Sector Watch: Good, Bad & Ugly

Education: Good sector
Shares of ITT Educational Services Inc (ESI) lifted educational stocks on Thursday after the company reported fourth-quarter earnings of $1.61 a share on revenue of $279.8 million, above Wall St estimates of $1.44 a share and $270.7 million in revenue.

Shares rose nearly 11 percent to $126,73. Fellow education provider DeVry Inc (DV) gained 3.3 percent to $63, Corinthian Colleges (COCO) added 5.8 percent to $18.02 and Apollo Group (APOL) tacked on 3.3 percent to $88.33.

Retail Tech: Bad Sector

Major U.S. indexes tumbled on Thursday, dropping after Dow component Microsoft (MSFT) reported quarterly results that missed expectations, and a round of economic data prompted concerns about the impact of the recession on the labor and housing market.

eBay Inc. (EBAY) today reported reported a 31% drop in its fourth-quarter profit, and its first quarterly revenue decline due to one of the worst environments for consumer demand in decades. For the fourth quarter, eBay reported earnings of $367 million, or 29 cents per share, down from a $531 million, or 39 cents a share, a year earlier. Revenue was down 6.7% to $2.04 billion, down from $2.18 billion.

Financials: Ugly Sector
A number of large U.S. regional banks on Thursday said that rising credit losses had led to weaker fourth-quarter results, in an illustration of the breadth and depth of the national credit crisis and recession. Many banks also said they would be cutting jobs in an attempt to lessen the impact of the recession.

Fifth Third Bancorp (FITB), Huntington Bancshares (HBAN) and SunTrust Banks (STI) all posted quarterly losses, while profits fell steeply at BB&T Corp (BBT) and Comerica (CMA).

Citi on Thursday said it expects global corporate earnings to fall an additional 40 percent from current levels, with the biggest falls in cyclical sectors and Japan. “Defensive sectors, the U.S. and Europe should see more moderate falls in profits,” it wrote. The firm wrote that current valuations suggest that much of the potential decline was already discounted, but it expects global returns on equity to bottom at about 8 percent in mid-2010.

Retail: Ugly Sector
Phillips-Van Heusen Corp. (PVH) shares dropped 4.3%. The clothing company said late Wednesday it’s closing about 175 stores, shutting down its domestic production of machine-made ties and other neckwear and lowering travel, payroll and marketing expenses. Over 10% of the company’s salaried workforce, or about 250, and about 150 hourly tie manufacturing positions have been eliminated.

Williams-Sonoma Inc. (WSM) said late Wednesday it will cut 18%, or 1,400 jobs, close its Camp Hill, Pennsylvania call center and a distribution center in Memphis, Tennessee. The retailer said it’s also cutting 2009 merchandise inventory, catalog circulation and retail leased square footage growth.

Jones Apparel (JNY) shares fell 8.3%. The owner of Nine West and Jones New York labels said Thursday that profit excluding items for 2008 would drop to 85 cents to 88 cents a share, shy of its previous projection of 93 cents to 98 cents a share. Fourth-quarter results on an adjusted basis were expected to swing to a loss of 3 cents to 6 cents a share.