4/28/2011 7:01 PM ET
Companies are reporting stellar results. But drill down in the numbers and you find those companies benefiting from temporary tax breaks and facing climbing costs. Stock pickers need to be extra-choosy.
Related topics: stocks, earnings, tax breaks, prices, Jim Jubak
So far it's been a troubling U.S. earnings season.
Surprised I'd say that? You might well be -- 80% of the companies in the Standard & Poor's 500 Index ($INX) that have reported first-quarter 2011 earnings have come in above Wall Street projections. (That's on the heels of the 72% of companies in the fourth quarter of 2010 and the 76% in the third quarter.)
Many companies from all over the economy have not just beaten expectations, but blown them out of the water. Cummins (CMI, news), a maker of truck engines, reported earnings 31 cents a share above Wall Street estimates. That's 22% above Wall Street projections. Apple (AAPL, news) beat projections by $1.03 a share, or 19%. Timken (TKR, news), a maker of ball bearings and other specialty steel products, beat projections by 31%.
To see it, you have to look not just at the numbers for this quarter, but at how companies achieved those numbers. You have to study trends for things like the cost of goods sold. Let me demonstrate with some very concrete examples.
First-quarter earnings news
On April 27, Whirlpool (WHR, news), the world's biggest appliance maker, reported earnings of $2.17 a share. Wall Street analysts had expected just $1.16. So where did this 87% earnings surprise come from?
Not out of revenue. Revenue for the quarter climbed by just 3%. Not out of operating income. Operating income actually declined to $221 million for the quarter from $287 million in the first quarter of 2010.
How about out of the tax code?
Jim Jubak
The company received a net income tax benefit of $24 million in the first quarter of 2011, up from $3 million in the first quarter of 2010. The company received more in energy tax credits, renewed as part of December's lame-duck-Congress budget deal, than it had expected. For 2011, the company expects to receive from $300 million to $350 million in energy tax credits. That's up from the $300 million the company estimated in February.
Investors, though, should be asking what happens after 2011, since the energy tax credit was extended only for a year in December 2010 and is proving considerably more expensive than Congress had initially projected. (Although maybe since it's a "tax benefit" rather than "spending," it will survive the budget cuts looming for fiscal 2012.)
/*
Whirlpool, in fact, has had a negative effective income tax rate for 2010, 2009 and 2008. In 2010, for example, the company reported a negative tax rate of 10.9% and a tax benefit of $64 million.
Nice money if you can get it. And Whirlpool certainly isn't the only company to get it. General Electric (GE, news), for example, got a tax benefit of $3.2 billion in 2010 and recorded a profit of $14.2 billion.
Tax breaks are lifting profitsBut I'd argue that a boost to earnings from taxes isn't as valuable to investors as an increase in operating profit. The boost from taxes is dependent on the hard work of lobbyists and the vagaries of Washington politics -- and to the ups and downs of the business cycle. (Taxes go down when companies apply the losses from a recession to the profits made during the early part of a recovery.)
I've seen a lot of earnings reports so far this quarter that noted a lower-than-expected tax rate. Intel (INTC, news), to take another example, reported a tax rate of 27.7% in the first quarter against a projection of a 29% rate.
I really don't want to depend on those lower rates for earnings growth in the rest of 2011 and in 2012.
The other problem that I'm seeing in this quarter's earnings comes from companies reporting that they expect higher energy and raw material costs in the rest of 2011. Higher costs are nothing new this quarter -- they've been going up for a while. But what I'm seeing in this quarter's earnings reports is new admissions that companies are going to have to start passing on these costs to customers by raising prices.
And that introduces new uncertainty about how higher prices might lower sales growth.
