Boeing Co., Tesla Inc. and Microsoft Corp. headline an action-packed slate of Wednesday earnings.
The aerospace giant will have to face investors Wednesday morning amid a new raft of controversy around the troubled 737 Max jets. Last week, reports surfaced indicating that Boeing misled regulators about the jets' safety years before they were involved in two deadly crashes. On Tuesday, the company replaced the leader of its commercial aircraft team as the criticism continued.
Commentary on the Max fallout may overshadow Boeing's actual financials, but those aren't expected to be pretty either as the company's Max jets remain grounded. Analysts are calling for a 46% drop in profits and a 22% decline in revenue for the third quarter. It remains unclear when the 737 Max will return to service and how consumers will respond once the planes are back in the air.
See more: Boeing faces a 46% drop in quarterly profit
Tesla looks on track to deliver its first quarterly revenue decline in more than a decade, prompting questions about what's next for the electric-car maker. Analysts project an 11% drop in third-quarter revenue, to $6.43 billion, and RBC wonders if the pressure for growth will prompt the company to accelerate the launch of its Model Y mid-size SUV. Production of that vehicle was expected to begin late next year.
Elon Musk's Tesla already posted disappointing delivery numbers for the third quarter, but the company's profit trajectory remains an unknown heading into the Wednesday afternoon report. RBC is "cautiously optimistic" that the company will show positive free-cash flow once again.
Microsoft's report is likely to be the tamest of the big three, with analysts upbeat as always about momentum in the company's Azure cloud-computing business. Look for commentary on the trajectory of the Windows 10 migration cycle with the end of Windows 7 support coming up in January. A pattern of strong PC sales so far this year indicates that the refresh cycle might be more spread out than initially expected, perhaps due to more long-term contracts.
The company's report is due out after the bell.
* Former corporate siblings eBay Inc. and PayPal Holdings Inc. are both on the afternoon docket as well, and the reports could bring more excitement than usual given an activist battle at eBay and some key unknowns for PayPal. EBay's conference call will feature the company's new interim chief executive, Scott Schenkel, who took over last month after the company's former head, Devin Wenig, resigned due to a disagreement with the board. The company has also been moving along with a strategic review that could lead to the sales of its StubHub and Classifieds businesses. PayPal is expected to feel an impact next year from eBay's decision to manage its own payments process and relegate the digital payments pioneer to a lesser role on its site. Analysts will be looking for an initial 2020 outlook, which may hold clues about how the company expects that transition to play out.
* Joining Tesla on Wednesday's automotive earnings slate is Ford Motor Co. , which faces low expectations from investors, according to Morgan Stanley analysts. They say that third-quarter numbers "may not pack a big punch" but that big structural changes at the company could start to pay off positively. The company is "restructuring the operations to allocate capital towards businesses where the company can win and away from areas where it cannot," in their view, but it remains to be seen whether Ford can execute effectively on that plan. The Wednesday morning earnings report could provide some early indications.
* Caterpillar Inc. shares have fallen following the company's past six earnings reports and the equipment giant will be looking to break that streak Wednesday morning amid weak sentiment for its sector. William Blair analysts recently cited a "plummeting" market for construction equipment that's leading to rising inventory as production cuts haven't kept up with the new pace of sales. "Further production cuts are probably warranted," they wrote.
Caterpillar earnings: Expect weakness on China tensions and global economic slowdown
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