Earnings – Better Than Expected
Better Than Expected, Better Than Expected, Better Than Expected…
The media loves to discuss corporate earnings as a measure of better (or worse) than what is expected.
Expected by who? The analysts who have a history of never being able to predict anything, thats who (remember the tech bubble… hmmmm).
[...] Analysts, after being complete wrong all of 2007 and 2008 have finally collapsed their estimates, lowering the bar to the point where even a mortally wounded company can stumble over it. That was to be expected, and isn’t really important. Most of the bottom line beats were the result of draconian cost cutting. Bonuses and merit raises first, big budget items second and finally people. Lots and lots of people. They all beat because they cut people faster than anybody expected. These kind of cuts can’t be repeated and companies won’t be able to pull the same miraculous bottom line beat next quarter.
Far more important and ominous are the top line misses. Revenues have collapsed and continue to do so. Big economic bellwethers all reported revenue declines of about 30%. Revenue at 143 companies fell on average of 10%. This is the true state of the economy and it is still in a ‘controlled’ free fall. [...] (source: FN)
Corporate Earnings – Snapshot Speaks Volumes
The following Excel graph was compiled from cumulative quarterly earnings data of nearly 4,000 companies that is tracked by the Wall Street Journal.
Each quarter the WSJ tallies the year over year changes in net revenues (continuing operations) of reporting companies and compares the net change from the same period one year earlier. The graph shown below tracks the year over year net changes in revenue starting in July 2006.
The most recent earnings data is for companies that have reported up to March 5, 2009
Net Earnings y/y % Change
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