Continued: Higher prices comingSingle page12Next >RELATED ARTICLESJubak on video: Why we're luckySilver fever is about to break3 hedge-fund myths exposedInvesting: Stock market, money & financial investment advice - MSN ...Money: Personal finance & investing news & advice - MSN Money5 tips for investing in stocks- MSN MoneyVIDEO ON MSN MONEY/* /**/ var scp_UserRating=-1; down_arrow_hover= new Image(); down_arrow_hover.src = 'http://blu.stc.s-msn.com/br/scp/css/15/decoration/toolbar/rating/down_hover.gif'; down_arrow_normal= new Image(); down_arrow_normal.src = 'http://blu.stc.s-msn.com/br/scp/css/15/decoration/toolbar/rating/down_normal.gif'; up_arrow_hover= new Image(); up_arrow_hover.src = 'http://blu.stc.s-msn.com/br/scp/css/15/decoration/toolbar/rating/up_hover.gif'; up_arrow_normal= new Image(); up_arrow_normal.src = 'http://blu.stc.s-msn.com/br/scp/css/15/decoration/toolbar/rating/up_normal.gif'; var scp_thankyoutext = 'Thank you!'; var scp_thankyoualttext = 'You have voted on this'; var scp_votestext = '{0} votes'; var scp_votescount = 9; var scp_errmsg = 'Errors occured while saving your rating. Please try again later.'; var scp_yesvotes = 7; var scp_jsurl='MSNRRV2.aspx'; var scp_jsargs='rrct\x3doE0QuuCFWRgt\x252fxpt\x252fkHSJs57VE1CLazX0d\x252bTwJqkFcL2bGg2NfKHVpqPgCXgbdIuvANxlDo2zKeXs\x252b\x252fjZiAhRXzM5lDuux2b5LZUUCzrfxz9ST1PUyLxAxIwdTsYXXRWf1YUoj6gvN8esh\x252b4e2Y1cob9z11YdbAjWR1soofgiJzetr0E8w3WcG6Tyu\x252bKHEKtK78dYMfz98Q28gW4LARuPw\x253d\x253d\x26values\x3dshFp7XlTQbexq2I491\x252fdUQ\x253d\x253d\x26rritemId\x3dTZsRd4pyoJ1qQ2wcthY8ulGJwtGPdDdjoITzzhiDbBaB8C\x252fJPbKVVoUOJS7g\x252bSapvfmq6HVLPcucrFSUsEf7sA\x253d\x253d\x26rrpurl\x3dhttp\x253a\x252f\x252fmoney.msn.com\x252finvesting\x252fearnings-are-not-as-good-as-they-seem-jubak.aspx\x253ffb_xd_fragment'; var scp_itemid = 'scp\x3abbcdiscussion\x3a979db2a0-9bd3-4627-8d61-99a7364047f4'; function BinaryRatingToolBar(ratingValue){scpjs.socialToolbar._handleBinaryRating(ratingValue);} Recommend9 votes78% Rating: You recommend this22% Rating: You don't recommend this ToolBarUpdateRating('scp\x3abbcdiscussion\x3a979db2a0-9bd3-4627-8d61-99a7364047f4','ratCntrlBinary'); jQuery.async('scp', function () { jQuery.scp.socialToolbar({"partnerId":"e70689f0-2848-458a-b8ae-965c0aac79c8","jsUrl":"http://us.social.s-msn.com/s/js/16/ue.min.js","enabled":true,"previewMode":false,"contentId":"8e4d934cdr0hg9a53evwsmteba6v3f6k","boardId":"00000065-02a6-0000-0000-000000000000","threadId":"979db2a0-9bd3-4627-8d61-99a7364047f4","urlParams":{"title":"","desc":"","image":"","url":"http://money.msn.com/investing/earnings-are-not-as-good-as-they-seem-jubak.aspx?page=2","s-url":"http://on-msn.com/jAZPup"},"timesShared":21,"shareCountUrlBase":"http://social.msn.com/boards","settingsCookieDomain":"msn.com","showMiniTb":true,"showRatings":true,"showEmail":true,"showPrint":true,"showIM":false,"imagesDir":"","printUrl":"","sharingSites":[{"id":"1","name":"Messenger","icon":"http://media.social.s-msn.com/images/blogs/Messenger.png","smallIcon":"http://media.social.s-msn.com/images/blogs/Messenger-s.png","urlTemplate":"http://profile.live.com/badge?url=%7Bs-url%7D"},{"id":"2","name":"Facebook","icon":"http://media.social.s-msn.com/images/blogs/Facebook.png","smallIcon":"http://media.social.s-msn.com/images/blogs/Facebook-s.png","urlTemplate":"http://www.facebook.com/share.php?u=%7Bs-url%7D&t=%7Btitle%7D"},{"id":"3","name":"Twitter","icon":"http://media.social.s-msn.com/images/blogs/twitter.png","smallIcon":"http://media.social.s-msn.com/images/blogs/twitter-s.png","urlTemplate":"http://twitter.com/home?status=%7Bs-intro%7D"},{"id":"4","name":"Digg","icon":"http://media.social.s-msn.com/images/blogs/digg.png","smallIcon":"http://media.social.s-msn.com/images/blogs/digg-s.png","urlTemplate":"http://digg.com/submit?partner=MSN&url=%7Bs-url%7D&title=%7Btitle%7D"},{"id":"5","name":"Yahoo