Bullish CFOs See Earnings Gain, Not Decline

Confounding the conventional financial wisdom that corporate earnings will decline about 5% this year, a majority of CFOs in U.S. firms anticipate 1999 earnings will be better than 1998's. Executives in the largest firms, companies with annual sales greater than $5 billion, expect earnings to increase 6%; those in midsize companies expect a 13% gain; and those in the smallest firms are figuring on a nearly 20% rise, reveals the most recent Financial Executives Institute/Duke University Corporate Outlook Survey. Most CFOs expect that earnings will pick up after a slow start. While 58% of the companies surveyed expect an earnings increase in 1999, only 7.4% anticipate they'll report earnings increases for the year's first quarter. "It is notable that 58% of the firms expect earnings to increase in 1999, because only 15% expect sales revenue to increase," says John Graham, a Duke finance professor and director of the survey. "This indicates that many firms will wring their increases from cost-cutting programs."