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The Worldwide Economy Is Fine, But The Sales Reps Are Lazy - Or Something
Wolf Richter www.testosteronepit.com www.amazon.com/author/wolfrichter
Some of the crown jewels of corporate America have reported declining revenues and earnings, and have lowered their forecasts, and in doing so, have unleashed a flood of obfuscation and excuses – from Easter falling on the wrong date to lazy sales reps. So when Caterpillar reported on Monday, it was almost refreshing in its unvarnished ugliness.
Sales plunged 17.7%, profits 44.6%. “A challenging first quarter,” Corporate Controller Mike DeWalt called it. Dealer sales had been less than expected, inventories had piled up on their lots, and they’d cut back their orders to bring down their inventories. End-user demand was down, along with sales of aftermarket parts. Everything was down. But manufacturing costs jumped, and profits sagged. The rest of 2013 would be tough, and revenue guidance was lowered by a chunk. Not a single excuse.
Then there’s IBM. Because it’s the world’s largest supplier of information technology, its earnings report is a harbinger of things to come... namely excuses. A technique it had picked up from Oracle last month. Oracle’s earnings call was a mess. Revenue dropped 1%, instead of being up. Revenues from new software licenses and cloud subscriptions dropped 2%, after the company had forecast an increase of 3% to 13%. Hardware sales were a disaster. Who did they blame? First, the government – the quarter “ended on the same day as the sequester deadline,” explained President and CFO Safra Catz – then the sales reps. Oracle had just hired 4,000 new reps around the world; that was the problem Catz and President Mark Hurd said in unison. They hadn’t been trained yet. It was just “sales execution.” Nothing else. Certainly not the economy, Catz pointed out.
“What we really saw was the lack of urgency we sometimes see in the sales force as Q3 deals fall into Q4,” Catz said. Those “new reps,” she said, “ran out of runway in Q3.” They just couldn’t close their deals. “The issue for us is simply conversion,” Hurd added. “Clearly we have work to do in training new reps on managing the sales processes,” Catz chimed in. What about the old reps? Where they all on vacation? They didn’t say. Not a good omen.
Thursday evening, it was IBM’s turn to report a first-quarter earnings shortfall and revenues that, instead of growing, had skidded 5% from a year ago. To get back on track, IBM would swing the axe, at a cost of $1 billion in the second quarter – “workforce rebalancing” was its newfangled term, “to better align our resources to opportunity.” There’d be a lot of “rebalancing.” The term was used 14 times during the call. And it would dump some businesses.
Why the drop in revenues? “We had a shortfall in sales execution in our software and mainframe businesses,” explained Mark Loughridge, Senior VP and CFO. These sales reps just hadn’t been able to close the deals in time, which then rolled over into the next quarter. The same disease that had afflicted Oracle reps. He blamed Easter, which fell into March, at the end of the quarter. He said most of those rollovers were in Europe and the US, countries impacted by Easter.
A few moments later he added that revenues in the Americas were down 3%, with steep declines in the US and Canada “mitigated by double-digit growth in Latin America.” Wait a minute. Easter – in fact the entire Holy Week – is a huge event in Latin America; yet Latin America had “double-digit growth?” Despite Easter? While rollovers due to Easter destroyed sales in the US where Easter isn’t that big?
Revenues were down in other places: Europe, the Middle East, and Africa saw a 4% tumble – most of the countries were down, but Spain “returned to modest growth,” he said, though Spain is precisely where the Holy Week and Easter are huge. In Asia-Pacific, revenue was down 1%, with white-hot China posting “modest declines” and with depressed Japan growing 3%.
At any rate, there’d be a good list of unfinished deals, the “rollover transactions,” that would kick-start the current quarter, and revenues should be up, right? Um, no. “I did not mean to indicate that all else would also be on the original performance track,” he said. “So, in fact, I still believe there are parts of our business that are in transition or have been underperforming that also were disappointing....”
What a tangle of obfuscation. Blaming sales reps, Easter, and whatnot to disguise what pulled the rug out from under IBM. It’s the same problem that other gauges of the global economy, such as Caterpillar and Oracle, have: declining demand in the US, Europe, and China, combined with tough competition.
A scary thought that the three largest markets in the world could weaken simultaneously – despite the prodigious amounts of money that central banks have printed and handed out. That phenomenon must be hidden under layers of lazy sales reps, sequester deadlines, and badly timed holidays. Yet, at the very end, something did slip out: “We are clearly not immune from changes in the global economy,” Loughridge said during his wrap-up, the most revealing sentence of the entire earnings call.