Buzz","icon":"http://media.social.s-msn.com/images/blogs/Yahoobuzz.png","smallIcon":"http://media.social.s-msn.com/images/blogs/Yahoobuzz-s.png","urlTemplate":"http://buzz.yahoo.com/buzz?src=MSN&targetUrl=%7Bs-url%7D&headline=%7Btitle%7D"},{"id":"6","name":"LinkedIn","icon":"http://media.social.s-msn.com/images/blogs/linkedin.png","smallIcon":"http://media.social.s-msn.com/images/blogs/linkedin-s.png","urlTemplate":"http://www.linkedin.com/shareArticle?mini=true&url=%7Burl%7D&title=%7Btitle%7D"},{"id":"7","name":"MySpace","icon":"http://media.social.s-msn.com/images/blogs/Myspace.png","smallIcon":"http://media.social.s-msn.com/images/blogs/Myspace-s.png","urlTemplate":"http://www.myspace.com/Modules/PostTo/Pages/?u=%7Bs-url%7D&t=%7Btitle%7D"},{"id":"8","name":"Google Bookmarks","icon":"http://media.social.s-msn.com/images/blogs/GoogleBookmarks.png","smallIcon":"http://media.social.s-msn.com/images/blogs/GoogleBookmarks-s.png","urlTemplate":"http://www.google.com/bookmarks/mark?op=add&bkmk=%7Bs-url%7D&title=%7Btitle%7D"}],"locale":"en-us","miniTbPositionRef":"ahead","strings":{"lc_rdcmnts":"Read comments","lc_addcmnt":"0","lc_rec":"Recommend","lc_eml":"Email","lc_shrintro":"I thought you would be interested in this: {0}","lc_im":"IM","lc_mor":"More","lc_ncmts":"{0}","lc_prt":"Print","lc_shr":"Share","lc_shrn":"Shared {0} times","lc_shrt":"Share","lc_vts":"{0} votes","lc_ivno":"You don\u0027t recommend this","lc_ivyes":"You recommend this","lc_yvno":"You didn\u0027t recommend this","lc_yvyes":"You recommended this","lc_ratingadded":"Thank you!","lc_ratingerr":"Could not add rating","lc_alrdyvote":"You have voted on this","lc_defml":"Email program","lc_hotml":"Hotmail","lc_gml":"Gmail","lc_yml":"Yahoo! Mail"},"omniAccount":"MSNPORTALSCP","ratingsControlId":"ratCntrlBinary","ratingsItemId":"scp:bbcdiscussion:979db2a0-9bd3-4627-8d61-99a7364047f4","appUri":"http://social.msn.com/boards","pageUrl":"http://money.msn.com/investing/earnings-are-not-as-good-as-they-seem-jubak.aspx?page=2","ratingTags":["00120065-0000-0000-0000-000000000000","00000065-02a6-0000-0000-000000000000","ART"],"fblkShow":true,"fblkAppId":"","fblkRef":"","fblkTrkName":"","fblkTrkVal":"","twtShow":false,"twtTrkName":"","twtTrkVal":""}); }); /**/ 1CommentNewestOldestBestWorstControversialNevada Gold7 hours agoEveryone should know that during the 1990's when Japan was in stimulus mode their market did go up BUT when the stimulus stopped it went down. I expect the same thing will happen here. This market is nothing but a by-product of artificial stimulus, be careful. I'd sell anything that is too high priced, right now! 4 0ReportSpamAdd a commentReportPlease help us to maintain a healthy and vibrant community by reporting any illegal or inappropriate behavior. If you believe a message violates theCode of Conductplease use this form to notify the moderators. They will investigate your report and take appropriate action. If necessary, they report all illegal activity to the proper authorities.CategoriesSpamChild pornography or exploitationProfanity, vulgarity or obscenityCopyright infringementHarassment or threatThreats of suicideOtherAdditional comments(optional) 100 character limitAre you sure you want to