Five Things to Know This Earnings Season

Updated from 3:16 p.m. EST

The first earnings season of 2009 has commenced with the traditional kick-off by Alcoa (AA).

Related: AA Preview: Have We Seen a Cyclical Bottom? and Alcoa Loss Exceeds $1B in Fourth Quarter

Since Alcoa last reported on Oct. 7, 2008, the market went into a tailspin. We saw the economic and financial crisis deepen as the U.S. Government enacted programs to support the banking and automobile industries. Unemployment took a nasty turn for the worse and fourth quarter GDP is expected to decline dramatically.

All of these issues will factor into the earnings reports and guidance that public companies will provided to investors over the next several weeks.

So what can we expect and be cognizant of this earnings season? Here are five.

1. There are two sides to job cuts. Many companies have already announced job cuts. In fact, a week before Alcoa's scheduled earnings release, the company announced that it would reduce its global workforce by 13% or about 13,500.

Expect more companies to join the job-cutting bandwagon. This will have two different implications. First, the good news: The companies will be leaner in the future. Now the bad news: These cuts will happen on the back of diminished demand and profitability.

Related: 'Good News' on Jobs Is Bad News for Stocks and Cramer: Forget Jobs Data -- It's a Technical Market (Video)

2. Returns to shareholders will be slashed. This will take two forms. First, despite falling stock prices, the emphasis on staying liquid during a credit squeeze will result in fewer companies issuing new stock repurchase authorizations. Second, dividends at many companies are in danger of being slashed.

While some companies like General Electric (GE) have already "protected" their 2009 dividend, many other companies will be seeking to cut dividends. This will be a result of dividend yields that have risen as stock prices fell in 2008 and mounting pressure on certain boards of companies which have received TARP and other government sponsored bail-out programs to retain more cash.