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CONFUSION OVER PROFITS KEEPS STOCK PRICES ON MOVE

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If the stock market seems unable to make up its mind you can attribute it to confusion about the future of corporate profits, which have been declining for a full year.

Based on the vast range of opinions from executives and stock analysts, next year can mean an end to the profits recession, a rebound, a continuation or even a worsening.The outlook is varied, clouded by uncertainties, the chief of them being a gut feeling that an economy entering its eighth straight year of expansion is bound to need a rest.

Of slightly less concern seems to be difficulty

in comprehending the relaxation of world tensions, the probability of declines in defense spending and the chances of greater trade with Europe and China.

A survey of 1,500 business executives by Dun & Bradstreet in August showed expectations for higher sales and profits had dropped to the lowest levels in four years for the current quarter, but gave no indication beyond that.

However, the fact that profit expectations had been dropping throughout the year, makes unlikely the possibility of a sudden turnabout in corporate confidence.

The profit erosion began very late in 1988 and worsened throughout the past year. A survey of 1989 third-quarter results by the Wall Street Journal showed a 21 percent drop, and one by Business Week showed a 22 percent decline.

However, the outlook is viewed optimistically by some investment analysts.

Zacks Investment Research, which collects earnings predictions from 2,000 analysts and compiles a consensus forecast, contends that median profit growth should be 12.9 percent in 1990, surpassing 1989's expected 9.6 percent rise.

Financial analysts, however, have been known to be wrong, so Financial World magazine, which published the research, wisely asked Zacks to make a breakdown into three groups: companies that surpass Wall Street expectations, those that come closest to matching analyst estimates, and companies that often earn less than forecast.

It suggested that readers be wary of stocks that regularly surprise analysts.

While concerned about the profits shrinkage, Edward Yardeni, director of economics for Prudential-Bache Securities, believes worries might be overdone. He feels the profits decline has nearly reached bottom.

"Odds are that the worst of the year-over-year comparisons will occur during the fourth quarter of this year," Yardeni recently told that firm's clients. He said comparisons should turn positive by the 1990 second quarter.

Still another unknown draws questions. Wright Investors Service calls attention to a surprise factor that seems to play a prominent role of late in the affairs of profit-seeking enterprises.

"Unusual charges and write-offs have become a regular feature of fourth-quarter earnings reports," it said. Companies have been forced into costly restructurings, and banks have had to write off uncollectable loans.