delete this comment?jQuery.async('scp', function () { jQuery.scp.comments({"partnerId":"e70689f0-2848-458a-b8ae-965c0aac79c8","jsUrl":"http://us.social.s-msn.com/s/js/16/ue.min.js","strings":{"lc_shw":"true","lc_dtf":"%M/dd/yyyy %h:mm tt","lc_dtf2":"ddd %h:mm tt","lc_gmt":"-5","lc_erg":"Comments are currently unavailable. Try again later.","lc_det":"Comments are unavailable on this page.","lc_pgf":"{0} of {1}","lc_1ach":"Comment","lc_ach":"Comments","lc_newm":"Newest","lc_oldm":"Oldest","lc_bestm":"Best","lc_worstm":"Worst","lc_mixedm":"Controversial","lc_prv":"Previous page","lc_nxt":"Next page","lc_pageNumTooltip":"Enter a page number, and then press the Enter key","lc_first":"First page","lc_last":"Last page","lc_rpl":"Reply","lc_rbs":"Report","lc_edt":"Edit","lc_del":"Delete","lc_pstthanks":"Thanks for posting to","lc_pstand":"{0} and {1}","lc_seemore":"More","lc_seeless":"Less","lc_rpttxt":"Thank you for reporting.","lc_msg2mod":"Send note to moderator"¦","lc_cc0":"Please help us to maintain a healthy and vibrant community by reporting any illegal or inappropriate behavior. If you believe a message violates the","lc_cc1":"Code of Conduct","lc_cc2":"please use this form to notify the moderators. They will investigate your report and take appropriate action. If necessary, they report all illegal activity to the proper authorities.","lc_cat":"Categories","lc_spa":"Spam","lc_che":"Child pornography or exploitation","lc_pro":"Profanity, vulgarity or obscenity","lc_cor":"Copyright infringement","lc_har":"Harassment or threat","lc_usrpic":"Inappropriate user picture","lc_oth":"Other","lc_abc":"Additional comments","lc_opt":"(optional)","lc_atl":"100 character limit","lc_rep":"Report","lc_1hourm":"1 hour ago","lc_1minm":"1 minute ago","lc_recomm":"You recommend this","lc_recomdontm":"You don\u0027t recommend this","lc_voted":"You have voted on this","lc_suicide":"Threats of suicide","lc_joi":"Be the first to comment","lc_shwm":"Show comments","lc_hidem":"Hide comments","lc_hourm":"{0} hours ago","lc_minm":"{0} minutes ago","lc_secm":"{0} seconds ago","lc_add":"Add a comment","lc_dmg":"Are you sure you want to delete this comment?","lc_dok":"Delete","lc_dca":"Cancel","lc_pna":"There\u0027s a problem creating posts right now. Please try again later.","lc_clt":"This discussion is closed. New comments cannot be posted.","lc_fta":"Be the first to comment","lc_fsg":"Be the first to add a comment. To add a comment, please","lc_sgn":"sign-in","lc_lnk":"Read comments","lc_spell_gen_err":"Could not check spelling. Please try again later.","lc_spell_no_mist":"No spelling errors found.","lc_spell_num_mist":"Spell check detected {0} mistake(s).","lc_spell_in_prog":"Spell check in progress...","lc_spell_check":"Check Spelling","lc_post_gen_err":"There's a problem creating posts right now. Please try again later.","lc_post_long":"Post cannot be longer than {0} characters.","lc_post_empty":"Your post cannot be empty.","lc_cmnt_day_max":"You already reached the daily limit for posts today. Please post again tomorrow.","lc_post_prog":"Post in progress...","lc_post":"Post","lc_save":"Save","lc_not_auth":"You are not signed in.","lc_no_suggest_paren":"(No suggestions)","lc_ignore_paren":"(Ignore)","lc_insrt_emot":"Insert Emoticon","lc_cancel":"Cancel","lc_ok":"OK","lc_fmt_quote":"Format as Quote","lc_incr_indnt":"Increase Indent","lc_decr_indnt":"Decrease Indent","lc_bullets":"Bullets","lc_numbering":"Numbering","lc_italic":"Italic (CTRL+I)","lc_bold":"Bold (CTRL+B)","lc_post_dirty":"Edits you have made to your