The FBI and Justice Department put-on a media dog-and-pony show to trumpet how the combined forces of law enforcement captured the Boston Marathon Bombers. Nothing could be farther from the truth. The real investigative heroes were millions of members of the social-media site Reddit, who virally leveraged their diverse skills. Read.... Homeland Security Failed In Boston
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IBM is nearing the end of its strategy of getting one time gains via outsourcing to high school kids in India. IBM=Indians Badly Managed
And how many of those cuts are going to be to the sales force? (been there, very much done with that).
Are you kidding me. How can the worldwide economy be fine? I doubt that even a single place can be found on this earth where the economy is not struggling. Just look around...poor people are everywhere and the number of them is increasing as a day goes by. We will soon not going to see anything other than speedy loans, foreclosures and in one word: everything that creates possible debts, including credit cards of course. This is just crazy. Not only the first quater is challenging, but the entire year!
No need for heavy equipment...bullish, definitely bullish.
Shirley bullish - what else could it be?
Oh I can't wait for this new bullshit internet tax. This fucking place is getting nuts.
I got an email from ebay with a form to fill out to email my "representatives" against the tax.
I did it. Doubt it will affect them much, though one has on occasion not towed the line and listened to constituents.
If they tax me online then I will buy less; I"ve been taxed and fee'd to death already.
Yes I filled it out also. Of course im already 'in the mix' as I run an LLC. I fuck them for every deduction I can if they're going to make me pay im going to make them pay. Basically equates to a stalemate, not worth the fucking headache and tons of paperwork for everyone. Oh well, ill hire a hot 20 something desk bitch.
That's a good sheep! The shepherd and his sheepdogs like it when you head in the right direction.
Homer head slap ensues!
mo \dooooooooo....nuts pls.
very good, I hoped I'd find you together. I have a book reccomendation for you both: I just finished to read Charles Murray's "Coming Apart". Very interesting and imo a solid work of sociology (if this is in any way possible). Author is libertarian/conservative and tries to find an explanation to what "the heck" happened to the quintessential American Way of Life ingredients voluntarism and community between the 60's and the 90's. I found it readable, quite devoid of BS and very engaging
Thanks for the recommendation, Ghordius. I'll look into it.
[edit] I've looked at the NYT and some of the Amazon reviews and I'm not hopeful. :/
From those reviews, it would appear that he hasn't addressed the need for a total re-think of the structure of advanced societies in the face of the potent combination of the Techonogical Revolution and Enlightenment Statism.
Just one example: In my opinion, bemoaning the disintegration of communities in these days of international air travel and long-distance commuting won't turn the clock back to hand-me-down careers in the village mill and weekends with the extended local family/tribe. We also need to accept that the planet already has too many mouths to feed and that "the meaning of life" is not to breed like rabbits in order to overwhelm neighboring tribes.
I commented here a few years ago on similar attitudes that I found with my big multinational clients - where I had to steer them towards more productive and creative uses of all their existing personnel (and possibly employing more!) in the face of savings from automation, rather than just cutting staff and maintaining a status quo with respect to product quality and customer service.
But I'm judging too quickly and will comment further later.
actually the fact that he was refraining from putting up reccomendations was endearing, to me. I have a weakness for writers who focus on how reality looks like without immediately explaining "how it ought to be", something might change with time anyway
kudos for remembering that existing personnel is an asset for every firm, and every loss of them often a missed opportunity
Well, sales of bullion coins and bars seem to be doing well enough. Many shops are just sold out. Do they have better sales staff you reckon?
Reloading supplies are hard to come by also.
"Reloading supplies are hard to come by also."
Yup. Primers are pretty much nonexistent where I live. Bullets can be backordered though.
Product sells itself.
I want my money back from Homeland security....all my money did was buy new toys. They failed. They will continuously fail.
It is all about how many toys they have..high tech stuff to make them go OOOOH and AAAAAH. But no boots on the ground. No intelligence.
Get rid of the toys. Hire real people with minds that can think through stuff like this.
Unfortunately, Easter fell on Sunday this year
@ Pit:
Um ... the real problem is no money has been printed. Where is all this printed money everyone is talking about?
What the central banks have done is add trivially to the flow of debt, they have not increased the stock of it, in fact they cannot.
Everyone is flat broke. There is no 'printed money', it's a myth like Santa Claus. The Establishment is reduced to outright thievery ... this is bad for the bulldozer- and computer 'cloud' businesses believe it or not ... and all the other businesses, besides.
