Earnings Analysis: Q2 decline attributed to Financials sector

By John Butters

NEW YORK (Reuters.com) - At this time, the blended growth rate (combines actual numbers for companies that have reported and estimates for companies yet to report) for the second quarter 2008 stands at -22.0%.

On Jan 1, the estimated growth rate for the second quarter of 2008 was 4.7%. On April 1, the estimated growth rate for the second quarter of 2008 was -2.0%. On July 1, the estimated growth rate was -11.5%.

The second quarter of 2008 marked the first time the S&P 500 has recorded four consecutive quarters of negative growth since Q2 2001 - Q1 2002.

Since the start of the quarter, most of the decrease in the Q2 2008 growth rate (to -22.0% from -2.0%) can be attributed to both downward estimate revisions and lower than expected earnings for companies in the Financials sector.

At the industry level, the aggregated net income for companies in the Investment Bank & Brokerage (-$9.4 billion), Diversified Financials (-$7.8 billion) and Thrift & Mortgage (-$6.2 billion) industries decreased by $23.4 billion during the quarter.

(John Butters is director, U.S. earnings for Thomson Reuters Proprietary Research Group.)

(To see the full research on second quarter earnings and outlook for estimates revisions, download the PDF here: static.reuters.com/resources/media/editorial/20080822/TWIE.pdf )