China dragged down a lot of giant companies last quarter

China’s economy appears to be on a smoke break.
China’s economy appears to be on a smoke break.
Image: Reuters/Wong Campion
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With the third-quarter earnings season for American companies in the rearview window, the question is what did we learn? That is, aside from the fact that the overall numbers were, well, meh. The biggest standout was China, which appears to be coming up short in its role as the world’s growth driver.

According to analysts from market data firm FactSet, about 73% of the companies that reported earnings so far beat the consensus expectations for earnings per share. That may sound pretty good, but it’s actually about average. Like the children of the fictitious Lake Wobegon (a bedrock of the long-running American radio show, A Prairie Home Companion), nearly everyone is an out-performer during earnings season. In revenue terms, about 52% of companies that reported beat expectations, which is slightly below the average over the previous four years, according to FactSet.

More interestingly, here’s a smattering of quotes culled from earnings calls that collectively show that a big corporate America feels weighed down by China.


Asian economic projections are mixed, as expansion in Japan has been offset somewhat by slowing China growth.

-D. Scott Davis, CEO. (Oct. 25.)

Cisco Systems

Overall, [orders in] Asia-Pacific, Japan, and China were down 10%. China continued to decline as we and our peers work through the challenging political dynamics in that country.

-John Chambers, CEO. (Nov. 13)


From a geographic perspective, we saw broad-based revenue growth. Overall, both developed and emerging markets showed strength. The U.S. and parts of Western Europe were particularly strong, while China was weak.

-Amy Hood, CFO. (Oct. 24)


I think China has already had a slowdown and is beginning to recover. We see that, and there’s always also a lag between the GDP per capitas and disposable incomes. So, also important to realize that they don’t all happen at the same time.

-Muhtar Kent, CEO. (Oct. 15)

Corning Inc.

The majority of the year-over-year increase was due to carrier growth in North America and EMEA as well as enterprise growth in North America, which more than offset year-over-year declines in China fiber sales. The China fiber [optic cable] market was softer than expected in Q3, and we believe this will continue through Q4.

-James Flaws, CFO. (Oct. 30)

Avon Products

Looking at our Asia-Pacific business, I’m not satisfied with our performance. We continue to work through our challenges in China. But as I said in the previous call, it will take some quarters to stabilize that business.

-Sheri McCoy, CEO. (Oct. 31)


There is and has been, as you all know, a slowing of the economy. The GDP is at its slowest growth level in 23 years and that’s causing a bit of a credit crunch across China, slight decline in consumer confidence that goes along with that as consumer sentiment is very cautious is the way I would describe it.

-Don Thompson, CEO. (Oct. 21)

YUM! Brands

Based on KFC China’s sales for September, which is part of China Division’s fourth quarter, and the less than expected sales lift from the launch of our new beef burger, it’s now unlikely that China Division’s same-store sales will be positive for Q4, although we do expect to show improvement.

-David Novak, CEO (Oct. 9)

Starwood Hotels & Resorts

Clearly, growth in China has been disappointing this year, and this trend continued into Q3. We saw a small sequential pickup, but not as much as we had expected. More recently, the economic news coming out of China suggests a stronger trend. This should clearly help. On the other hand, the government’s focus on curtailing spending on entertainment by public officials continues, hurting our business in regions where this is the largest source of demand.

-Vasant M. Prabhu, CFO. (Oct. 24)


China is still a challenging market, and that’s why we have gone through some retrenchment over the last year-and-a-half and two years.

-Albert Stroucken, CEO. (Oct. 31)


Revenue was higher for every geography, except China.

-Donald Blair, CFO. (Sept. 26)