from Wolf Street:
Nasty secondary effects of corporate cost-cutting.
By now, 40% of the companies in the S&P 500 index have reported earnings for the fourth quarter, including eight of the top 10 by weight. The S&P 500 companies, accounting for about 80% of market capitalization, are a good sample for what’s going on in corporate America. And what is going on is the first revenue and earnings recession since 2008/2009.
Revenues on a blended basis – actual revenues for companies that have already reported, and estimated revenues for companies that haven’t yet reported – fell 3.5% in Q4 from a year ago, according to FactSet.
Revenue declines are stretching across four quarters in a row, a feat that has been accomplished for the last time during the depth of the Financial Crisis: Q4 2008 through Q3 2009.
Four of the ten sectors are in the red. The Energy and Materials sectors got hit the hardest. But Industrials got roughed up too. And even Information Technology, the supposedly blooming sector in the US, had significant revenue declines, including shining stars Microsoft and IBM, whose revenues dropped 10.1% and 8.5% respectively:
And the mystery boom in the Telecom sector? FactSet sheds some light on it:
At the company level, AT&T is the largest contributor to revenue growth for the sector. The company reported actual sales of $42.1 billion for Q4 2015 (which reflects the combination of AT&T and DIRECTV), compared to year-ago sales (which reflects standalone AT&T) of $34.4 billion. If AT&T is excluded, the blended growth rate for the sector would fall to 3.1%.
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