when a public company has a backlog there can be implications for shareholders because the backlog may have an impact on the company s future earnings as having a backlog could suggest the firm is unable to meet demand 
investopedia yurle villegasunderstanding a backlogthe term backlog is used to indicate the existing workload that exceeds the production capacity of a firm or department often used in construction or manufacturing the presence of a backlog can have positive or negative implications for example a rising backlog of product orders might indicate rising sales on the other hand companies generally want to avoid having a backlog as it could suggest increasing inefficiency in the production process likewise a falling backlog might be a portentous sign of lagging demand but may also signify improving production efficiency naturally unexpected backlogs can compromise forecasts and production schedules backlogs may also apply to companies that develop products services on a subscription basis such as saas software as a service providers a backlog in this case is not due to the company being unable to meet demand but because the time for performance or provision of the service i e future months of the subscription or contract has not yet been reached example of a backlogconsider a company that sells printed t shirts it has the capacity to print 1 000 t shirts each day typically this level of production is right in line with the demand for the company s shirts as it receives approximately 1 000 daily orders one month the company unveils a new t shirt design that quickly catches on among college students suddenly it is receiving 2 000 orders per day but its production capacity remains at 1 000 shirts per day because the company is receiving more orders each day than it has the capacity to fill its backlog grows by 1 000 shirts per day until it raises production to meet the increased demand real world examples