Barnes & Noble wasn't alone. Drugmaker Eli Lilly ( LLY) offered a very weak outlook for 2012 earnings and its shares tanked. Petroleum refiner Tesoro ( TSO) also warned about a fourth-quarter loss and said earnings for 2012 would come in well below analysts' forecasts. Not all of the news was bad, though, as hard-drive maker Seagate Technologies offered a fiscal third-quarter sales outlook that impressed investors, sending shares higher. John Butters, senior earnings analyst with FactSet Research, says earnings estimates for 2012 have been falling steadily since the summer. Six months ago, Butters says the year-over-year earnings growth rate for S&P 500 companies stood at 14.5%, and it's now at only 10.4%. For context, Butters says the earnings growth rate for 2011 fell by 21.9% from June 2010 through December 2010. The largest decline in most recent history came between June 2008 and December 2008, when forecasts for 2009 earnings were slashed by 65%. With the fourth-quarter earnings reporting season set to kick off next week, should investors brace for more disappointing full-year guidance from companies? "It's certainly possible, but it's all about the outlook for the year," Butters says. "The estimates have already come down quite a bit. A lot of the movement will come from corporate guidance." Michael Sheldon, chief market strategist with Stamford, Conn.-based RDM Financial, says the issue is that there is an uncertainty about how much Europe is hurting global economic growth and profits. "The estimates are likely to continue to come down for a range of different companies. The more cyclical ones with the exposure to Europe are probably most at risk," Sheldon says. "The bigger question is where they stabilize. That will help determine what P/E level the investors are willing to give to the market. Until there is more visibility, P/E levels are likely to be below historical trend." A few months ago, analysts were expecting earnings of $108 during 2012 for S&P 500 companies. That number has now come down to about $105, which would give the S&P 500 a multiple of 12 times earnings. Historically, the price-to-earnings ratio for the broad index has been closer to 16.