Off to a Rocky Start (CEG, BRK-A)

By Douglas A. McIntyre Updated Feb 18, 2:56PM EST · Published Feb 18, 9:43AM EST

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Constellation Energy Group, Inc. (NYSE:CEG) missed analysts’ estimates by a mile.

Fourth quarter EPS was $0.03 compared Wall Street consensus estimates of $1.24. For the full year, Constellation was expected to earn $4.84, but came in at $3.54. Revenue for the fourth quarter was lower than a year ago by about $400 million, and annual revenue was down by about $1.38 billion. Not a very good showing.

On a GAAP basis, the merger dance with Berkshire Hathaway Inc.(NYSE:BRKA) subsidiary Mid-American Holdings and Electricite de France cost shareholders $6.72/share for 2008. Constellation also took an impairment charge of $3.04/share on its upstream properties, merchant energy goodwill, and “other investments adversely impacted by events in the financial markets.”

Going forward, the company set EPS guidance for 2009 at $2.90-$3.20, and for 2010 at $3.05-$3.45. According to MarketWatch, the average estimate for 2009 EPS is $3.30. Constellation expects the EDF deal to close in the third quarter of this year. The earlier sales of its international commodities unit and its gas trading platform in Houston are expected to close in the second quarter.

Constellation apparently believes that it has positioned itself for the coming year by shedding all that value in the fourth quarter. That seems counter-intuitive, but maybe its right. The stock is trading up more than 2.5% in pre-open trading.

Paul Ausick
February 18, 2009

About the Author Douglas A. McIntyre →

Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.

McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.

His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.

A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.

TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.

McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.