Skip to main content

The Globe and Mail

When business is just too good to make your profit target

Every three months, the markets are gripped by a kind of madness, otherwise known as quarterly earnings season. It lasts about 10 days or so, but the impact can unravel investment strategies and alter lives.

Most eyes focus on a single number – earnings per share. Everything from the careers of executives to the fortunes of big fund managers and the hopes of small investors ride on whether companies make, exceed or fail to reach analysts' estimates. Which may explain why this has also become prime alibi season, when the misses prompt some remarkable responses.

Among those pleading guilty with an explanation this time:

Story continues below advertisement

ABB Ltd. Extreme weather has always been a handy fall-back for the profit-challenged. Severe droughts, floods, hurricanes, polar vortexes and the like can hit everything from insurance margins and airline costs to wine production and fertilizer demand. But in the case of ABB, the problem is having too much of a good thing. The Swiss-based engineering giant, which is developing wind-powered sources of electricity, slashed its projected net income for the fourth quarter because of too much wind. Gales in the North Sea forced delays in offshore wind projects, along with other problems in its power systems unit.

"We are addressing issues in this division unrelated to offshore wind power with a high sense of urgency," CEO Ulrich Spiesshofer insisted last week. He can't do anything about the natural storms, but maybe more wind power isn't the way to go when costs are high and wholesale electricity prices are plunging.

United Parcel Service Inc. The fourth-quarter numbers will be revealed Friday, but the company has already signalled that its results were marred by too much business. It seems the crush of online retail orders between U.S. Thanksgiving and Christmas forced UPS to hire 30,000 more temps than it had accounted for in its budgeting, boosting expenses and reducing margins. And in case success turns out to be a poor excuse for a logistics company famed for its cost controls, there are always those vicious winter storms to fall back on. Now, if only those digital shoppers could be persuaded to wait longer for their merchandise, all would be well.

Yahoo Inc. Well, at least high-profile CEO Marissa Mayer is consistent. Revenue fell 6 per cent in the fourth quarter, matching the top-line shrinkage of a year earlier and reflecting a continuing decline of its share of digital advertising.

Take away Yahoo's lucrative 24-per-stake chunk of Chinese Internet company Alibaba and its stake in Yahoo Japan, and there would be precious little left to spark any investor enthusiasm.

Henrique de Castro, who was lured from Google by a rich pay package to become Ms. Mayer's chief operating officer, has been tagged with the blame for the ad miseries and dumped at a cost of $109-million (U.S.) after only 14 months. He was apparently so valuable that he is not being replaced. "Ultimately, Henrique was not a fit," said Ms. Mayer, another Google veteran. If the numbers don't improve, shareholders may soon be saying the same about her.

Royal Philips NV. The Dutch lighting, health-care and electronics company reported stronger sales and profit. But it makes our list as one of the early signalers of trouble ahead from the tumult in emerging markets. "Social unrest as we have seen in Turkey or currency weakness as in Indonesia are not helping us," CEO Frans van Houten warned. It's sure to be a leading excuse by the time the next quarterly earnings season arrives.

Story continues below advertisement

Report an error Licensing Options
About the Author
Senior Economics Writer and Global Markets Columnist

Brian Milner is a senior economics writer and global markets columnist. In a long career at The Globe and Mail, he has covered diverse business beats, including international trade, the automotive industry, media, debt markets, banking and the business side of sports. More


The Globe invites you to share your views. Please stay on topic and be respectful to everyone. For more information on our commenting policies and how our community-based moderation works, please read our Community Guidelines and our Terms and Conditions.

We’ve made some technical updates to our commenting software. If you are experiencing any issues posting comments, simply log out and log back in.

Discussion loading… ✨

Combined Shape Created with Sketch.

Combined Shape Created with Sketch.

Thank you!

You are now subscribed to the newsletter at

You can unsubscribe from this newsletter or Globe promotions at any time by clicking the link at the bottom of the newsletter, or by emailing us at