Sure, it's the sober 1990s, but the script for this year's buoyant second quarter seems straight out of the go-go 1980s: A healthy economy. Strong sales. And how's this for a bit of nostalgia: Big Blue was among the most profitable companies in America.

Thanks in large part to a rebound at IBM, profits for the 900 companies in BUSINESS WEEK's Corporate Scoreboard rose by a breathless 45% in the second quarter. That's the biggest leap since the final quarter of 1992, when profits rose 51%. Even excluding IBM's huge surge in earnings, profits still jumped 21%.

A vibrant economy certainly helped enliven Corporate America's bottom line. Growth in gross domestic product quickened to 3.7% in the second quarter, from 3.5% a year earlier. As a result, corporate sales rose 8%, to $1.06 trillion. That's slightly better than the 7% increase in the first quarter, and a big improvement over the 5% gain of a year ago. Best of all, the sales growth is mostly real--not the product of inflation. "Corporations aren't raising prices to get these profits. They're doing it the old-fashioned way: They're selling more stuff," says Maureen F. Allyn, chief economist with Scudder, Stevens & Clark Inc.

Continued belt-tightening also helped. Thanks partly to downsizing, margins widened to 5.8% in the second quarter, from 4.3% last year. Margins haven't been this healthy since the prerecession second quarter of 1989, when they also hit 5.8%. "We're seeing real solid payoffs to restructuring and investments in technology that have been ongoing in the last five years," says Hugh A. Johnson, chief economist at First Albany Corp., a securities firm in Albany, N.Y.

MOTOWN FEVER. Of course, companies can't keep up this torrid earnings pace. I/B/E/S Inc. estimates that per-share earnings growth for the Standard & Poor's 500-stock index will slow to 20% in the third quarter from 48% in the second. BUSINESS WEEK economists figure that operating-profit growth economywide will slow from the second quarter's 20% to 9% in the third quarter and 5% in the fourth. More modest economic growth will have a lot to do with the slowdown. GDP growth may come in a shade below 3% in the second half, according to BUSINESS WEEK calculations. That's because companies will have to work down inventories. Of the 3.7% increase in second-quarter GDP, more than half came from expanding inventories. Still, earnings in the second half will get a boost from foreign sales.

The Big Three auto makers were again among the biggest winners as consumers continued to snap up Detroit's latest designs. Lower expenses for rebates and other sales incentives also helped drive Motown's profits. For the second straight quarter, General Motors Corp. headed the list of BUSINESS WEEK's top 15 earnings leaders. GM's profits rose a staggering 116%, to $1.92 billion, as its sales climbed 11%, to $40.4 billion.

Meanwhile, Chrysler Corp. posted record second-quarter profits of $956 million, up 40% from a year ago. Thanks to the popularity of its Ram pickup and Jeep Grand Cherokee, sales rose 19%, to $12.7 billion. Ford Motor Co., bolstered by a recovery in its European operations and better sales of light trucks, also posted its best quarterly results ever. Earnings were up 121%, to $1.7 billion, as sales rose 15%, to $33.8 billion.

Telecommunications companies fared well, too, thanks in part to an upsurge in long-distance calling and the use of premium services, such as 800 numbers. AT&T's profits rose 12%, to $1.1 billion, as its sales increased 9%, to nearly $18 billion. Ma Bell's chief competitors were close behind: Profits at MCI Communications Corp. and Sprint Corp. rose 21% and 33%, respectively.

Computer makers also rebounded smartly from disappointments a year earlier. None, however, matched IBM's impressive turnaround. Thanks in large part to deep cost cuts that reduced expenses by 18% in the second quarter, IBM posted a $689 million profit--even though sales declined 1%, to $15.4 billion. It was the third straight quarter IBM has been in the black, and a far cry from the $8 billion loss the computer giant suffered a year ago after taking steep restructuring charges. Apple Computer Inc. also recovered, as personal-computer sales picked up. Apple had profits of $138 million in the second quarter, compared with a $188 million loss a year ago. Its sales rose 15%, to $2.1 billion.

Still, the computer industry had its share of bad news. Digital Equipment Corp. topped the list of the second quarter's biggest losers. It posted a loss of $1.7 billion, compared with a $113 million profit a year ago, after taking a $1.2 billion charge to consolidate plants and lay off 20,000 workers over the next 12 months.

