The Sales Engine Kicks In

摘要

In 2003, companies saw the results of productivity improvements flow to the bottom line. Now the final piece of the corporate-profit recovery is falling into place: sales growth. First-quarter earnings for the 900 companies in BusinessWeek's Corporate Scoreboard surged 25% from the year before. But what stood out even more was the Scoreboard's 12% increase in revenue, the largest gain in three years. That's good news because companies can't drive profits through cost-cutting forever. Sales must rise if earnings gains are to be sustained. "Now what you have is the top line growing fast, and cost restraint remaining tight," says Richard Rippe, chief economist for the Prudential Equity Group. "That's nearly perfect for profits." Indeed, rising revenues helped plump up margins this quarter to 75%, from 6.7% the previous year.