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Commentary > The Bottom Line
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Geez, business stinks
This may not surprise you, but our captains of industry seem shocked.
September 18, 2002: 2:02 PM EDT
By Adam Lashinsky, CNN/Money Contributing Columnist

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SAN FRANCISCO (CNN/Money) - When somebody figures out what's going in the global economy, they ought to give the folks running it a heads up. If you didn't know any better, you'd think the powers that be were clueless. Consider:

  • J.P. Morgan, beset by hydra-headed problems in its banking and brokerage businesses, pre-announces a weaker-than-expected third quarter. A frightening nugget tells a large part of the story. Trading revenue, the bread and butter of a financial services behemoth like J.P. Morgan, was $100 million in July and August, compared with $1 billion in the full second quarter. It seems fair to guess that J.P. Morgan surmised it wouldn't make up the difference in September.
  • Oracle reports sluggish sales for its first fiscal quarter, noting that it was particularly hurt by weak performance outside the United States. "Our international guys are scratching their heads and saying they're not sure what's going on," says Oracle Chief Financial Officer Jeffrey Henley. Merrill Lynch analyst Christopher Shilakes reports that Oracle largely isn't seeing year-end "budget flush" activity, meaning that, apparently to Oracle and Wall Street's surprise, large corporations aren't dumping their remaining information-technology budgets into large software programs.
  • Charles Schwab -- the retail brokerage, not the person -- says it will lay off about 1,800 employees, about 10 percent of its workforce. The culprit? Persistently weak trading volumes. In other words, you, dear reader, aren't buying and selling enough stocks. And that comes as something of a surprise to Schwab, apparently among many other brokerage firms, also busy trimming their staffs.

What's going on here? Are these folks really that out of touch with their own realities? The short answer is, yes. Seasoned executives have seen weak economies before. But nobody has seen the combination of sluggish economic growth, unprecedented (in our lifetime) corporate scandals and what now looks like a third consecutive year of declines for all the major stock indices.

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Way back in February a column here predicted that Enron merely was the tip of the iceberg in corporate re-statements, pre-announcements and general disclosure of as much ugly stuff as possible. Call it the reverse of the previous several years of putting out every piece of possibly positive news and hoping the stock would run up.

Now, with two weeks remaining in most companies' third quarters -- quarters that you'd think would be helped by easy comparisons to last year's awful September -- executives are waking up to the fact that their businesses still haven't improved.

Expect much more of this over the next two weeks and into October. That way at least you'll have a clue.


See Adam Lashinsky this weekend on the Fox News Channel's "Bulls and Bears" program. Check here for local times and channels.

Adam Lashinsky is a senior writer for Fortune magazine. Send e-mail to Adam at lashinskysbottomline@yahoo.com.

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Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer. Morningstar: © 2018 Morningstar, Inc. All Rights Reserved. Factset: FactSet Research Systems Inc. 2018. All rights reserved. Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor's Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2018 and/or its affiliates.