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UnitedHealth earnings fall 73%, but shares jump

It’s true. UnitedHealth (UNH) reported earnings of $337 million, down from $1.22 billion for last year’s Q2. On an earnings-per-share basis, UNH earned 27 cents compared with 89 cents last year.

Now if we exclude some big charges, UNH made 67 cents for the quarter, which is just ahead of the 64 cents Wall Street was expecting. The stock is up today, but that’s probably because investors were expecting more bad news. Earlier, the company said to expect 64 to 66 cents. If you can rally this well by beating the top end by a penny, I think it means that investors have lost confidence in management.

I can’t say I blame them. UNH said not one, but twice, that it was expecting FY08 earnings-per-share of $3.95 to $4. After its competitors lowered forecasts, UNH lowered its forecasts, not once but twice. First to a range of $3.55 to $3.60 a share, then down to $2.95 to $3.05 a share. That’s where we are today.

Posted by edelfenbein at July 22, 2008 2:06 PM