|
|
|
 |
FreeRepublic , LLC PO BOX 9771 FRESNO, CA 93794
|
|
|
|
Posted on 01/18/2003 11:26:24 AM PST by arete
AMSTERDAM (Reuters) - After two years of hoping in vain for a recovery, which many said was only six months away, companies are now writing off all of 2003 and focusing on 2004 for any improvements in their markets.
Two weeks into the new year, key European and U.S. companies have toned down their hopes for economic bloom. Slow consumer spending, a possible war in Iraq and the resulting high oil prices could further dampen business activity.
In the past week, airlines, technology and chemicals companies, banks and retailers have all said they are hesitant to predict the upturn for this year, opting for caution after misreading their markets during the past two years.
The chief executive of telecoms equipment giant Cisco, John Chambers, started off the miscalculation season in January 2001, when he said he was confident the downturn could be over in six months even though his clients' businesses had hit a brick wall.
``I believe we're probably talking a two-quarter phenomenon, although it could last longer. I'm talking the first half of this year for most companies in the U.S.,'' Chambers said then in Davos, Switzerland, where many of the world's business leaders will gather again next week to discuss the future.
DAVOS MANTRA
Chambers wasn't alone with his turnaround prediction in early 2001. A second-half recovery became a mantra in the cramped corridors of the conference at the Swiss ski resort.
Now, however, few CEOs express such bold dreams.
Gerco Goote, head of equity research at ABN Amro Asset Management in Amsterdam which oversees 30 billion euros ($31.96 billion), said firms are clearly afraid to stick their neck out. ``The word 'caution' is on every page of our research. Companies might be overdoing it, but nobody knows,'' he said.
Bank of America Chief Financial Officer James Hance said this week he felt positive about consumer and mid-markets, but was ``not comfortable with some segments of the large corporate book.'' He expects quarterly charges to remain high in 2003.
Hopes for a recovery are also slim in the airline industry, where U.S. players are experiencing their worst ever crisis following the September 11, 2001 attacks on the United States. U.S. airlines lost between $8 billion and $10 billion in 2002.
German airline Lufthansa abandoned its 2003 operating-profit target last week, following in the footsteps of Dutch carrier KLM, while Delta Air, the third largest U.S. airline, expects to book another loss in 2003.
Investors are a bit miffed about so much doom and gloom.
Florian van Laar, asset manager at Amsterdam-based Eureffect: ``I'm surprised when I hear people writing off all of 2003. It's like when you start a 500 kilometer trek and say after 100 meters: 'This trip ain't worth it'.''
Two weeks into the year, it's really impossible to tell what's going to happen at the end of the year, he added.
U.S. chemicals giant DuPont said on Wednesday it was struggling with anemic demand and higher oil prices, up as a result of war looming in the Middle East.
Chief Executive Cees van der Lede of DuPont's smaller Dutch rival Akzo Nobel said in his New Year's speech there was no reason to expect that 2003 would be any easier than 2002.
British electronics retailer Dixons said last week that pressure on profit margins would continue and like-for-like sales would remain static for the time being. The firm was hit by sluggish Christmas sales due to the economic uncertainty.
``A poor December has rocked management's optimistic assumption that the product cycle is more important than the consumer cycle,'' investment bank WestLB Panmure said.
CHIPS DOWN
The technology sector remains particularly weak after it was badly bruised in the last two years as companies -- telecoms firms in particular -- spent less on computers, software and IT services after the Internet bubble burst in 2000.
U.S. chip behemoth Intel sees little improvement in its markets for the first six months, and cut its 2003 investment budget to below $3.9 billion from $4.7 billion.
Dutch chip equipment maker ASML said on Thursday a recovery in the battered sector, in its worst downturn ever, could happen in the second half, but the company declined to give a forecast and showed a thin order backlog entering 2003.
The same day, U.S. computer maker Sun Microsystems failed to reiterate a November target of turning a profit by the end of its fiscal year in June, blaming a murky economy.
France's Alcatel's Chief Executive Serge Tchuruk this week forecast another down year in the telecoms equipment market after a 50 percent fall over the last two years.
Software makers see no recovery either.
U.S.-based Microsoft said sales for the fiscal year ending in June would fall short of expectations. ``Our view continues to be that there has not been much change in the health of the PC ecosystem where things have continued to be soft,'' said Chief Financial Officer John Connors. U.S.-based IBM, which has its fingers in virtually all technology pies, said on Thursday it thought the environment had begun to stabilize.
But the company had already said this last April, when CFO John Joyce announced that IBM could achieve 2002 earnings of $4.16 a share on flat revenues of $83 billion.
On Thursday the computer services-to-chip giant reported 2002 sales of $81.2 billion and earnings of $3.07 per share, well below its April hopes, even if integration and restructuring charges of $0.88 per share would be added. ($1-.9387 Euro)
But the company had already said this last April, when CFO John Joyce announced that IBM could achieve 2002 earnings of $4.16 a share on flat revenues of $83 billion.
On Thursday the computer services-to-chip giant reported 2002 sales of $81.2 billion and earnings of $3.07 per share, well below its April hopes, even if integration and restructuring charges of $0.88 per share would be added. ($1-.9387 Euro)
Show me the IT recovery they have been promising. Show me real earnings growth and not all this flim flam "second half" talk.
Richard W.
|
|
|
|
|
FreeRepublic , LLC PO BOX 9771 FRESNO, CA 93794
|
|
|
|
Comments and opinions welcome.
Richard W.
The recovery-niks have hung their hat on hope...nothing more..
But you guys know me by now...I am a persistent bear...fwiw
A fellow doom and gloomer. It isn't the stock market that is going to kill us, it is the credit markets. Everyone is trading paper promises and creating more and more promises day after day. Show me the money.
Richard W.
Richard W.
So what's your bitch?
Have you seen what the stock market does in the third year of a presidency. It is always good, usually great.
Plus the price of oil should tank after day one of the Iraq war just like it did in 1991.
No bitch...I don't really care if it goes up or down...as long as it moves...
I just think a whole lot of people are in for a really rude awaking though...
And: Thats a Pretty cute trick saying the market is up 20% in 4 months...how much is the market up in 6 months? Its not...its down 10% [SPX]. And over the last year? Down 17%...you can try to pare and twist it anyway you want but this is a bear market, and the bear is alive and well. Take a look at a monthly chart and show me the support?
You will need to see a year of consolidation at any level to return the market up.
The recovery-niks have hung their hat on hope...nothing more..
But you guys know me by now...I am a persistent bear...fwiw
I prefer to pay attention to people who base their beliefs on facts, rather than moodiness. I would ask the pessimists and the optimists to please leave the room, and let the adults talk.
LOL...show me someone who says they have an objective view of the markets and economy and I will show you a liar.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.