The Economist (September 19)
“Corporate profits more than tripled in 1980-2013, rising from 7.6% of global GDP to 10%, of which Western companies captured more than two-thirds. The after-tax profits of American firms are at their highest level as a share of national income since 1929.” Yet a recent study suggests “the golden age of the Western corporation may be coming to an end.” The McKinsey Global Institute projects “that corporate profits may fall from 10% of global GDP to about 8% in a decade’s time.”
Financial Times (August 11)
Fears are growing of a meltdown in the aluminum market as Chinese output soars and, much like the oil market, supply outstrips demand. “China now accounts for more than half of global supply, up from 18 per cent in 2003 thanks to cheap power and the world’s most efficiently built smelters. Established producers from North America to Russia and the Middle East—facing the lowest prices since the financial crisis, reduced margins and profits—are anxious but do not want to cut capacity for fear of losing market share.”
Tags: Aluminum, Capacity, China, Fears, Margins, Market share, Meltdown, Middle East, North America, Oil, Output, Profits, Russia, Smelters
Washington Post (August 10)
“Matters are not as clear as is often suggested regarding short-term-driven ‘quarterly capitalism.’” The “most enthusiastic champions of long-termism” are often the “managements of companies that are dissipating the most value, such as General Motors before it needed to be bailed out.” Long-termism can also lead to short-term excesses, such as “market participants who willingly place huge valuations on many Silicon Valley companies that lack any profits and have little revenue.”
Tags: GM, Long-termism, Profits, Quarterly capitalism, Revenue, Short term, Silicon Valley, Valuations
Financial Times (July 27)
“Ending the tyranny of quarterly earnings is an idea that is on the march. The case for reforming shareholder capitalism is strong.” An “investment drought” is resulting from the focus on short-termism. “With healthy profits and a near zero cost of capital, now ought to be the time to lay down plans for the future. Today’s investments yield tomorrow’s dividends. But listed companies are almost uniformly opting for dividends today.” In the U.S., leading listed companies are, on average, investing only one dollar for every $8-$9 they return to shareholders.
Tags: Cost of capital, Drought, Future. Dividends, Investment, Profits, Quarterly earnings, Shareholder capitalism, Shareholders, Short-termism, U.S.
Wall Street Journal (July 12)
With about 1,000 companies making smartphones globally, only “one reaps nearly all the profits” and that company accounts for just 20% of smartphone unit sales. “Apple Inc. recorded 92% of the total operating income from the world’s eight top smartphone makers in the first quarter, up from 65% a year earlier.”
Tags: Apple, Companies, Operating income, Profits, Smartphones
Los Angeles Times (November 25)
“Retailers are waging a war on Thanksgiving.” This “traditional day of family gatherings and relaxation is dying at the hands of those who can’t wait even six hours to reach into our pockets in order to line their own.” More and more retailers are opening earlier and earlier on Thanksgiving. They “seem to feel Thanksgiving is just an inconvenient speed bump on the road to Christmas profits.”
Tags: Christmas, Family, Gatherings, Profits, Relaxation, Retailers, Thanksgiving
Reuters (November 18)
“Japan’s attempts, through Abenomics, to beat back against the tide of demographics may be proving futile.” Though the country may be able to keep printing money, Japan “can’t print people.” Cheap funding won’t stimulate corporate investment unless companies “see both a strong outlook for profits and for market growth,” something that remains unlikely amidst an aging, shrinking population.
Tags: Abenomics, Aging, Corporate investment, Demographic, Funding, Japan, Market growth, Outlook, Population, Profits
Washington Post (December 12, 2013)
Manufacturing has bounced back in the U.S. since the Great Recession, rising each year since 2010. “Profits are soaring — in 2012, after-tax profits of manufacturing firms hit a record high of $290 billion. Share values have soared with them. The Standard & Poor’s 500 Industrials Index has risen 59 percent more than the overall 500-stock index since 2009.”
Tags: Great Recession, Industrials, Manufacturing, Profits, S&P 500, Share values, U.S.
Wall Street Journal (October 24)
“After earning big profits at home, Chinese investors are looking abroad for safer assets that offer steady returns. They are shifting their increasingly valuable currency out of China’s expensive property market and into the likes of Manhattan and San Francisco—bargains by comparison.”
Tags: Bargains, China, Investors, Manhattan, Profits, Property markets, Safe assets, San Francisco, Steady returns. Currency
Financial Times (June 17)
“From chemicals and cement to earthmovers and flatscreen televisions, Chinese industry is awash with excess capacity that is driving down profits inside and outside the country and threatens to further destabilise China’s already shaky growth.”
Tags: Cement, Chemicals, China, Excess capacity, Growth, Industry, Profits, Televisions
