Wal-Mart has posted a higher third quarter 2008 profit:
NEW YORK – Wal-Mart Stores Inc. reported a 10 percent increase in third-quarter profit Thursday but trimmed its profit outlook because of the troubled global economy and the renewed strength of the dollar.
The world’s largest retailer said its renewed focus on low prices was attracting financially squeezed shoppers and that it was pleased with the results of early holiday price promotions.
The Bentonville, Ark.-based retailer said it earned $3.14 billion, or 80 cents per share, in the quarter ended Oct. 31. That’s up from $2.86 billion, or 70 cents per share, a year earlier. Earnings from continuing operations were 77 cents per share.
Total sales for the quarter rose 7.4 percent to $98.64 billion from $91.86 billion a year earlier. Analysts surveyed by Thomson Reuters expected earnings of 76 cents per share on sales of $98.28 billion.
Toyota U. S. showed a third quarter 2008 profit:
Toyota’s net income for the three months ended Sept. 30, probably fell 50 percent to 227 billion yen ($2.28 billion), according to five analysts surveyed by Bloomberg News. The company’s full-year profit will be 1.05 trillion yen, 16 percent lower than its forecast, according to analysts.
Southwest Airlines ran a profit, too, albeit a very modest one:
Southwest Airlines Co. reported 3rd quarter 2008 earnings of $0.09 per share on 10/16/2008. This met the consensus of the 13 analysts following the company.
and Bank of America is still making money:
Bank of America’s third-quarter earnings skidded to $3.7 billion, or 82 cents a share, from $5.42 billion, or $1.18 a share, a year earlier.
As we consider bailouts for this firm or that I think that it’s important that we remember that, by reprieving failing companies from the death penalty, we are subsidizing losers at the expense of the winners and there are still winners, even in industries that are showing broad declines. Propping up bad companies actively punishes good companies by robbing them of market share and profits that would otherwise be theirs.
Why are companies like Wal-Mart, Toyota U. S., Southwest Airlines, and Bank of America continuing to prosper even as so many in their respective industries falter? Some of it may be better technology; some of it may be plain luck. But I think that some of it is that they have better business models than their competitors.
That doesn’t mean that we should never grant such reprieves. However, I think that when we do grant them we need to demand more than just a change in technology or even a return to profitability. I think that companies that are failing because their business models are failing should either be compelled to change those business models or die.
Failure to do so will not only create a drain on the prudent and punish the successful. It’s eating the seed corn, sacrificing the future to forestall an inevitable decline.