Executive Analysis"The global economy was weaker than we'd expected." This is the classic table setting for the full-year earnings warning. As that sweet nothing rolls from their tongues, this is where my head will be.
- "Global economy" does not mean only the U.S., Europe and China. It also includes emerging markets such as India and Brazil -- and, in India, April-to-June growth in India came in at 5.5%, the worst performance in a decade. Meanwhile, Brazil's central bank recently reduced its 2012 growth estimate by a full percentage point.
- How the "global economic weakness" impacts higher-margin business segments will be vital in offsetting softer growth in more established, less profitable businesses.
- "Inventory destocking" is one phrase that has often sent chills down my spine. It's a phenomenon that signals customer hesitancy is unlikely to abate in a single quarter, and it usually says reordering is not as robust as the market has been pricing into the company's valuation.
- I'm on a constant hunt for "hype words" designed to deflect attention from the earnings warning and limp operating performance. Examples include: "outstanding," "stellar," "record," "best ever" and "robust."