post will be lost.","lc_rte":"Rich Text Editor","lc_ip_banned":"The computer or device you are using is temporarily banned from posting on this site. People or automated programs have recently used this computer or device to create unwanted posts. You may still browse the site and read other people's posts, but you can't create, edit, or delete posts.","lc_chk_msg_spell":"Check message for spelling errors (F7)","lc_post_msg":"Post this message (CTRL+ENTER)","lc_perm_ban":"This Windows Live ID was banned for violating the Code of Conduct. You may still read other people's posts, but you can't create, edit, or delete posts.","lc_temp_ban":"This Windows Live ID is banned from posting on this site until {0}. You may still read other people\u0027s posts, but you can\u0027t create, edit, or delete posts.","lc_also_pst_fb":"Facebook","lc_also_pst_wl":"Windows Live","lc_also_post_to":"Also post to:","lc_idnt_settings_err":"Could not save your settings. Try again later.","lc_idnt_nick_prohibited":"The nickname you requested is not allowed. It may contain a reserved name or profanity. Please enter another nickname.","lc_idnt_nick_unavail":"The nickname you requested is not available. Please enter another nickname, or select one of these suggestions:","lc_idnt_nick_empty":"Nickname cannot be empty","lc_idnt_nick_max_len":"Nickname cannot be longer than {0} characters","lc_idnt_nick_allowed_chars_err":"You nickname may only contain letters, numbers, hyphens, underscores, and periods. Please enter another nickname.","lc_idnt_lnk_msn_wl":"Link your MSN posts to your profile on Windows Live","lc_idnt_posting_name":"Now when you post with your \u003cstrong\u003ename\u003c/strong\u003e, all of your past and future MSN posts link to your profile on \u003ca href=\"{0}\"\u003eWindows Live\u003c/a\u003e so your friends can read them.","lc_idnt_posting_nick":"If you keep posting with your \u003cstrong\u003enickname\u003c/strong\u003e, your posts aren't connected to your profile on Windows Live.","lc_idnt_name_nxt_psts":"The name you choose appears next to all of your past and future MSN posts.","lc_idnt_post_w_name":"Post with my name","lc_idnt_kp_post_w_nick":"Keep posting with my nickname","lc_idnt_chs_name":"Choose the name that appears next to your posts","lc_idnt_name_lnk_wl":"If you post using your name, your posts link to your profile on \u003ca href=\"{0}\"\u003eWindows Live\u003c/a\u003e so your friends can read them.","lc_idnt_nick_no_wl":"If you create a nickname, your posts are not publicly connected to your profile on Windows Live.","lc_idnt_post_w_nick":"Post with a nickname","lc_idnt_enter_nick":"Enter nickname","lc_idnt_post_w_yr_name":"Post with your name","lc_idnt_mst_use_name":"You must now use your name when you post here.","lc_idnt_note_post_w_name":"Note: When you post using your name, your posts link to your profile on \u003ca href=\"{0}\"\u003eWindows Live\u003c/a\u003e so your friends can read them.","lc_continue":"Continue","lc_idnt_create_nick":"Create a nickname","lc_idnt_nick_nxt_pst":"Your nickname appears next to your posts on MSN.","lc_idnt_nick_allowed_chars":"Nicknames may contain letters, numbers, hyphens, underscores, and periods.","lc_cmnt_unavail":"Commenting is currently not available. Try again later.","lc_loading":"Loading...","lc_signin":"Sign in","lc_signin_create":"Sign in with your Windows Live ID, or create a new one.","lc_spam_msg":"Your post was blocked because it has a hyperlink or appears similar to spam. Please revise your post and try again.","lc_wrt_cmnt":"Write a comment...","lc_avtr_pic":"User Picture","lc_edit_cmnt_err":"Could not load comment for editing. Try again later."