Blue-chip earnings remain strong

NEW YORK (Money) -- Friday's preliminary report on gross domestic product showed growth at an annual rate of only 1.6 percent. That was disappointing - most economists were expecting around 2 percent.

Other statistics confirm that the economic slowdown is sharper than expected. New home prices dropped nearly 10 percent in September, compared with a year earlier, the biggest drop in 35 years.

Nonetheless, earnings for blue-chip companies have been coming in even better than expected. More than half of the S&P 500 have reported results for the third quarter. So far, there are four times as many positive surprises as negative ones, and earnings for the typical blue chip are up more than 12 percent, according to Zacks Investment Research.

There are several reasons that profits at the largest corporations are holding up better than the overall economy. Cost-cutting efforts have improved profit margins at some companies. Inflation is easing. In addition, cash-rich corporations are using their extra money to repurchase shares, which increases earnings for stocks that are underpriced.

Sixteen of the Sivy 70 have reported quarterly results over the past six trading days. Here's a quick look at their results, adjusted for any one-time events or other special factors:

American Express (Charts) turned in an 11 percent adjusted earnings gain, but was still two cents a share short of analysts' expectations.

Amgen's (Charts) earnings were up a robust 22 percent, thanks in large part to the success of anemia drug Aranesp. But analysts caution that some hard-to-replace products will lose patent protection over the next six years.

Anheuser-Busch (Charts) slightly beat expectations with an 8 percent gain.

Colgate-Palmolive (Charts) reported flat earnings because of a host of special factors. But adjusted earnings were up 22 percent, beating analysts' expectations.

DuPont (Charts) reported a 48 percent rise in earnings per share, after recovering from most of the effects of Hurricane Katrina. The company sees a continuation of solid results going into next year.

First Data (Charts) reported a one-third drop in earnings because of the costs of spinning off Western Union. But revenue slightly exceeded analysts' estimates and the stock rose on the news.

Fortune Brands (Charts) reported a 64 percent profit gain on a 23 percent gain in revenues, chiefly because of recent acquisitions. Results were a tad below projections, but analysts still like the consumer brands conglomerate.

T. Rowe Price (Charts) reported only a single-digit gain in earnings because costs rose faster than revenues. Nonetheless, S&P upgraded the stock to a buy on expectations that business would continue to be strong next year.

Boeing (Charts) suffered a 31 percent drop in earnings because of unexpectedly high costs for a new airplane. Boeing's chief rival Airbus is having even bigger problems with its new plane, however, and Boeing remains optimistic about long-term success.

ConocoPhillips (Charts) reported flat earnings on a slight decrease in revenues. One reason: Partner BP had to shut down a corroded pipeline in Alaska for repairs.

Results for food distributor Sysco (Charts) were down for the quarter and below expectations, because of accounting changes and other costs.

Exxon (Charts) posted a 12 percent gain in earnings, exceeding analysts' expectations.

Johnson Controls (Charts), which makes automotive and other industrial products, posted a 27 percent sales gain on an 18 percent increase in sales.

Earnings per share were up more than 15 percent for advertising conglomerate Omnicom (Charts).

Burlington Northern (Charts), one of the largest U.S. railroads, reported a 22 percent earnings gain on a 19 percent gain in revenue. One major reason: high demand for shipments of low-sulfur coal.

Texas Instruments (Charts), which I wrote about last week, had the most impressive overall results, capped by a 25 percent jump in earnings.

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