Weakening Corporate Revenues
Reuters published a story on October 17 titled “Sales stumbles raise fresh worries for corporate America.” The article discusses recent corporate results that have either missed revenue and/or earnings expectations, as well as several instances of outright corporate revenue declines.
Some notable excerpts include:
A majority – 54.3 percent – of the 70 companies in the widely watched Standard & Poor’s 500 Index that have reported results so far have missed analysts’ revenue forecasts, according to Thomson Reuters I/B/E/S.
International Business Machines Corp, the world’s largest technology services company, missed analysts’ sales forecasts for a fifth consecutive time with a 5 percent drop in the third quarter, as corporate customers in the United States and Canada cut their spending on equipment and services.
CEOs may be wise to reel in expectations for 2013 as it would be difficult to push profit margins much higher, given the slowdown in revenue growth, said Peter Klein, senior portfolio manager at Fifth Third Asset Management in Cleveland, Ohio.
“Margins are pretty rich,” Klein said. “If you have slower revenues and you’ve cut as much (in) expenses as you can, there’s not much more you can do” to grow earnings.”
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