Earnings from the second quarter may not have been stellar (to say the least), but here are five major revelations from second-quarter earnings that indicate both companies and consumers may be ready to play ball again:
- More than 70% of companies performed better than expected: This could be a mirage, as corporate cutbacks and widespread layoffs may have helped companies artificially boost their earnings. But the positive takeaway is companies are making the moves necessary to right the ship. As profit margins increase, so does a company’s ability to wheel and deal again.
- Credit defaults on the decline: Bad credit means bad business. The fact that consumers (and companies) are gettting back to accumulating debts they can actually repay ia a positive sign. With defaults on the decline, companies may want to return to offering available credit lines to buyers (or suggesting low percentage ways they can secure credit).
- Bailout banks battling back: Whether you agree or disagree with corporate bailouts, the short-term reality is the bailout funds are having the positive impact some financial analysts hoped they might. Citigroup, Bank of America, Goldman Sachs and J.P. Morgan all posted multi-billion dollar profits during the second quarter, which may be a healthy sign that Wall Street is once again open for business.
- Consumers show signs of resilience: Consumer confidence was on the rise during the second week in August, according to an ABC poll. The same poll revealed 47% of consumers feel their finances are in good standing, up from 44% in the week before. 25% of respondents also felt buying conditions were good, up from 24% a week earlier. Further proof of a boost in consumer spending – Apple sold 5.2 million iPhones during the second quarter alone – up an astounding 626% from a year ago.
Most analysts predict the economy won’t really start to pick up until the end of 2009 or beginning of 2010, but these factors provide several valuable business angles for companies looking for fresh new ways to market their products, draw in more prospects or motivate prospects to start spending again.
For more upsides revealed by second-quarter earnings, check out
SmartMoney‘s “Eight Bright Spots of the 2Q Earning Season.”