Third-quarter earnings season was full of surprises.

Many companies beat Wall Street estimates, reporting better-than-expected earnings. But strong earnings don t necessarily indicate a pickup in demand. Many firms boosted their bottom lines by cutting costs a strategy that isn t sustainable (you can trim only so much fat).

Those cuts and kinder year-over-year comparisons played a role in lifting third-quarter profits, but some companies also showed signs of real growth, says David Kelson, a portfolio manager at Talon Asset Management. There was more underlying strength, broadly speaking, than we would have anticipated, Kelson says.

The list of upside surprises includes big names like Apple, Amazon, and Microsoft. These are not little companies that are putting up substantial top- and bottom-line beats. You can t ignore that, Kelson says. But you can t make too much of it, either.

See which blue chips had real growth in Q3.

The recession and the collapse of the housing market underscored some consumption habits that appear to be waning in popularity the personal savings rate is up; new home sales are down; and holiday retail sales are expected to be weak again. Consumer spending may have become an unsustainably large portion of the overall economy in recent years, meaning companies will eventually have to adjust to longer-term muted underlying demand, Kelson says.

SmartMoney looked at latest earnings reports from the 30 components of the Dow Jones Industrial Average to find out which ones are showing signs of life (in the form of real revenue growth), and which are just making cuts.

Here s a breakdown of how some key sectors are doing:

Most blue chips in the manufacturing and industrial sectors appear to have achieved their results by cutting, not growing, although demand did appear to be bottoming out for some.

Alcoa, the aluminum manufacturer whose report signals the unofficial kickoff of earnings season, got the Dow components off to a strong start last month. The company reported earnings of four cents a share, a huge surprise considering analysts had expected a loss of nine cents a share. Revenue climbed to $4.6 billion, a sequential improvement (better than the second quarter) but substantially lower than the $7 billion the company brought in during the third quarter last year. Alcoa has cut workers and set a goal -- which it says it s on track to meet -- of a 50% reduction in capital expenditures for 2009.

Later, General Electric and DuPont also beat estimates through cost cuts. GE posted third-quarter revenue of $37.8 billion, down 20% from the same quarter last year. DuPont s CEO Ellen Kullman said the company saw sequential improvement and signs of stabilization, but earnings growth over 2008 was driven largely by the $900 million worth of cost reductions the company has made so far this year. United Technologies beat estimates, but earnings were still lower than the year-ago quarter, and revenue was 11% lower than last year. CEO Louis Ch nevert said orders seem to have stabilized at lower levels but warned that the overall trajectory of the recovery is uncertain. 3M beat the Street mainly on cost cuts, and CEO Patrick Campbell said demand appear[s] to have bottomed.

Boeing disappointed, reporting a larger-than-expected loss of $2.22 a share for the quarter. The company maintained that the much-delayed 787 would see its first flight by the end of this year and its first deliveries remain scheduled for the fourth quarter of 2010. Given the 787 s numerous delays, Boeing s problems may appear internal, but the company has been hobbled by the recession, says Alex Hamilton, an analyst with Jesup & Lamont Securities. Boeing s commercial and defense businesses are under pressure from the downturn, and defense spending will be slower to recover than commercial, Hamilton says.

Caterpillar reported much better earnings than expected (net income of 64 cents a share, despite revenue of $7.298 billion, 44% lower than the same quarter a year ago). Cost cuts boosted earnings, but the company s CEO Jim Owens said he believes this quarter will mark the bottom for the company s sales. Still, demand may not fully return for another six months to a year, Eli Lustgarten, an analyst with Longbow Research, says. Caterpillar fundamentals don t turn until nine to 12 months after the economy turns, he says.

Photos: Getty Images

Retail sales of laptops were better than expected for the back-to-school shopping season, but businesses haven t started spending again yet. Most tech blue chips either suffered or leaned on cost cutting to post deceptively rosy results.

Microsoft reported earnings of 40 cents a share, better than analysts expectations, but revenue was still 14% below that of the year-ago period. IBM also beat estimates, largely on cost cutting. The company reported better-than-expected earnings of $2.32 a share, on revenue of $23.6 billion, down 7% from the year-ago quarter. Next year should bring a recovery for tech companies, says Louis Miscioscia, an analyst with Brigantine Advisors, LLC. As the global economy starts to recover, that will then fall back into IT spending in a good way, Miscioscia says.

Chip makers results are typically considered leading indicators, and Intel showed signs of legitimate growth. The company beat estimates on stronger-than-expected sales, reporting earnings of 33 cents a share on revenue of $9.4 billion. Revenue was still below that of the same quarter last year, but the sequential revenue growth from the second quarter to the third was the biggest in the company s history.

The back-to-school and holiday shopping seasons are always strong, but the huge seasonal jump could translate to a worse-than-usual dip in the first quarter of 2010, says Daniel Berenbaum, an analyst with Auriga USA. I am concerned that the industry has effectively pulled forward demand, he says. Intel has also benefited from the unexpected surge in demand for netbooks, but sales may have had more to do with the industry encouraging customers to trade down from notebooks than some untapped well of demand, he says. The average selling price of PCs has declined rapidly over the last few months, and since it happened so quickly, it hasn t rolled down the food chain yet, Berenbaum says.

