7 Companies That Upped 2Q Views

The second-quarter earnings season unofficially kicked off after the market close Wednesday, when aluminum giant Alcoa (AA) released its earnings. It proved to be a surprisingly good start. Alcoa, which is struggling with a slump in global demand, reported a loss of 26 cents a share (excluding charges) -- marking the company’s third consecutive quarter of losses – but the firm shocked traders by topping analysts’ estimates by 12 cents a share.

Unfortunately, the rest of the season might look less rosy. According to analysis by Thomson Reuters, the expected second-quarter earnings growth rate for the S&P 500 is negative 35.5% -- marking the eighth straight quarter of declines. All 10 of the sectors Thomson tracks are expected to fall (health care is expected to fare the best with a decline of 2%, while basic materials is expected to do the worst with a decline of 79%). “By any historical context, it’s not looking to be a good quarter,” says John Butters, director of U.S. earnings research for Thomson Reuters.

But not all hope is lost. A handful of companies have actually raised their second-quarter projections, providing some precious clues to which industries may produce some upside surprises in the coming weeks. SmartMoney.com combed through earnings preannouncements and guidance to see which types of companies are feeling a little more optimistic about their results for the quarter. In doing so, two clear industries emerged: technology (particularly chip makers) and consumer goods.

Texas Instruments (TXN), for example, raised its earnings projections from a range of 1 to 15 cents a share to 14 to 22 cents a share in early June. And Pepsi Bottling Group (PBG) not only raised its second-quarter earnings projections by 5 cents a share in early June, it then followed that positive news by beating the high end of its revised projections by 4 cents a share Wednesday.

But do the positive announcements from Texas Instruments and Pepsi Bottling bode well for their respective tech and consumer goods peers?

In certain corners of the tech world, the earnings season could very well show signs that the industry is rebounding off of a bottom, says Daniel Berenbaum, an analyst at Auriga USA.

“I think second-quarter earnings is going to be pretty positive, and everybody’s going to be looking out at what guidance is for Q3,” says Berenbaum. The second half of the year is typically stronger for semiconductor companies, thanks to seasonal shopping patterns, he says. “We’re going to see some seasonality – there is going to be a back to school, and there is going to be a Christmas – it’s just a question of how good they are,” the analyst says.

Predicting how consumer-goods companies will fare is more difficult. “When you’re looking out at the environment, it’s really a tale of two cities,” says Paul Larson, an equity strategist at Morningstar, an independent investment research firm. He expects companies that sell goods consumers can’t do without to report earnings that are down year-over-year, but only by 5% or 10% -- a relative success in the current recession.

Of course, investors should keep an eye out for company projections beyond the second quarter, says Butters. What the companies say they expect for the second half of the year will be key in determining their level of confidence about future sales, he says.

Here’s a look at some of the companies that have revised their second-quarter estimates upward, the factors behind their good news and whether it bodes well for other companies in their industry.