The obvious risk here is that profitmargins in emerging markets will decline to global average levels as new competition surfaces, says Robert Arnott, chairman of fund manager Research Affiliates.
After several years of increasing productivity, U.S. companies are now near their peak levels of profitmargins, leaving earnings vulnerable to any decline in sales volume, analysts said.
The iPhone-maker posted its first year-over-year profitdecline in a decade because of declining margins, but the bigger story was what came along with the earnings report.
Wuhan Steel agreed and also forecast a decline in steel demand for 2011, saying that profitmargins for steel makers could be eroded if raw material and energy costs continue to rise.