Companies increasingly quiet about the future

updated 2:38 p.m. ET April 19, 2009

These days, it's not what companies say about the past as much as what they say about the future that matters most to investors.

Increasingly, though, companies are dialing back what they're willing to forecast.

Consider what happened to Intel on Tuesday. The company reported stronger-than-expected first quarter results after the close of trading. It even said the personal computer market had bottomed out.

But Intel declined to provide a specific revenue forecast because of the uncertainty in the economy. The next day Intel shares dropped as much as 7 percent.

A third of the 600 companies responding to a recent survey by the National Investor Relations Institute said their policies about financial guidance had changed. Most eliminated or limited the amount of guidance they provide about earnings and revenue.

"If you don't know what the future holds and you can't accurately predict it, you don't want to be out there telling somebody something you don't have confidence in," said the Institute's Chief Executive Jeff Morgan.

Other companies reporting first-quarter results this week are taking similar action.

Manpower Inc. declined earlier to provide a first-quarter EPS estimate. "We believe it would be cavalier of us to use such a limited visibility to guide to an earnings-per-share range," Chief Executive Jeffrey A. Joerres said in a February conference call with analysts.

Management consultant The Hackett Group Inc. says its recent research shows companies are finding it increasingly difficult to estimate cash flow accurately, making in harder to zero in on accurate quarterly estimates.

Much of the reason for the difficulty goes back to the current credit crunch. Companies are finding it more difficult to draw down credit, predict customer demand and anticipate other issues that impact the ability to foresee the short-term future.

The Hackett Group's study shows that more than 60 percent of companies say they cannot accurately forecast cash flow within 10 percent and more than 90 percent cannot forecast within 5 percent.

Still, investors and economists will be looking closely at corporate earnings this week for any signs that the economy is improving. Here is a look at six companies that will report this week. Each could provide some indication about where the economy is headed.

Caterpillar Inc.
Why it's important: Caterpillar's backhoes, bulldozers and scrapers are used worldwide to build everything from roads and bridges to homes and office buildings. Its engines power freighters that carry goods across oceans. Caterpillar's turbines and engines pump oil and natural gas from miles under the earth's surface, and its mining trucks haul materials such as copper, which is used in products like computers and TVs.

When it will report: Tuesday, April 21.

What the experts say: Caterpillar is expected to earn 8 cents per share on revenue of $8.71 billion, compared with profit of $1.45 and revenue of $11.8 billion in the same period a year ago.

You'll know the economy is improving if: Caterpillar is ramping up production of its distinctive yellow-and-black excavators, trucks and loaders. That could mean the government is spending money to lay new roads, build bridges and renovate schools under the $787 billion stimulus program approved by Congress earlier this year. It would also be a sign mining companies are buying more equipment in anticipation of higher prices for coal and metals.

You'll know the economy is not improving if: Caterpillar lays off more workers and idles more assembly lines. Since the start of the year, the company has announced plans to cut more than 22,000 jobs, or 19 percent of its work force.

The quote: "These are very uncertain times, and it's imperative that we focus ... on dramatically reducing production schedules and costs," Caterpillar's CEO Jim Owens said earlier this year.

Delta Air Lines Inc.
Why it's important: Delta is the world's biggest airline company. Subsidiaries include Northwest Airlines, Comair, Compass and Mesaba. It has hubs in cities such as New York, Atlanta, Amsterdam and Tokyo. The company's airlines serve more than 170 million passengers a year and employees 80,000 people.

When it will report: Tuesday, April 21.

What the experts say: Delta is expected to lose $1.01 per share, excluding one-time items, on revenue of $6.7 billion, compared with a net loss of $16.15 and revenue of $4.77 billion a year ago. The earlier quarter was before Delta's acquisition of Northwest.

You'll know the economy is improving if: Revenue declines stabilize. Any improvement is welcome for an industry that has been struggling to fill seats. Another good sign would be optimism from the company about its ability to raise money.

You'll know the economy is not improving if: Delta says demand for air travel is shrinking at a faster pace than expected. If advance bookings for travel during the usually busy summer period are much lower than a year ago, that would be another sign of trouble.

The quote: "Bottom line, the global economic downturn is worse than many economists anticipated," Delta CEO Richard Anderson and President Ed Bastian said in a recent memo to employees. "We will continue to act quickly and decisively to address these economic pressures looking ahead for the remainder of 2009 and into 2010."

Manpower Inc.
Why it's important: Manpower is one of the largest staffing firms, and it's a gauge of the global work force since about 90 percent of its revenue comes from overseas. The employment industry has shrunk to levels not seen since the 1980s because temporary staff are usually cut before permanent workers, particularly in Europe, where full-time employees are often protected by long-term contracts and strict labor laws.

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