It’s That Time Again

It’s earnings time once again, that quarterly popularity contest that always leaves investors scratching their heads.

Short of blowing away estimates and raising guidance through the roof, there’s no telling how investors will react to an earnings report.

Take University of Phoenix Online , for starters. The company beat earnings estimates Tuesday on a 57% jump in revenues, yet the stock closed down 3% on the day. The problem? The company merely reaffirmed expectations for next quarter.

That’s fine. At a price-to-earnings ratio of 90, the stock looks a little pricey anyway, so the market was expecting more there.

So now let’s look at an “old economy” company, and an important one at that. After the bell on Tuesday, Alcoa beat earnings estimates – but missed revenue estimates. The stock sold off, right? Nope, it was trading 2% higher after hours.

Must be cheaper than UOPX, you say? Well, at a PE of 50-60 for a Dow blue chip, it doesn’t look all that cheap to us, so go figure.

Yahoo will likely continue the head-scratching tomorrow night with its earnings report. Investors expect earnings of 9 cents a share, up from 5 cents a year ago. At a PE of 137, our bet is that investors will want to see more than that.

The broader market rose once again Tuesday on optimism about third-quarter earnings reports.

The Nasdaq rose 14 to 1907, the S&P 500 climbed 4 to 1039, and the Dow gained 59 to 9654. Volume rose to 1.28 billion shares on the NYSE, and 1.84 billion on the Nasdaq. Advancers led 19-12 on the NYSE, and 19-12 on the Nasdaq. Upside volume was 65% on the NYSE, and 71% on the Nasdaq. New highs-new lows were 349-6 on the NYSE, and 304-7 on the Nasdaq.

Looksmart plunged 52% after announcing it had lost MSN’s business. Yahoo lost 2% on fears that Overture’s MSN business could be next. Overture shareholders approved Yahoo’s takeover offer today.

SGI soared 29% after raising guidance. Quantum lost 5.5% after warning.

Transmeta surged 23% on an upgrade and continued progress.

Broadcom bolted 6% to a new 52-week high.

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