CNBC had a very interesting stat out today: of all companies already reporting earnings for their last fiscal quarter (July 1st thru September 30th for most of those companies) fully 81% had reported earnings higher than analyst's estimates -beat forecasts, if you will. Revenue is another matter altogether.....less than 20% had beat on the revenue side.
Simply put, earnings > forecasts are coming from increased productivity, efficiency and lower payrolls (COS). Unemployment at 9.6% be damned.....companies are still making LOTS of money....
Unfortunately in all cases, unless you have increased sales activity, things do start to look bad to shareholders.
The general consensus at Wall street is that everyone has cut to the bone, and unless you start to see growth through increased sales, you will hit a brick wall. You can only cut so deep. Most companies are not reporting any great near term insights.
The wall street analysts are all saying now that unless we start to see big improvements in the Job market, the market will not bode well in the next while. Not in North America at least.
GM for instance reported great sales in the last quarter, but if you dig deep the money folks all find that if you remove the lost leader sales (brands they have discontinued, and sold at reduced prices) and included the fact they had to throw in larger discounts than every other car company to get things off the lot, their real sales picture does not look as rosy as reported.
I suspect the last Harley quarter had a lot of similar accounting magic placed into it as someone has already suggested.
With a reported combined 20% unemployment or under employment rate, I would not look for any bright spots in the next couple of years for anyone making toys.
