Two corporate earnings reports caught my attention over the last couple of days. Apple reported that their revenues were 70% up Y-o-Y. Infosys reported that their revenues were up 50% Y-o-Y. By any standards, both outstanding results.
Yet Apple shares lost close to 9% value, Infy close to 5%. As a result, both Wall Street and Dalal Street took a beating. The reason:both of these companies gave conservative guidances for the next quarter. It almost seems shareholder expectations are reaching ridiculous levels. Corporates just have no breathing space with every 90 days bringing an hour of reckoning. The 'American' way is so all pervasive now that no public firm can escape this scrutiny.
I guess all of this pressure will finally translate to the employees working in all of these firms. Already I can see most of the tech firms still trying to find innovative ways of cost cutting so that they can still hold on to their margins. Of course, many of these are directly linked to employee benefits.
The question is where will this stop? I guess companies will need to find a balance amongst employee well-being, looking after shareholder interests, finding new growth engines & a whole bunch of other objectives.
Saturday, April 16, 2005
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As far as Apple goes the market feels that the current growth rate is not sustainable and hence the sharp drop in prices.
Pressure on Qtrly results makes companies focus more on short term goals (which is not always good). However such qtrly pressures are required so that companies act responsibly.
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