Where Profit Can Be So Disappointing

Headache, headache, headache, HEADACHE!!!!

Okay, I may not be the smartest kid on the block, the sharpest knife in the drawer or the greyest of the grey squirrels but I am a graduate of LSE (no, not London School of Economics but the Lone grey Squirrel Elementary).  In my simple world, you buy and sell;  you make a profit and that’s good; you make a loss and that’s bad.  Or…..if you have one nut, that’s okay cause at least you get to eat.  Have two nuts and you eat one and you bury the other – that’s called “saving”.  Have no nuts and you are a dead squirrel. See, simple.  In my simple world, 1 + 1 =2 (I’m fairly sure that is right).

So what is this rant about?  It’s about how the world is greedy and is run by GREED economics.

My tiny brain first began to rattle in my skull when I read the news headlines last week which said, “Apple Posts Disappointing Profits”.  Now please paws, I mean pause to think what a disappointing profit might mean to you.  For me, my salary is pretty disappointing cause I seem to be able to buy less and less nuts with that amount.

Now to be fair, it wasn’t Apple who said that their profits were disappointing but it was analysts and shareholders.  So just how bad was the disappointing Apple profits?  Was it a mere million? Was it down 50% from the same period before?  Well, apparently, Apple reported its third quarter earnings last week and it showed  profits up 21% year-on-year to USD 8.8 billion  and revenues up 23% to USD 35 billion.

In Haiti, people are fortunate if they can get USD 2 per day to live on.  Do we really live in the same world?

And then, there is the report earlier this year of Verizon. It is alleged that the company  made record profits in 2011, raking in more than $2 billion, while using tax loopholes to get out of paying any corporate income tax.  To celebrate, they apparently then laid off 330 workers citing declining use of one of their products!

And this is not an isolated case.  For example, there is Merck – a pharmaceutical giant!  It was reported that Merck’s second quarter report for 2011 showed that profit rose to $2.02 billion, or 65 cents a share, up from $752.4 million, or 24 cents a share, a year earlier, helped by a $1.34 billion tax benefit.  In the same breath, the company announced the axing of an additional 13,000 jobs.

And there was another recent case of an Australian Mining Company that posted record profits but is also downsizing to maintain their profit margin ( I could not re-trace the story but I did read it somewhere).

So, okay.  I just don’t understand this sort of economics; nor do I think I want to.  Something is amiss with the GREED economy.



22 thoughts on “Where Profit Can Be So Disappointing”

  1. I totally agree. I think we went to the same school.
    I don’t understand it either. I learn how to live within my means and companies are not able to do that. It seems that they should be able to do that. It’s a dizzying mix of insanity that I do not want to be part of. It seems that we got into this economic situation by the same thinking – let’s build a bigger bubble and let someone else pick up the pieces when it bursts.

    But isn’t it all part of the “we must only have good news” mentality in our world?
    People seem to be losing grasp of the fact that there are good times and bad times. So when the bad times come they are ill equipped to deal with them. And in the corporate world this is exponentially exacerbated.

  2. Mobius,
    I think you hit the nail on the head when you said that people “seem to be losing grasp of the fact that there are good times and bad times.” Nowadays they talk about annual growths of 20% and higher. That is not sustainable in a real world – only in their surreal boardroom worlds.

  3. Greed has been around for a long time. I work to keep my head above water and I don’t deal with too many money hungry companies because I can’t. Would I like to see things be better sure. But it isn’t going to happen in my lifetime and I know there are good days and bad days. These are the days the Lord gave me.

  4. It is rediculess and weird LGS. That bunch has no scrupelus. let’s fire all these CEO’s and get rid of the shareholders. Buy real appples, eat them and you don’t need Mercks anymore either 🙂

  5. Please do not turn into my second husband. He would get so overwhelmed by the problems of the world that he could barely move. I felt bad for him, I really did, and he was eventually diagnosed with depression (after I was gone), but he never could quite be happy. He escaped to some sort of Zen resort type place and taught yoga, but when I saw him at my daughter’s wedding in 2010, he still looked very sad. The Serenity Prayer exists for a reason. it’s a shame more people don’t understand it.

