Companies that made money last quarter will make more money this quarter if the earnings were based on continuing operations. It is ridiculous when I hear people with significant business backgrounds talk about how cost cutting is a one time thing. When you reduce staff, reduce inventory or eliminate facilities it is ongoing, and those costs will not return until you hire people or open new facilities. In fact, normally the cost cuts get better over time as severance payments or costs related to closed facilities go away.
So, the companies that achieved profitability via better efficiency (a nicer word than cost cuts) have only to see revenues stay the same to have an increase in profitability. If there is revenue growth it will greatly increase profitability.
In fact, the next quarter is going to see a shortage of consumer goods develop since retailer's have lowered their expectations and stocked much less inventory. As hot items start to move off the shelves, we will see manufacturers filling rush replacement orders and putting on additional shifts to satisfy this short term demand. Now, this doesn't require great sales increases from last year, since if you are stocked up to a level that expects less sales and get the same sales, you will be short of product.
Businesses are prepared for the worst and they are going to get something better than that. That is going to drive significant earnings improvements similar to what happened during back to school shopping. You don't have to sell more than you did less year, you simply have to sell most of your current inventory.
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