From Bad To Worse

Not Many Customers This Month Then, George?

Fresh from the rumour mill, it seems that one Silicon Valley equipment manufacturer is predicting sales in one division will come in at 25% of what was originally predicted. Yes, you read that right, a 75% miss. Another rumour is that a major semiconductor manufacturer came within $20m of running out of cash, and that's in a business doing close to $5 billion world-wide on an annual basis. Meanwhile, companies across the globe are making cuts in both production capacity (semiconductors to name but one) and ongoing operating expenses as the calender 4Q plays out. (Oh, and as the big three U.S. auto makers head to Washington again to try for bailout round 2, GM is spreading the love to their dealer networks by allegedly refusing to make incentive payment unless they take more inventory ... which they can't anyway sell but it makes GM look, well, slightly less worse I suppose.)

In short, the January reporting season is going to be extremely ugly as retail companies give-up and fold now the Christmas bubble has popped, and industrial companies report the quarter in which they felt the worst impacts of the worldwide slowdown. And it is worth noting here that Wall Street today is only operating on the basis of reports reflecting the early signs of slowdown, the full economic impacts of which have yet to be fully felt.

2009 could yet be a record-breaking year, but not the good kind ....