Despite the market’s miserable performance during the past five weeks, corporate earnings as well as the overall economy have been improving on a quarter-to-quarter basis since mid-2009. The growth pace may be slowing now, but progress is still being eked out.

Interestingly though, a few highly-regarded blue-chip names — Dow components, no less — have simply failed to ride the earnings growth tide. Before buying a Dow Jones Industrial Average constituent simply because it’s in the Dow, it may pay to take a step back and realize how far these companies haven’t come.

1. Bank of America (NYSE: BAC)
During the course of the past couple of quarters, Bank of America has discovered it’s actually no closer to a recovery now than it was two years ago. As of the end of the first quarter of 2011, Bank of America was boasting a trailing 12-month loss of $0.47 per share. This is worse than the trailing loss of $0.25 seen at this point a year ago, and downright alarming compared with the  profit of $0.83 seen at this point in 2009. Shrinking earnings are only the symptom, however. The illness is loan-loss write-downs, which are the way banks and other lenders account for losses on their accounting statements when mortgage borrowers stop paying their loans.

The illness is going to get worse before it gets better. Bank of America is expected to write-down an additional $32 billion in loan losses in the next three years. About $9 billion has already been accounted for in loan loss reserves, but the other $21 billion will be incrementally taken straight off the bottom line going forward. For reference, B of A generated $134 billion in revenue last year, but hasn’t turned an annual profit since 2008’s earnings of $2.5 billion. So, the pending losses aren’t chump change. They’ll take a serious bite out of the bank’s bottom line.

Even if it’s an expected and “accounting only” event, investors could tire of it very quickly. Pair the write-downs with the uncertainty of pending legislation regarding capital requirements (not to mention new derivates rules) is causing, and Bank of America is simply too big of a question mark.

2. Cisco (Nasdaq: CSCO)
Cisco’s income faltered in 2009 like most other companies when the brakes got put on technology spending. But, the recovery of profits during 2010 suggested the router manufacturer was back on track. The company earned $1.36 per share that calendar year compared with only $0.98 in calendar 2009. In the past two quarters though, year-over-year profits have fallen again.

What gives? A couple of key problems that aren’t likely to fade away anytime soon.

One of them is — or was — too much reliance on government sales. Last year, federal, state and local governments accounted for 24% of Cisco’s sales, compared with less than 20% in 2004. With all levels of government now exercising some serious belt-tightening, Cisco is facing a big headwind due to a shrinking segment of its customer base.

The second problem crimping profits is a lot of new competition from the likes of Juniper (NYSE: JNPR), Brocade (Nasdaq: BRCD), and even Hewlett-Packard (NYSE: HPQ). Gone are the days of the late 1990s and early 2000s when Cisco was the only real networking player and could price its wares however it wanted. The company has adapted by offering lower price points for its equipment, but low prices and stiff competition still seem to be foreign concepts to CEO John Chambers.

3. Pfizer (NYSE: PFE)
For a while it appeared Pfizer would escape the recession unscathed. Income picked up modestly again in late 2009, but since then, net income has started to flat-line around $2.24 per share, in line with 2007’s total and below 2008’s $2.42.

In some regards, Pfizer is in the same boat as Cisco. It’s being forced to do things it hasn’t historically had to do and things it doesn’t know how to do well. One of the unusual items on the immediate agenda is to cut costs. The pharmaceutical maker is hoping it can simply trim $1 billion worth of annual savings out of the budget. This may be easier said than done for Pfizer, though, which spent $42 billion (of its $68 billion in revenue) in 2010 on general expenses, including research and development. If Pfizer is going to continue solving its second problem — the biggest of which is a dwindling menu of marketable drugs — then it needs to spend money on research and development (R&D), acquisitions, or both.

Pfizer’s even-bigger current challenge is the expiration of patents on a couple of its key drugs. The patent on its cholesterol-fighting Lipitor drug, which accounts for 15% of the company’s total revenue, will expire in November of this year. Viagra’s patent expires in March of next year; and it’s worth about $2 billion in annual sales.

To its credit, Pfizer has addressed the problem by ramping up its own R&D activity, such as the development of crizotinib, a treatment for a rare form of lung cancer that some industry analysts say could be worth $2 billion a year. Tofacitinib (for rheumatoid arthritis), Prevnar (a pneumonia vaccine) and Eliquis (a blood thinner) are also all in Phase III testing and could be approved in the foreseeable future.

And what it can’t make itself, the company is willing to buy or partner to get. For instance, Pfizer recently announced a partnership with China’s Hisun Pharmaceutical Co. to begin offering low-cost generic drugs in China. The joint venture could offset some of the revenue that’s bound to be lost in the near term.

The problem with these measures is two-fold: there’s still no “blockbuster” drug in the lineup to replace Lipitor and Viagra, and the deeper into the generic market Pfizer gets, the greater the risk of defocusing the company from more fruitful matters.

Action to Take –> None of this is to imply these companies are on their death bed. But, two years removed from the beginning of the recovery, it’s time to start acknowledging that what’s wrong with Pfizer, Bank of America and Cisco isn’t the environment, but rather, the companies themselves. There’s no reason to own shares of any of these three names until these bigger problems are solved.

P.S. — I don’t know if you’re aware of this or not, but a 20-year energy agreement between the United States and Russia is about to expire. The problem is, this deal supplies 10% of America’s electricity. When the Russians refuse to renew the agreement, the U.S. will face an entirely new kind of energy crisis. This disruption could send a handful of energy stocks through the roof. Keep reading…