of Windows 7 is believed to be a big help, particularly after recent Ballmer comments on that notion.  But Dell maintained that the enterprise refresh and upgrade cycle would be in 2010.

JON C. OGG

The earnings season is mostly winding down, but we still have a slew of retail earnings in the apparel and home categories.  On Thursday alone, we have earnings from Dick’s Sporting Goods Inc. (NYSE: DKS), Foot Locker Inc. (NYSE: FL), Gap Inc. (NYSE: GPS), Ross Stores, Inc. (NASDAQ: ROST), Sears Holdings Corporation (NASDAQ: SHLD), The Buckle (NYSE: BKE), The Children’s Place Retail Stores, Inc. (NASDAQ: PLCE), Wet Seal Inc. (NASDAQ: WTSLA), Williams-Sonoma (NYSE: WSM), and Zumiez, Inc. (NASDAQ: ZUMZ).

We have compiled data and analysis here using Thomson Reuters consensus estimates, recent metrics offered by the companies, relative performance, and more.  As with what we have seen at most retail and apparel earnings this week and last, many of these are richly valued and probably cannot just hope to please the bulls by meeting estimates on cost cutting and inventory management and then giving cautious guidance.

Dick’s Sporting Goods Inc. (NYSE: DKS) estimates are $0.09 EPS and $961.5 million, both higher than last week’s estimates; estimates for the holiday quarter are $0.57 EPS and $1.27 billion in revenues, both also higher than last week.  With shares at $24.60, its 52-week trading range is $9.21 to $26.00.  A look at forward annual earnings estimates of $1.13 EPS for Jan-2010 and $1.29 for Jan-2011 will bring up some of the same valuation concerns we have seen elsewhere in retail.

Foot Locker Inc. (NYSE: FL) estimates are $0.13 EPS on $1.19 billion in revenues.  For the holiday quarter ahead estimates are $0.28 EPS and $1.29 billion in revenues.  The stock is probably not overly expensive at $11 at almost 18-times the $0.60 EPS target for FY Jan-2010 and 14.5-times the $0.73 EPS target for FY Jan-2011.  They are not exactly cheap either.  The 52-week trading range is $3.65 to $12.95.

Gap Inc. (NYSE: GPS) is in a totally new light as the new CEO has really gotten this longstanding turnaround candidate turned around and heading in the right direction.  Things are good enough and not-bad enough that we aren’t calling Old Navy a dead brand thanks to the new efforts.  Estimates are $0.44 EPS and $3.57 billion in revenues.  Next quarter estimates are $0.43 EPS and $4.15 billion in revenues.  The CEO deserves praise, but the question here is one of how to value Gap shares in looking ahead now that it is mature, has managed to get much of a turnaround under its belt considering the economy and peers, and since it is no longer the great growth story it once was.  Estimates are $1.50 EPS for FY Jan-2010 and $1.65 EPS for FY Jan-2011.  With a $22.20 price, Gap trades at 14.8-times this year’s earnings and trades at 13.5-times next year’s expected earnings.  That is not expensive in the current climate, particularly when you consider that it has provided an upside surprise for the last four quarters.  We don’t expect it to come any time soon, but we have always had Gap as a break-up candidate where it could break the three major brands apart.  The company also noted how October same-store sales were up 4% and the total sales rose 5% after seeing gains over at Banana Republic and Old Navy.  The Gap brand continues to drag the ship now.

Ross Stores, Inc. (NASDAQ: ROST) $0.84 EPS and $1.73 billion in revenues.  For the holiday quarter those estimates are $0.99 EPS and $1.92 billion in revenues.  With shares at $45.65 and with a 52-week trading range of $21.70 to $50.50, this doesn’t sound that expensive or like it has to blow numbers away to keep the bulls happy.  The off-price and home accessories retailer trades at 13.5-times expected Jan-2010 earnings estimates of $3.37 EPS and 12.5-times the expected Jan-2011 earnings estimates of $3.67 EPS.

The Buckle (NYSE: BKE) estimates are $0.70 EPS and $231.07 million in revenues; and estimates are $0.81 EPS and $269.94 million in revenues.  At $28.96, the retailer of casual apparel, footwear, and accessories for young men and women has a 52-week range of $13.57 to $39.09 and it trades at 11-times both the Jan-2010 estimates of $2.62 and Jan-2011 estimates of $2.63.  That sounds cheap, but the lack of growth is probably part of the reason when you consider about 6% top-line revenue growth from fiscal years Jan-2010 to Jan-2011.

Sears Holdings Corporation (NASDAQ: SHLD) estimates are -$1.09 EPS on $9.92 billion in revenues.  For the ever-important holiday quarter the estimates are $2.64 EPS and $12.61 billion in revenues.  This has a huge premium close to 70-times this year’s expected earnings and about 50-times FY Jan-2011 estimates.  The premium is due to the old belief of the value of the dirt underneath the shops and because of brands and trademarks which can be sold or licensed.  At $76.00, the 52-week trading range is $26.80 to $79.35.  Calling the history here spotty is an understatement, yet shares continue to rally after selling off on bad news.

The Children’s Place Retail Stores, Inc. (NASDAQ: PLCE) still has a discrepancy from source to source on its earnings estimates so that is about all we will add: $1.38 EPS on $461.18 million in revenues; next quarter estimates are $1.05 EPS on $463.78 million in revenues. The largest unquantifiable risk here is what happens in flu season and how protective Mommy is over Junior. With shares around $34.65, and the 52-week trading range is $16.45 to $37.68.

