The Norman Transcript

Headlines

October 28, 2012

Halftime report: Is fear of a weak 3Q overblown?

WASHINGTON — It’s halftime for the season of corporate earnings reports, and investors are in desperate need of a locker-room pep talk.

Before Alcoa reported its third-quarter results Oct. 9, marking the unofficial start of earnings season, financial analysts were predicting that profit and revenue for companies in the Standard & Poor’s 500 would be lower than the year before.

That would have been the first decline by either measure since the third quarter of 2009, just after the Great Recession ended.

But a funny thing happened on the way to the pity party: Some of the biggest and most important U.S. companies started reporting revenue growth and raising their guidance.

The quarter was no blockbuster, to be sure, but by midweek analysts were reassessing their grim predictions. Halfway through earnings season, both winning streaks — profit and revenue — are on track to survive another quarter.

There are still plenty of reasons to worry about corporate America.

Sales are hurting because of weaker demand from Europe, which faces a recession, and China, where economic growth has slowed. A stronger dollar means sales overseas translate into lower revenue on the books back in the United States.

Above all, analysts worry about weaker revenue. Net income grew for 11 straight quarters partly because so many companies cut costs, borrowed money more cheaply and employed other short-term strategies to boost their profit margins.

In the fourth quarter of 2010, for example, net income for the S&P 500 leapt 37 percent, but revenue increased only 10 percent, according to S&P Capital IQ, a research firm.

That gap can’t survive, analysts say, and revenue growth is starting to weaken. Companies will need to beef up sales to keep increasing their earnings, and that takes stronger customer demand.

And yet: The winning streak appears likely to continue.

Text Only | Photo Reprints
Headlines
  • Oklahoma City Memorial Bombing museum gets tech boost

    OKLAHOMA CITY — A memorial and museum built to remember the worst act of domestic terrorism on American soil is in the midst of a $7 million upgrade so it can better portray how different the world was when Timothy McVeigh blew up the ...

    April 19, 2014 1 Photo

  • Is Okla. backing off accountability?

    One by one, K-12 education reforms passed in previous years by Oklahoma lawmakers are being targeted for weakening or repeal....

    April 19, 2014

  • Hope Trunk travels to Norman

    The rustle of paper could be heard as students meticulously folded one crane, then another and another Friday afternoon. After reading the inspiring story, “Sadako and the Thousand Paper Cranes,” Cleveland Elementary School fifth graders ...

    April 19, 2014

  • Congressman Cole reflects on recovery

    Congressman Tom Cole’s home in Moore was not hit by the May 20 tornado but it came pretty close. His wife has made it clear she wants a saferoom, he said. In a visit to the Transcript on Friday afternoon, Cole talked about tornado ...

    April 19, 2014

  • Gaylord to get $35,000 grant for poverty project

    A team from Gaylord College is among the first winners in a national competition to fund innovative news experiments that serve communities, the Online News Association has announced....

    April 19, 2014

  • U.S. puts off pipeline decision

    WASHINGTON — The Obama administration is putting off its decision on the Keystone XL oil pipeline, likely until after the November elections, by extending its review of the controversial project indefinitely....

    April 19, 2014

  • Garage sale to benefit Team Jamie’s Crew set

    A garage sale to benefit Team Jamie’s Crew will start at 9 a.m. today at 1510 Melrose Drive....

    April 19, 2014

  • Sonic plans expansion

    OKLAHOMA CITY — Oklahoma-based Sonic Corp. plans to open 1,000 new drive-in restaurants nationwide over the next 10 years, expanding the chain by about 30 percent, the company said....

    April 19, 2014

  • Singing Sooners show set

    The University of Oklahoma School of Music presents the Singing Sooners Spring Show at 8 p.m. Friday, April 25 in the Sharp Concert Hall, Catlett Music Center. Jim Graves and Stephen Ziegler serve as directors for the group....

    April 19, 2014

  • Study: Half of jailed youths have injury

    NEW YORK — About half of all 16- to 18-year-olds coming into New York City’s jails say they had a traumatic brain injury before being incarcerated, most caused by assaults, according to a new study that’s the latest in a growing body of ...

    April 19, 2014