Weekend Economists Batten Down the Hatches October 26-28, 2012

[Demeter]

10. This earnings season, more global means more pain

http://news.yahoo.com/analysis-earnings-season-more-global-means-more-pain-212348650--business.html

For many U.S. companies, the earnings period has been scary enough. For those with big overseas operations, it has been a horror show.

Corporate America overall is struggling, with year-over-year earnings expected to decline for the first time in three years. But in a big switch from last year, a high proportion of overseas business is no longer a ticket to big earnings - and, in fact, has been a hindrance.

"It's how the worm turns," said Uri Landesman, president at Platinum Partners in New York. "Right now, the U.S. is not super-exciting, but relatively speaking, it's doing well. Anybody who is doing a lot of business overseas, things are slow."

The slowed growth overseas, particularly in Europe, has hurt U.S. companies' sales. The U.S. economy is growing at a middling 2 percent at an annual rate that compares favorably with the 17-nation euro zone, which is expected to have fallen into recession in the third quarter...A basket of 39 S&P 500 companies among those having the highest percentage of sales from overseas are expected to see earnings decline 8.5 percent from a year ago. That's based on actual results from 24 companies and estimates for the rest, according to the Thomson Reuters data...