},"isCommentShow":"true","_p":"","locale":"en-us","forumId":"00120065-0000-0000-0000-000000000000","forumTitle":"MSN Money","boardId":"00000065-02a6-0000-0000-000000000000","boardTitle":"ArticleComments","threadId":"979db2a0-9bd3-4627-8d61-99a7364047f4","title":"Article Comment","userId":"b5e44170581cc833","contentId":"8e4d934cdr0hg9a53evwsmteba6v3f6k","pageUrl":"http://money.msn.com/investing/earnings-are-not-as-good-as-they-seem-jubak.aspx?page=2","appUri":"http://social.msn.com/boards","cssBaseUrl":"unused","emoticonBaseUrl":"http://us.social.s-msn.com/s/","responseBridgeUrl":"http://money.msn.com/ResponseBridge.aspx","cmntSharingOn":true,"cmntSharingNetworks":[{"id":0,"locKey":"lc_fb","tooltipLocKey":"lc_also_pst_fb"},{"id":1,"locKey":"lc_wl","tooltipLocKey":"lc_also_pst_wl"}],"omniAccount":"MSNPORTALSCP","currentPage":1,"totalPages":1,"sortOrder":0,"isAuth":false,"signInUrl":"https://login.live.com/login.srf?wa=wsignin1.0&rpsnv=11&ct=1304071921&rver=6.1.6195.0&wp=MBI&wreply=http:%2F%2Fmoney.msn.com%2Finvesting%2Fearnings-are-not-as-good-as-they-seem-jubak.aspx%3Fpage%3D2&lc=1033&id=250710","genericAvatarUrl":"http://us.social.s-msn.com/s/images/bluemann.png","settingsCookieDomain":"msn.com"}, false, true, true); });DATA PROVIDERSCopyright © 2011 Microsoft. All rights reserved.
Quotes are real-time for NASDAQ, NYSE and AMEX. See delay times for other exchanges.
Fundamental company data and historical chart data provided by Thomson Reuters (click for restrictions). Real-time quotes provided by BATS Exchange. Real-time index quotes and delayed quotes supplied by Interactive Data Real-Time Services. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Gradient Analytics. IPO data provided by Hoover's Inc. Index membership data provided by SIX Telekurs.
Japanese stock price data provided by Nomura Research Institute Ltd.; quotes delayed 20 minutes. Canadian fund data provided by CANNEX Financial Exchanges Ltd.
$.dap("&PG=INVIHP&AP=1089",300,250,"dapAd2");FeedbackRECENT QUOTES/*WATCHLIST/*SymbolLastChangeSharesWatchlist optionsUpdate quotesClear this listView full pageWhere's my listHelpQuotes delayed at least 15 minSponsored by:$.dap("&PG=INVSRQ&AP=1025",120,30,"quotead");MARKET UPDATEUSINTERNATIONALNAMELASTCHANGE% CHANGEThere's a problem getting this information right now. Please try again later.NAMELASTCHANGE% CHANGEThere's a problem getting this information right now. Please try again later.[BRIEFING.COM] It took stocks a while to muster any kind of upward momentum, but the major equity averages managed to make modest gains, which ultimately extended their recent highs. ... More
More Market NewsStock TickerStory StocksIn PlayShort StoriesCurrenciesNAMELASTCHANGE% CHANGEThere's a problem getting this information right now. Please try again later.See more currenciesRECENT ARTICLESEarnings aren't as good as they seemInvestors, it's time to run and hideWorld is bitten by the gold bugChina creeps toward a crisisBlues for blue-chip investors JIM JUBAKEarnings aren't as good as they seemChina creeps toward a crisisWhere to turn when the dollar fallsWorrying about QE2High-speed trains to nowhere?MORE FROM BINGBudgeting for home maintenanceCould you live on cash alone?Career fields that are hiring nowHow much do I need to retire at 50?What's the secret of saving money?Best values in public collegesTODAY's MSN STAFF PICKSMSNBCAre your parents secretly hiding millions of dollars?
