Caldari Markets Shaken By Megacorporate Profit Warnings | EVE Online

Caldari Markets Shaken By Megacorporate Profit Warnings

New Caldari - The Kimotoro stock exchange reeled today as a number of Caldari megacorporations issued profit warnings for the second quarter, triggering a sell-off and a 7% decline, the largest single-day drop since the collapse of the Crielere project four years ago. While spokesmen from the CEP and CBT urged calm, market watchers in the State and elsewhere around the cluster are quietly worried that this is yet another symptom of a worsening recession in the State. "This is the sixth quarter where more than a third of Caldari corporations have failed to meet expected growth," said one trader who declined to be identified. "There's no sign that things look like they'll be turning around anytime soon."

Over the course of this morning, Kaalakiota (down 9%), Lai Dai (down 5%), and Wiyrkomi (down 6%) all issued profit warnings; among the reasons cited were the contraction of markets in the Republic and Empire, as well as an influx of cheaper foreign goods hurting their domestic markets. Hyasyoda also issued a profit warning later in the day, but most brokerages generally agree this is a minor blip and not a significant trend, as the megacorporation has spent the last six months making a significant investment upgrading its infrastructure on several key colony worlds; the company's stock price was not significantly affected as a result.

While most corporate brokerages in the State are publicly agreeing with the CEP's analysis that these shortfalls are simply part of the normal boom and bust cycle of the market, privately, many experts in both the State and elsewhere are saying that this could be something significantly worse. "Many of the megacorporations are responding to economic stresses with stronger protectionist measures, and while that might have helped in the short term, in the long run it's causing some serious problems as their competitors respond similarly," said Faye Nicolette, an economist at the University of Caille. "Domestic trade in the State is starting to suffer as the megacorporations raise tariffs not only on foreign goods but on their competitors' goods as well." According to sources close to the CEP, confrontations between the two Liberal megacorporations, Ishukone and Hyasyoda, and the rest of the Panel members over free trade policy are getting increasingly heated, with the Hyasyoda and Wiyrkomi representatives nearly coming to blows at one point. New Caldari insiders say this kind of tension is only likely to increase if the State's economic problems get worse.

While none of the four warning corporations have announced any dramatic policy shifts in response to the drop in profits, most experts agree that some significant measures are likely to be implemented over the next few weeks in an effort to raise their fortunes. Already, rumors are circulating that the boards of Kaalakiota and Wiyrkomi plan to renegotiate contracts with large numbers of their employees, asking for substantial temporary reductions in pay and benefits in order to shore up their budgets and free up liquid capital. Even those corporations that have so far been relatively stable, such as Ishukone, Nugoeihuvi, and Sukuuvestaa, are looking at ways to cut expenditures and open up new markets in an effort to stave off similar shortfalls.