Federal workers demonstrate for an end to the U.S. government shutdown on the west front of the U.S. Capitol in Washington on Oct. 13, 2013.JONATHAN ERNST/Reuters
You can always count on a crisis (or poor weather) to generate plenty of excuses from companies, and the U.S. government shutdown looks set to continue the trend – and just in time for the thick of the third-quarter reporting season, which kicked off last week.
The folks at footnoted, a site devoted to corporate filings to the Securities and Exchange Commission, pointed out that some companies have been warning over the past couple of weeks that the shutdown will have an impact on their results. So far, most of these warnings have been relegated to small biotech firms who require the services of the Food and Drug Administration – but they are starting to see bigger companies follow.
CalAmp Corp. and Zogenix Inc. began the warnings, followed by Echo Therapeutics Inc. and Atossa Genetics Inc. More recently, though, health-care company Humana Inc. (market cap: nearly $15-billion) disclosed that the shutdown will interrupt disbursements from the Defense Health Agency, though they don't expect the interruption to have a material impact on results or financial position.
But it goes beyond drugs and healthcare. Homebuilder Lennar Corp. included the shutdown in its list of forward-looking statements. And software company Red Hat Inc. warned that its investment portfolio of U.S. government bonds could take a hit if the shutdown leads to a default or ratings downgrade.
So far, though, the impact on investors has been insignificant. CalAmp and Zogenix shares are up since the crisis began, while Echo and Humana shares are relatively flat. Atossa and Red Hat shares have fallen, but for reasons that have nothing to do with the government shutdown: Atossa recalled a drug and Red Hat reported disappointing second quarter billings.
Still, as the reporting season heats up over the next few weeks, it will be interesting to keep an eye on how other companies respond to the shutdown. Perhaps there is an upside here too: The more that companies cite the crisis as an impediment to their operations, the more pressure on Washington to find a solution.
(A hat tip to Abnormal Returns for finding the link.)
David Berman