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Tickers in this Article: ETN, ERIC, HRL
Before the opening bell of the markets there are times when many companies announce earnings, news related events, and other important information. For those who want to make money trading on this news it is important to listen to what the company not only says about earnings but also how they are doing in the general economic environment. The next step is to watch and see how shares are trading after the open. If the stock can hold gains or losses of the news then generally this is a good sign that the stock might be a good trading situation.

Three stocks with news related events include: Eaton (NYSE:ETN), LM Ericsson Telephone (Nasdaq:ERIC) and Hormel Foods (NYSE:HRL).

Eaton and Ericsson: A Side-by-Side Comparison
Both Eaton and Ericsson announced earnings not long ago. Ericsson made an operating profit of $772.5 million compared with the Reuters earnings before interest and taxes (EBIT) estimate of $460 million. Management also commented on how the company is holding up in the current economic environment. "Our financial position is strong with healthy net cash and high payment readiness," CEO Carl-Henric Svanberg said. "Our business in the quarter has not been impacted by the financial turmoil. Our customers are generally financially strong. In addition, networks are loaded and traffic shows strong increase."

Eaton didn't fare as well. The company cut its 2008 guidance to $7.10-7.20 per share down from the previous forecast of $7.20-7.50 per share. Analysts polled by Thompson Reuters were expecting earnings per share (EPS) of $7.60. The company further added that it expects fourth quarter earnings to come in at $1.55-1.65 per share compared with the analyst estimate of $1.88. CEO Alexander Cutler said, "The severe issues in world financial markets have started to impact markets for our products. While it is not possible to forecast with precision the prospective impact upon our end markets, prudence suggests anticipating a significant slowdown." What we have are two companies with very different opinions on whether the glass is half full or half empty. Ericsson is handling the financial challenges very well and the confidence shows, while Eaton is very cautious about future growth.

Hormel Cuts Estimates
Hormel cut earnings estimate to $2.03-2.09 per share from the First Call Estimate of $2.25 per share. Chairman Jeffrey Ettinger said, "The recent decline in global financial markets has negatively impacted our rabbi trust investment performance. This is one factor that will prevent us from reaching the earnings range articulated in our third-quarter conference call." What this is telling investors is that a wide range of companies are having their earnings affected by the global financial crisis. Investors should expect earnings guidance that is much more cautious than previously expected.

Bottom Line
Any news related event can have an impact on the price of the stock up or down. To profit in this kind of a market it is important to watch and see how these events unfold when the stock starts trading on the news. If it can hold its gains or losses this might be a good trading opportunity for the aggressive investor.

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