Dow Chemical Earnings: What Really Matters

Believe it or not, Dow Chemical's (DOW) EPS tomorrow has become secondary. We know EPS will be weak, here is what we really want to know...

There are several questions that need to be answered:

1. What were equity earnings? These are the earnings from Dow's various JV's across the globe. Are they still growing?
2. The dividend. It is now $1.68 a share for a 4.6% yield. Is it going up?
3. $9 billion. That is the amount Dow is getting from Kuwait for 50% of its commodity business. What is going to happen to it?
4. What is the outlook for 2008? We know the US will be weak, but international growth will be strong. How will the JV with Kuwait affect earnings in 2008?
5. What else is in the works? Dow will be sitting on almost $12 billion after the Kuwait transaction, that means a major deal is possible. Could we have a stunning share repurchase of almost 20% of the outstanding shares? That would still leave plenty to do big time deals.
6. How much farther is Dow going to push into the AG business with its seeds division? Will they become an acquirer (DuPont (DD)?) with all their new-found wealth?

Liveris was very coy on CNBC last week when he instructed Becky Quick to "be sure you ask me about our strategy" when she inquired about Dow's businesses. Liveris typically plays it close to the vest and this was an uncharacteristic statement from him. This would lead me to believe plans are in the works and whatever it is, it is big... Ought to be interesting tomorrow..

Disclosure ("none" means no position): Long DOW.