Strategies For Survival

Wiggling out of last year's profit squeeze can be done. But it takes a mix of managerial policies, and no little ruthlessness to boot

Rarely has a sour note turned so sweet so fast. While production, jobs, incomes and consumer spending soared in the U.S. last year, corporate profits fell. To be sure, they fell only 0.8%, but that result stood out like the proverbial uncertain trumpet in a triumphal march. By April, analysts had begun muttering about "profitless prosperity" when--bingo! Within days, company earnings reports for the first quarter of 1999 heralded what the government eventually calculated was the strongest profit rebound in four years.

So what's going on here? There is no mystery about what caused the 1998 squeeze: company executives could not...

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