Wet Seal Inc. (NASDAQ: WTSLA) is a young women’s apparel retailer.  Normally, we might not cover this one, but it is a retailer that has been very range-bound because of a turnaround and because of its mixed performance metrics.  Estimates are $0.03 EPS and $139.79 million in revenues for the past quarter, yet the coming holiday quarter-end estimates are $0.08 EPS and $155.19 million in revenues, yet the company gave guidance of $0.04.  We will hold off on forward valuation multiples because each penny in an EPS scenario for a $3.36 stock will skew the ratios.  October same-store sales were down 1.3%.

Williams-Sonoma Inc. (NYSE: WSM) is not just in the apparel market, but steadfast in the retail market for middle and upper-middle class spending for the kitchen and house. Its estimates are $0.05 EPS and $686.1 million in revenues. For the important Christmas quarter the estimates are much higher at $0.38 EPS and $949.9 million in revenues.  At $20.66 and with a $4.35 to $22.25 52-week trading range, this company absolutely has to knock the cover off the ball here.  Otherwise, this trades at 62-times Jan-2010 fiscal estimates and 38-times Jan-2011 fiscal earnings estimates.  Meeting estimates and maintaining guidance won’t likely be enough here.

Zumiez, Inc. (NASDAQ: ZUMZ) is the last of the retailers out on Thursday Estimates for the action sports equipment and apparel retailer are $0.15 EPS and $112.01 million in revenues for the last quarter, which is higher than estimates last week.  For the important holiday quarter-end ahead the estimates are $0.25 EPS and $131.17 million in revenues, also higher than last week. Unfortunately, its same store sales in October were off by -8.9% and that may erase its habit of beating estimates.

JON C. OGG
NOVEMBER 17, 2009

Melco Crown Entertainment Ltd. (NASDAQ: MPEL) is holding up better than many might have expected after the stellar rise seen in the casino stocks with Macau ties.  Melco Crown turned a wider loss over a year ago, despite a 70% revenue rise.  The loss was on a net basis rather than operating basis on higher depreciation and related expenses as well accounting for interest payments from the City of Dreams project.  This has implications for the coming Las Vegas Sands Corp. (NYSE: LVS) IPO, and possibly even for MGM Mirage (NYSE: MGM) after Wynn Resorts Ltd. (NASDAQ: WYNN) managed its IPO for Macau.

The net loss was $39.5 million, or -$0.08 EPS. The good news is that Thomson Reuters was at -$0.09 EPS.  The 70% revenue jump was to $500.3 million, but that was short of Thomson Reuters figures of about $520 million.  The revenue gain was due to the opening of City of Dreams in June 2009.

The company said that its estimated share of gross gaming revenue in Macau was approximately 17% in the third quarter.  The CEO further noted, “…. It is important to note that our gross gaming revenue market share has been achieved with player rebate rates at City of Dreams set at a level that is compliant with the announced commission cap legislation…. Our grind mass market business has demonstrated sequential volume improvements across the reporting quarter and this growth trend has continued into the fourth quarter of this year. We have not yet reached our full potential in this segment and the recent opening of the Grand Hyatt Macau is now having a positive impact on performance….”

Las Vegas Sands Corp. (NYSE: LVS) is on deck for its overseas asset IPO soon.  The company did confirm that it will resume construction in January on massive gambling resort.  The company had suspended development because of funding and operations elsewhere.

Las Vegas Sands started offering the IPO out on Monday and the hope is to raise some $3.3 billion from the deal.  Of that, about $500 million will be used for restarting the construction.  The company will also pay down a large chunk of debt.  This IPO follows a very similar IPO path already seen by Wynn Resorts Ltd. (NASDAQ: WYNN).

Because of Wynn’s success, it seems that even MGM Mirage (NYSE: MGM) may get in on the Asian asset IPO game.  What is still true is that the opportunities are huge for Macau and those companies operating there can realize significant rewards.  But this is not without risk and not without regulation at the local level.

JON C. OGG

One word from a CEO can obscure an entire earnings reports. Home improvement giant Lowe’s (NYSE:LOW) reported lackluster earnings. However, its chief Robert A. Niblock said, “We are beginning to see signs of improved performance in some of the hardest-hit housing markets including California, Florida and areas of the desert Southwest.” Those areas were crushed so flat that it would require a massive turnaround the regions to do much to help the prospects of Lowe’s or Home Depot (NYSE:HD)

Lowe’s numbers were net earnings of $344 million for the quarter ended October 30, 2009, a 29.5% decline from the same period a year ago. Diluted earnings per share declined 30.3% to $0.23 from $0.33. Revenue fell 3% to $11.4 billion.

The most telling part of the Lowe’s earnings release is that sales in the current quarter will be flat with last year. The final period of 2008 was particularly poor for the housing market, so that there will be no improvement tells much more about Lowe’s prospects that the CEO statement does. Lowe’s aid expects comparable store sales to decline 2% to 6% so it will have to rely on firm pricing when the housing market is still in a severe recession.

The market, of course, listened to the CEO. Lowe’s shares moved up slightly to $22, just below that stock’s 52-week high of $24.09.

Douglas A. McIntyre