  6. Marja,
    Being from a biomedical background, I was horrified to learn that even previously elevated pharmaceutical companies have been found guilty of lying and bribery for the sake of putting profits over everything else including the health and safety of their customers.

  7. geewits,
    Thanks for the concern. I too hope I do not turn into your second husband. I believe that life is to be enjoyed and celebrated. Despite all the problems of the world, I am thankful each day just to be breathing.

  8. Pretty sad when the business section of the local paper says that a particular company beat the analysts estimates by losing “less” money than what Wall Street had predicted…

  9. OK I will try to get you loyal nuttiness to understand modern economic theory, Once we used the system of supply and demand, as demand went up so did the need for supply, the more of a widget that was sold the lower the price could be because the volume was there, the less a widget was in demand the higher the price was because it cost more to produce and if the slide in the demand for the widget was lost, then lay offs were a part of the economic reality necessary to save the company.

    There is your 1+1 = 2 theory

    That was called supply capitalism.

    Now we have moved to where the only asset a company has that s in need of protection is the financial asset. Not the brick and mortar or the people or even the “real profit” for those can be made up through subsidies and tax avoidance on the government level. In order for a squirrel to play in this market he does not need,1 nut, 2 nuts, or even a hundred thousand nuts. He needs Billion nuts to compete and has to understand that capitalism for profit is based mostly on a non existent profit but in the trading of shares(or partial ownership of a company) so what governments have done, at least in America they have been successful in privatizing old age retirement benefits and forcing more money into the “economy” it’s real money but it doesn’t do any real good in the economy only in the market of for profit capitalism which is global.

    Now this is what you ave to understand about the New World Order. The really big boys who play with 100’s of billions of nuts creat a demand for a product and blow smaoke into it.Investors see the smoke and follow suit which drive the price of the stock up and everybody is happy because it always looks like they are worth a half million nuts or more… then when the big boys have doubled and tripled the worth (went short) of their investment on the price of the stock they sell. which collapses the price of the stock and because they were betting it would go and fall the went short and reaped all of the money the suckers put int it for the long haul.

    And that is how you get wealthy today. The real name for this is venture capitalism.which is why I want Romney to be president of the united states, he understands it all even where to hide money so he doesn’t have t pay any taxes…and because-within one year America will feel like home all over because everywhere will be like Detroit and i will feel at home again in America.

  10. Sorry to say, LGS, that companies like to “project” what they think their revenues will be, and this is based entirely (or almost entirely) on their “wish list.” And so if they wish for the moon and stars, and they only get as high as the top of a skyscraper or a few clouds, they are “disappointed.” If you wish to hold a $5-billion lottery ticket and you only win $3-million, your results – in much the same manner – are “disappointing.” Dreaming big is OK but……why is everyone so disappointed when reality doesn’t measure up? Any smart squirrel knows, you can only bury the nuts you have!

  11. The chickens are coming home to roost Squirrel. Capitalism vs Communism. Capitalism wins. Now it’s on to “maximizing profits” Reaganomics. Profits wins. You lose. Capitalism is a morally corrupt system because it is driven by greed and gluttony but I fear there is no way to put that genie back in the bottle. It has to be destroyed.

  12. G.B.
    In a way, that is sad but more comprehensible. Making losses and lay offs are always bad news even when it is not as bad as expected. But to lay off people when a company makes record profits seems unethical and smacks of profiteering gone wild.

  13. Mark,
    Thanks for the economic lesson. So basically, it is a system in which the greedy rich get richer by running a kind of crooked gambling scam to swindle money from the greedy poor. And you would prefer Romney, because it would bring the rich down to the level of the poor? I think anything might be better than what we have now.

  14. Mr. Charleston,
    I totally agree. But I also believe that Capitalism is all about self and as a result, the social structure is sacrificed in the name of profit. I guess i will always be a Socialist squirrel.

  15. Eva,
    I think the first step is to be aware and to be more informed about the organisations that we buy things from. For example, some pension funds and investor groups make it clear that they will only invest in companies of high environmental and social standards.

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