Liam Dann: A time to be borne, a time to digest figures

Season of corporate reports is more important than ever

In unsettled economic times the corporate reporting season matters to all of us.

The ebb and flow of revenue, costs and profits are closely watched by investors - attuned to personal losses or gains that may flow from the numbers.

But the big corporates don't exist in a vacuum and now more than ever they provide a barometer for the state of the economy.

Likewise, the outlook provided by chief executives with the results can provide as good a forecast of the months ahead.

The predictions of big companies may also be self-fulfilling. If the outlook is grim, a company will keep retrenching and that in turn will play its part on the road to recovery.

Telecom, for example, has taken the best part of $90 million in costs out of its business in the past six months.

From a shareholder's point of view that shows chief executive Paul Reynolds is doing his job and earning his multimillion salary.

But from a macro perspective, that kind of contraction is the opposite of the stimulus and spending the Government has suggested to restore confidence.

Given Telecom's warning on the outlook for the next six months, it's a good bet they'll be keeping the squeeze on expenses.

If those kinds of warnings are mirrored by other big employers over the next few weeks, then the message will be every bit as chilling as last week's surprise unemployment figures.

Others may be more upbeat.

But thus far, the story of the year has been ominous reminders that the road back to strong growth will be longer and more difficult than it looked late last year.

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