The big banks and credit-card firms continued the long process of sorting themselves out, but the numbers and rhetoric did not inspire hope of near-term revenue growth.

JP Morgan Chase reported much-better-than-expected earnings of 82 cents a share and net income of $3.6 billion, far above the year-ago quarter s $527 million. However, Chief Executive Jamie Dimon remained cautious during the firm s earnings call, saying that the company sees signs of stability in consumer credit but that he isn t sure whether improvements will continue. American Express also posted a big upside surprise, with earnings of 54 cents a share, well above expectations. However, revenue fell to $6.106 billion, down 16% from the same quarter last year. The company has sharply decreased its marketing spending, and layoffs have lowered employee salary and benefit costs by 14%. Card members spent less, but CEO Kenneth Chenault pointed out signs of stabilization, including some signals that corporate cardholders spending is picking up.

Bank of America disappointed analysts and is still tinkering with cutbacks. The bank reported a greater-than-expected loss of 26 cents a share. BofA posted a net loss of $1 billion for the quarter, down from a net gain of $1.2 billion a year ago. The firm made too many bad loans, says Richard Bove, an analyst with Rochdale Securities. A shift to an automated loan approval process to reduce costs simply did not work properly, leaving the bank with heavier losses than those of its peers, Bove says. Going forward, the company needs to focus on paying back its TARP money and shedding more non-core businesses, Bove says.

Travelers Companies appears to have been the beneficiary of good luck. The insurer reported better-than-expected earnings of $1.61 a share. The recession drove net written premiums down 3%, but catastrophic losses this year were only $103 million, compared with $682 million in the same quarter last year. Hurricane season makes the third quarter the most volatile of the year for insurance companies, says Paul Newsome, an analyst with Sandler O Neill & Partners.

Big Pharma is its own animal, but the sector isn t faring much better than the others in terms of real growth.

Pfizer and Merck both beat estimates this quarter. Pfizer reported earnings of 51 cents per share, better than expectations of 48 cents a share, although the company s revenue of $11.6 billion was 3% below the year-ago quarter. Merck made 90 cents per share, better than the expected 82 cents per share, and sales were up 2% to $6 billion. Both companies have cut staff and found other cost savings.

Pharmaceutical business cycles don t follow the broader economy. They follow patent cycles for new drugs, says Seamus Fernandez, an analyst for Leerink Swann. The sales growth that you re seeing at several of these companies is kind of short lived, Fernandez says. Merck likely won t see sustainable sales growth until 2013, and Pfizer until 2015, he says.

Telecom firms are winning at the top line. AT&T and Verizon beat the Street largely on growth in their wireless units. AT&T s earned 54 cents a share, a penny below the year-ago period, but above expectations of 50 cents a share. The company reported its largest increase in subscribers in its history, and average revenue per subscriber was up 3.8% over last year.

Verizon s earnings of 60 cents a share were better than the 59 cents analysts had expected, and revenue was up 24.4% to $15.8 billion. The company saw a 25.7% increase in wireless subscribers. The telecom market is very competitive, but these two large players continue to gain new subscribers. Cyclical recoveries in residential construction and business spending should also benefit the landline units of these companies.

Blue chips that rely on personal discretionary spending were a mixed bag during the third quarter, but sales growth abroad helped offset some softness in the U.S.

Coca-Cola met expectations with earnings of 82 cents a share. Currency-neutral operating income was up 9%, and the company reported strong volume growth in key emerging markets, including India and China.

McDonald s reported earnings of $1.15 a share, better than the $1.11 a share analysts had expected. Same-store sales in the U.S. were up 2.5%, and growth was stronger in Europe and Asia. The company is outperforming its fast-food competitors on strong brand recognition and economies of scale, says Rachael Rothman, an analyst with Wedbush Morgan Securities. While competitors are beating estimates largely on lower agricultural commodity prices, McDonald s is, thankfully, having the benefit of both top-line growth and reduced costs, Rothman says. The concern for the company as the economy recovers may be how difficult it will be to retrain customers not to expect everything for a dollar, she says.

Procter & Gamble is more in lockstep with the downturn. The company s earnings of $1.06 a share topped expectations of 99 cents a share, but net sales were down from a year ago. Big companies are trying to eke out gains at the top line, and it s pretty hard to do when you ve become as big and diversified as Procter & Gamble, says Douglas Christopher, an analyst with Crowell, Weedon & Co. Once a company becomes this large, you re essentially going to start tracking GDP, Christopher says. In a tough economy, consumers have been trading down to store brands, but over the next two or three quarters Procter & Gamble s results should grow along with the overall economy, he says.

Last year s high oil prices have made this a tough comparison quarter for revenue growth at companies like Exxon, Chevron, and their competitors. Exxon missed expectations of $1.03 per share, reporting earnings of 98 cents a share. The company posted net income of $4.7 billion, 65% below the stellar results of a year ago. Chevron earned $3.8 billion, or $1.72 a share, beating expectations despite a 51% year-over-year decline. Cost cutting allowed the company to lower its operating expenses by 13% in the first nine months of this year.

Global demand for oil should come back over the next year, improving the picture for energy companies, says Robert Kessler, an analyst with Simmons & Company International. Natural gas prices are suffering not only from the global economic downturn but also from a lumpy period of downward pressure on prices as the market assimilates new production capacity, including shale production in the U.S., Kessler says.