The human race: broke and in debt up to their eyebrows ... so as to waste for no gain. Now ... it's over.
The human race: broke and in debt up to their eyebrows ... so as to waste for no gain. Now ... it's over.
__________________________________________
No. 'Americans' are broke and buried into debt, goes way beyond their eye brows level.
Other human beings? This is an 'american' world and they must shoulder the debt of 'americans'.
'Americans' disappear? Their debt problem is solved.
There are still human beings living like primitives and they cant be pushed on par with 'americans' when it comes to debt.
"There are still human beings living like primitives and they cant be pushed on par with 'americans' when it comes to debt."
You mean they haven't applied for their Capitol One Card yet? Why not, it's (kinda) free, ya' know.
Reading your posts I have to agree that there are indeed human beings like yourself thinking like primitives, that can't be pushed at par with rational minds ...
With the coming of the Chinese Citizenism Communautist Party, came the idea of non humans, the only way the Chinese citizenism system found to resolve its inner contradictions. Every human being is entitled to rights, if some are not, that is because they are not human beings, but half-man half-thing.
So jump on the Chinese Citizenism Communautist train.
I love you AnAnonymous.
Will you bear my child?
.
Hope it's not born a girl. You know what happens...
Reminds of ancient proverb of Chinese fabled past:
"A baby boy in the hand is worth two girl fetuses in the broth pot".
Akak, I conjure you: Take a deep breath. Mind your breathing. Take two Aspirin and lay down on your bed. If you then still want a child with AnAnonymous, take a bottle of booze and lay down on your couch. If that doesn't help either, give me a call and I shall head over to you and do my best to help. You shall regain consciousness!
Alas, alas, three times alas, it would all be for naught.
The 'american' heart wants to blob-up what the 'american' heart wants.
I see: You already got better.
Once you go chink, you get used to the stink.
The answer is here, please send your check today.
www.truthinaccounting.org
The Obowel Movement says the economy is recovering just fine...........
What HASN'T the Obowel Movement lied about?
The fact that he really likes to golf? Sorry, it's all I could come up with. =)
Credit contraction to try to contain the inevitable outflow...
Why don't they just say the crooks in Washington and Wall Street stole everybody's money.
Listen to any business owner or manager..........it's always the sales reps faults. No matter what. If there's a nuclear war goddamnit there's no fucking excuse not to find just as many customers as you did before and if you don't your fucking fired.
On the flip side, when business is good, it's never due to great sales reps, is it?
Dynamic new products, great ad campaign, new packaging or discount structure, etc., but sales reps are only the reason when sales drop off.
I work as a sales rep and have seen a definite change in customer attitudes. 90% of the people I talk to are very budget conscious, many asking for discounts even if they order 1 or 2 items. In the past, they would ask for special finishes, now it's polished unlacquered brass, because it will develop a patina over time, with patience. Before, they wanted the antique brass finish or other special finishes to satisfy their needs for everything to "match" right away. Customers are also arguing over the price of shipping charged. They're doing their homework and realize that we charge a 20% premium over the actual shipping costs, now I've been ordered to tell them that it's for shipping, handling and insurance.
Our website also sees a lot of incomplete orders. The shopping cart is left full and the customer information has been entered, but they have backed out of the sale. I have been told by my sales manager to contact these people to enquire about why the order was not completed. Most customers say that they saw the total and wanted to shop around for better prices. Mind you, our prices are around $1.00 to $20.00 under our competitors (depending on the item). Many opt to do business with our competitors, because they offer free shipping for orders $100.00 or more. The owners of the company have so far refused to offer this, and they refuse to listen to any argument regarding the pros vs. the cons of this subject. I honestly don't know what we are going to do when we have to charge sales tax for internet orders on top of everything else. I really think that charging this tax is going to scare a lot of people away from shopping online.
Sucks to be a sales rep in this Depression. The high total sales are getting fewer and farther in between.
If something looks too ugly to be true,
it probably is true, unless the whole global economy is under the influence of QEternity
In other news...DHS has successfully tracked down and isolated the terrorist AP hacker of 2013.
They are currently on board, cooperating and excited for the trip to Gitmo.
Put me down for 3 days, 5 hours until they drop the charges against the yet to be arrested hacker.
How many weapons of mass destruction did they find?
Ain't it just like a bean counter to blame it on the sales guys! They probably got mesmerized by his dynamic leadership style, and accidentally forgot about their customers.
What a tool.
For sake of economy, must outlaw holiday and sales reps.