Sales stumbles raise fresh worry for corporate America
By Scott Malone
BOSTON (Reuters) - A flagging world economy took a toll on much of Corporate America in the third quarter, leading the likes of eBay Inc, American Express, IBM and Textron Inc to miss Wall Street's sales targets or warn that spending was slowing into the holidays.
Those misses sparked concerns among investors that corporate America's year-long streak of profit growth could be nearing an end as CEOs run out of costs to cut and customers are increasingly wary about spending.
A major worry is the risk of the year-end fiscal cliff - $600 billion of spending cuts and higher taxes that could take effect at the end of the year if lawmakers in Washington fail to agree on a plan to shrink the federal deficit.
A majority - 54.3 percent - of the 70 companies in the widely watched Standard & Poor's 500 Index that have reported results so far have missed analysts' revenue forecasts, according to Thomson Reuters I/B/E/S.
The list of companies' reasons for weak performance has expanded, with some citing a decline in demand in the United States - until recently a more reliable source of growth - as well as in Europe, which is mired in a debt crisis.
American Express warned that its cardmembers' spending was starting to wane. After nine quarters of double-digit growth, spending among its mostly affluent customer base grew just 8 percent in the last quarter.
The online marketplace eBay beat estimates, but analysts said the magnitude was unimpressive and the holiday outlook cautious as price competition increases among retailers.
International Business Machines Corp, the world's largest technology services company, missed analysts' sales forecasts for a fifth consecutive time with a 5 percent drop in the third quarter, as corporate customers in the United States and Canada cut their spending on equipment and services. Continued...