Afraid to list your former boss as a reference?Bing: Second NFL player stabbed in a week10 neighborhoods that lost their identitiesPrivacyLegalAdvertiseMSN WorldwideHelpAbout our adsFeedbackSite MapRSS© 2011 Microsoft/* ({0})",msgr:"a.msgr",maxcount:9999,axob:"MSNMessenger.Hotmail2Control"});a(b).channelheaderflyout({delay:{open:500,close:50}});a("a.inbox").hotmaillivemenu({hotmailcalendertext:"Calendar"});a("div.websearch2").togglesearchtext({searchInputBoxId:"q4"});a("div.websearch2 form").bindSearch2();a(".myhp").setHomepage({url:"http://www.msn.com",txt:"Make MSN your homepage"})},a.jsUrl)})})(jQuery);jQuery("a.openpopup").async("openPopup");(function(a){a(function(){a.async("asyncCanary",function(){a(".ptnrcnt1").partnerhostedcontentfeature()},a.jsUrl)})})(jQuery);(function(a){a(function(){a.async("asyncCanary",function(){a.lazyLoad.timeout=6e4;a.cookie+=";MUID=";a(".cogr.coss").slideshow({delay:7e3});a(".cogr.cotb").tabGroup({hover:{delay:300}});a("div.ivideo").async("inlinevideo",[{param:{windowless:"true"},asyncp:1}])},a.jsUrl)})})(jQuery);jQuery("a.opennew").async("openNew");jQuery(".pageoptions1").async("pageOptions");jQuery(".pageoptions1 #ausug").async("autoSuggest",[{helpLinkText:"What is this popup",helpLink:"http://help.live.com/help.aspx?project=wl_searchv1&querytype=keyword&query=sihggus&mkt=en-US",formCode:"MSMONY",openNew:"0",market:"en-us",cookieDomain:null,cookiePath:null,inputId:"q4"}]);jQuery(".quotesearchbar0").async("quoteSearchBar");jQuery(".quotesearchbar1").async("quoteSearchBar");jQuery(".quotewatchlist0").async("quoteWatchList0");jQuery(".recentquotes0").async("recentQuotes0");jQuery(".stkscoutrating2").async("financefundamentals");(function(b){var a=b("#nav .breaknews1");if(a.text().length==0)a.css("display","none")})(jQuery)//]]>/*Whirlpool, in fact, has had a negative effective income tax rate for 2010, 2009 and 2008. In 2010, for example, the company reported a negative tax rate of 10.9% and a tax benefit of $64 million.
Nice money if you can get it. And Whirlpool certainly isn't the only company to get it. General Electric (GE, news), for example, got a tax benefit of $3.2 billion in 2010 and recorded a profit of $14.2 billion.
But I'd argue that a boost to earnings from taxes isn't as valuable to investors as an increase in operating profit. The boost from taxes is dependent on the hard work of lobbyists and the vagaries of Washington politics -- and to the ups and downs of the business cycle. (Taxes go down when companies apply the losses from a recession to the profits made during the early part of a recovery.)
I've seen a lot of earnings reports so far this quarter that noted a lower-than-expected tax rate. Intel (INTC, news), to take another example, reported a tax rate of 27.7% in the first quarter against a projection of a 29% rate.
I really don't want to depend on those lower rates for earnings growth in the rest of 2011 and in 2012.
The other problem that I'm seeing in this quarter's earnings comes from companies reporting that they expect higher energy and raw material costs in the rest of 2011. Higher costs are nothing new this quarter -- they've been going up for a while. But what I'm seeing in this quarter's earnings reports is new admissions that companies are going to have to start passing on these costs to customers by raising prices.
And that introduces new uncertainty about how higher prices might lower sales growth.
Copyright © 2011 Microsoft. All rights reserved.
Quotes are real-time for NASDAQ, NYSE and AMEX. See delay times for other exchanges.
Fundamental company data and historical chart data provided by Thomson Reuters (click for restrictions). Real-time quotes provided by BATS Exchange. Real-time index quotes and delayed quotes supplied by Interactive Data Real-Time Services. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Gradient Analytics. IPO data provided by Hoover's Inc. Index membership data provided by SIX Telekurs.
Japanese stock price data provided by Nomura Research Institute Ltd.; quotes delayed 20 minutes. Canadian fund data provided by CANNEX Financial Exchanges Ltd.
[BRIEFING.COM] It took stocks a while to muster any kind of upward momentum, but the major equity averages managed to make modest gains, which ultimately extended their recent highs. ... More
Are your parents secretly hiding millions of dollars?
Read Full Article »