NEWS AND COMMENTARY
June 28, 2001
Earnings Will Still Get Much Worse
Company profits plunged 17% in the second quarter -- a dive not seen since the 1991 recession. It's also the first time since 1991 that profits have dropped for two consecutive quarters. Here are just a few of the big name companies that have suffered huge profit declines: Cisco Systems -- profits down 88%; JDS Uniphase -- profits down 93%, Intel -- profits down 78%, Texas Instruments -- profits down 94%, GM -- profits down 61%. And there are many more companies in the same boat. And, for those companies, that boat certainly seems like it has already sunk to the bottom of the ocean floor.
But profits may still sink much further before they actually hit rock bottom. For one thing, lower interest rates haven't helped much, and probably won't cause the type of boost that companies need.
Plus, this slowdown is spreading worldwide. Of the three largest economies in the world, Japan is certainly the weakest. The US is a distant second, but will be running neck and neck with Japan if it isn't careful. And Europe is clearly showing signs that a protracted slowdown is in its future.
Company earnings are pretty bad already. But expect much worse.
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