Is our regional economy slowing down again?
Tampa Bay's 10 largest public companies saw a combined 8 percent drop in earnings in the latest quarter compared with a year ago. It's a troubling sign the corporate momentum spearheading the modest economic rebound may be in trouble. Seven of the 10 saw earnings declines in their latest quarters. The good news is that all but one of the 10 still made money.
The bad news is Tampa's Kforce, a temporary staffing business, suffered a severe hit that resulted in a $33.2 million loss for the quarter. The loss was blamed on a $42 million writedown of goodwill — an accounting move brought on by government fiscal and staffing pressures that made it hard for Kforce to complete some of its contracted government service projects.
Combined, the 10 area companies produced earnings of $427.1 million for the quarter, down from $467.9 million a year earlier. Most of that difference stemmed from the Kforce loss, a likely one-time event for the staffing firm.
The performance of Tampa Bay's bigger companies is a key barometer in measuring the strength of the region's emergence from recession. Combined, these businesses employ tens of thousands of workers and influence the creation of many thousands more jobs in the metro area.
Some of the 10 fared well.
Clearwater computer parts distributor Tech Data Corp., the largest public corporation here by revenues, enjoyed a gain in earnings in the quarter. So did Clearwater-based home oxygen supplier Lincare, although the company was just acquired by the German company Linde. That means Lincare's stock (LNCR) is no longer traded.
The biggest winner was Raymond James Financial. Earnings soared 63 percent to $76.4 million — despite a weak showing by the stock markets in the quarter. RayJay was bolstered by its recent acquisition of the Memphis-based brokerage Morgan Keegan.
Global electronics manufacturer Jabil Circuit, based in St. Petersburg, saw its earnings dip slightly. But it still made far more money, $101.3 million, in the quarter than any of the other nine companies.
In St. Petersburg, earnings at TV and Internet retailer HSN slipped as the company sold several businesses in its Cornerstone catalog unit. Gone are both window treatments retailer Smith+Noble and upscale casual clothing provider the Territory Ahead where, for example, men's shirts typically sell for between $70 and $100. HSN also added a business in the same quarter: a children's and baby boutique called Chasing Fireflies.
At Tampa's Sykes Enterprises, earnings fell by one-third to $7.8 million in the quarter as many corporations continue to rethink whether to outsource call center work to firms like Sykes. The company exited from Ireland and South Africa in the quarter.
To be sure, the performance of 10 Tampa Bay companies does not fully capture the precise speed of the regional economy. But it gives a sense that our financial foot is off the accelerator.
As a regional economy, we're hardly alone.
As the Associated Press reported Wednesday: "The recession that ended three years ago this summer has been followed by the feeblest economic recovery since the Great Depression."
Contact Robert Trigaux at [email protected]