SPUTTERING MARKETS. There were other disappointments, as some retailers stumbled. Beleaguered Kmart Corp. was among the biggest losers. Price-cutting contributed to lower profit margins. Its profits plummeted 69%, to $18 million, as sales rose by 6%, to $7.9 billion. Earnings at Sears, Roebuck & Co. also retreated sharply, falling 54%, to $503 million. But Sears' latest results are benchmarked against huge gains a year earlier, when the retail giant sold off nearly 20% of its Allstate insurance unit. Sales at Sears rose 7%, to $13 billion. Wal-Mart Stores Inc. once again put its competitors to shame. Its profits rose 11%, to $498 million, as sales shot up 27%, to $17.7 billion.

Financial services also had a poor showing, with profits down 21%. After two rounds of interest-rate hikes, the lengthy rallies in the bond and stock markets sputtered, and the volume of underwriting was also down. The biggest casualty: Salomon Brothers Inc., which saw its second-quarter revenues drop 50%, to $1.3 billion, because of the weak bond market. And given the markets' continued skittishness, few analysts see much reason for big brokerages to bounce back anytime soon. But for the rest of Corporate America, this taste of the Roaring Eighties has been sweet indeed.

WINNERS AND LOSERS IN SECOND-QUARTER PROFITS
      
      THE INDUSTRIES
      THE SHARPEST GAINS
      Percentage change from
      1993's second quarter
      NONFERROUS METALS                       521%
      INSTRUMENTS                             211
      SPECIAL MACHINERY                       146
      CARS & TRUCKS                           95
      CONSTRUCTION & REAL ESTATE              79
      TELECOMMUNICATIONS EQUIP. & SVCS.       69
      CONGLOMERATES                           57
      DRUGS & RESEARCH                        56
      AUTO PARTS                              47
      HOTEL & MOTEL                           47
      CHEMICALS                               44
      PUBLISHING                              44
      SEMICONDUCTORS & COMPONENTS             38
      MACHINE & HAND TOOLS                    38
      APPLIANCES & HOME FURNISHINGS           38
      
      THE DEEPEST DROPS
      Percentage change from
      1993's second quarter
      TRUCKING & SHIPPING                     LOSS
      ALUMINUM                                LOSS
      CONSTRUCTION & ENGINEERING              -43%
      COAL, OIL, & GAS                        -34
      PETROLEUM SERVICES                      -31
      FINANCIAL SERVICES                      -21
      DISCOUNT & FASHION RETAILING            -16
      APPAREL                                 -13
      TEXTILES                                -13
      AEROSPACE & DEFENSE                     -11
      ELECTRICAL PRODUCTS                     -6
      FOOD DISTRIBUTION                       -6
      GAS UTILITIES                           -6
      ELECTRIC UTILITIES                      -4
      INSURANCE                                0
      
      ALL-INDUSTRY AVERAGE: +45%
      
      THE COMPANIES
      WHO MADE THE MOST
      Millions
      of dollars
      GENERAL MOTORS          $1,923
      FORD MOTOR               1,711
      GENERAL ELECTRIC         1,522
      PHILIP MORRIS            1,232
      AT&T                     1,130
      CHRYSLER                 956
      EXXON                    885
      CITICORP                 877
      DUPONT                   792
      MERCK                    764
      COCA-COLA                758
      IBM                      689
      INTEL                    640
      GTE                      595
      JOHNSON & JOHNSON        559
      
      *Fiscal fourth quarter     **Fiscal third quarter
      ***Fiscal first quarter
      
      WHO LOST THE MOST
      Millions
      of dollars
      DIGITAL EQUIPMENT*              $1,746
      DELTA AIR LINES*                 250
      SALOMON                          204
      R.H. MACY**                      157
      GENERAL PUBLIC UTILITIES         120
      COMPUTER ASSOCIATES INT'L***     86
      ROSE'S STORES***                 60
      WESTPOINT STEVENS                55
      STONE CONTAINER                  51
      CONTINENTAL AIRLINES             49
      ALCO STANDARD**                  48
      GREYHOUND LINES                  45
      MAXXAM                           43
      MORRISON-KNUDSEN                 40
      WOOLWORTH***                     38
      DATA: STANDARD & POOR'S COMPUSTAT, A DIVISION OF
      MCGRAW-HILL INC.
      
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