July 2 - An increasing number of U.S. companies are pointing fingers at Europe, blaming them for earnings that will fall short of expectations. Bobbi Rebell reports.
PLEASE NOTE: THIS EDIT CONTAINS 4:3 MATERIAL Starbucks is doing it. And so is Hewlett Packard. Even Ford Motor is doing it. The Blame Game. Pointing fingers at Europe as they prepare the markets for earnings that will be anything but hot this summer. S&P Capital IQ's Sam Stovall: SOUNDBITE: SAM STOVALL, CHIEF EQUITIES STRATEGIST, S&P CAPITAL IQ: "Let's face it Europe either is in or will soon be in recession. S&P as well as IHS Global Insights are forecasting about a 0.6 percent decline in GDP in Europe in the second quarter and 10 of the 17 euro zone nations are expected to post negative GDP for the second quarter." 14 percent of all S&P 500 companies' sales come from Europe alone. And business has been bad. Starbucks's suffered its first same-store sales decline in Europe since 2009. PC maker Hewlett-Packard said Europe is one tough place to do business right now. Ford Motor says its losses from outside the U.S. could be triple the $190 million from the first quarter because of the headwinds from Europe. And of 85 S&P 500 companies that have warned, at least 20 blamed Europe specifically, and 15 pointed to currency issues. That's because the stronger dollar can make it more expensive for Europeans to buy U.S. produced goods. Thomson Reuters Analyst Jharonne Martis: SOUNDBITE: JHARONNE MARTIS, ANALYST, THOMSON REUTERS (ENGLISH) SAYING: "A strong dollar definitely makes the U.S. less competitive. It means that U.S. goods now cost more abroad and it also means that the sales that are generated will be worth less in the U.S. which definitely magnifies the problem and will hurt earnings." And unlike in the past, U.S. companies aren't able to rely on other regions for support. Even China is feeling the pinch. Bobbi Rebell, Reuters.