Kiplinger recently published an article called The Earnings Blame Game. Basically it is scapegoating, with companies using everything from El Nino to the recent housing crash to cover poor business models and falling income. Since I've invested in solar power and cable, I haven't seen much of this (my investments are, luckily, going up) but it might be something to keep an eye on; a company doing badly overall might just be using the latest disaster for justification.
Merrill Lynch's massive $8 billion subprime-related write-down was stunning, and the list of companies blaming housing, subprime mortgages or the credit crunch for their troubles includes not only homebuilders, banks and financial-services companies, but also car dealers, big-box retailers, semiconductor makers and freight companies.
. . .
Even Hershey (HSY) blamed the credit crunch for weakness in its candy business, saying that higher interest rates cut into distributors' profits, forcing them to whittle inventories.
In fact, you hear the same excuses in so many earnings releases that it makes you wonder: Are some companies latching onto a convenient scapegoat to camouflage other weaknesses? It wouldn't be the first time.
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