Beneficial interpretations of earnings report offset lower profits. If profits go down, the strategy is to show that revenues have gone up or that cash flow is more important. Profits can be temporarily manipulated by adding unsold goods to inventories, adding to intangibles, etc. Many investors have not been aware that profits in many of the dotcoms came from interest on investments from the IPO sales. If rescue appears impossible then downgrade.
Investment advisors bend with the winds and constantly upgrade and downgrade companies.
Their advice often comes too late. Many investment advisors recommended Worldcom and Yahoo at their highs and didn't remove their recommendations until these stocks fell precipitously. Best Buy- after the stock fell from 52 to 32 in one day. When stocks hit their growth peak, slow and non-publicized retreat from their high price occurs. Stocks mature and go through life cycles as if they were organisms.