Quarterly findings show signs of stabilization by early 2010. Own-company revenue targets, while sharply negative in the prior two quarters, have been reset for the next 12 months to a flat minus 0.1 percent. Pessimism toward the US and world economies appears to have topped out last quarter but remains high.

Key findings include:

Revenue projections remain flat

Although the average revenue projections for the calendar year remain low at minus 6 percent, most panelists expect some stability by early 2010. Own-company revenue projections for the next 12 months average minus 0.1 percent. Forty-six percent of panelists expect positive revenue growth over the next 12 months (up 11 points), with 10 percent forecasting in the double digits and 36 percent in the single digits. Twenty-four percent expect zero growth, and 26 percent negative growth, similar to the prior quarter.

Looking ahead, a few more panelists are optimistic about the US economy, up 10 points from the prior quarter to 19 percent. Pessimism dropped from a survey high of 66 percent last quarter to 45 percent. The remaining 36 percent are uncertain. A similar pattern is seen among panelists who market abroad: 15 percent are optimistic about the world economy, up 9 points, while pessimism dropped 15 points to 48 percent, and 37 percent remain uncertain about the world economy’s prospects over the next 12 months.

International sales stall

With overall revenue off, the contribution of international sales to total revenue among those marketing abroad held steady at 29 percent, same as the prior quarter and similar to 28 percent a year ago. Of those marketing abroad, only 22 percent reported an increase in international sales (down 7 points), while 47 percent reported a decrease (up 14 points). Thirty-one percent said sales were about the same. Overall, the decline of sales from abroad appears in sync with domestic sales.

Growth faces multiple barriers

The chief barriers to own-company growth over the next 12 months will be lack of demand, up 7 points to 81 percent, and decreasing profitability, up 4 points to 61 percent. Three other potential barriers on the rise are capital constraints (up 13 points to 47 percent), legislative/regulatory pressures (up 8 points to 47 percent), and taxation policies (up 8 points to 39 percent).

Barriers to business, next 12 months:

Lack of demand	81%
Decreasing profitability	61%
Legislative/regulatory pressures	47%
Capital constraints	47%
Taxation policies	39%
Monetary exchange rate	31%
Competition from foreign markets	26%
Oil/energy prices	22%
Higher interest rates	15%
Pressure for increased wages	8%
Lack of qualified workers	5%

Gross margins tighten

In the first quarter, only 19 percent reported gross margins up while 42 percent said they decreased–for a net 23 percent lower. Costs and prices were down in the first quarter. Costs were up for 15 percent, down for 42 percent, for a net 27 percent with lower costs. Prices were up for 15 percent, down for 32 percent, for a net 17 percent with lower prices.

Capital spending slows

Fewer panelists are planning major new investments of capital over the next 12 months–28 percent, down from the prior quarter’s 31 percent and 51 percent a year ago. Operational spending increases over the next 12 months held at 56 percent, increasing for new product or service introductions and, to a lesser extent, research and development.

Layoffs taper

Only 12 percent plan to hire workers over the next 12 months, and 34 percent plan to reduce their staff. However, fewer composite workforce layoffs are expected, at minus 0.6 percent, down from minus 2.9 percent in the previous quarter.

About this survey:

The PricewaterhouseCoopers Management Barometer Survey is compiled with assistance from BSI Global Research, Inc. One hundred and thirty executives participated in this survey by telephone between January 30, 2009 and April 30, 2009.

Demographic profile:

--Number of participants	130
--Average # employees	7,959
--Average revenues	$3.43B
--Enterprise revenues	$9.46B
--Market capitalization	$9.32B

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