• A day after posting better-than-expected quarterly earnings, Goldman Sachs Group Inc. (GS) sold $5 billion in stock to repay federal bailout money. All totaled, Goldman sold 40.65 million in shares at $123 a piece, 5.5% below Monday’s closing price, Reuters reported. Goldman received a total of $10 billion from the Troubled Asset Relief Program.
• Amsterdam-based Royal Phillips Electronics NV (PHG) said its cost-reduction program will save the company more than 500 million euros ($664 million) this year, Bloomberg reported. The announcement came with its quarterly earnings report, in which Europe’s largest consumer-electronics maker reported its second-consecutive loss.

• First quarter earnings for pharmaceutical and health care retail giant Johnson & Johnson (JNJ) fell, but beat estimates by cutting costs, Reuters reported. The company $3.51 billion, or $1.26 a share, in the first quarter compared with $3.6 billion, or $1.26 a share, in the first quarter last year. Johnson & Johnson reaffirmed its 2009 profit forecast of $4.45 to $4.55 a share.

• Singapore’s economy may shrink 6% to 9% this year, the government said in its third reduced forecast this year. To counter contraction, the government will adjust the trading range of the Singapore dollar. “The situation is really dire and the central bank’s policy will improve sentiment and help the economy,” Vishnu Varathan, an economist at Forecast Singapore Pte., told Bloomberg.

• Discover Financial Services (DFS), will cut 500 jobs in May, or 4% of its workforce, Reuters reported, citing company sources. Discover, the fourth-largest U.S. credit card network, last month posted a deeper-than-expected quarterly operating loss, cut its dividend and set aside more money to cover bad loans as defaults increase.

• In a sign bankers are gaining confidence that the worst of the financial crisis is over, the London inter-bank offered rate (LIBOR) for three-month dollar loans is dropping at the fastest pace since January, Bloomberg reported. Debt strategists at Credit Suisse Group AG (ADR: CS) Societe Generale SA (ADR: SCGLY) and Royal Bank of Canada (RY), three of the 16 banks that provide the data that sets Libor each day, say the declines will continue.

• Weak demand and a supply glut could cloud the coal industry’s prospects for the rest of the year, even as U.S. coal miners are likely to show strong quarterly profits this month, Reuters reported. But big U.S. coal producers should weather the economic downturn because they sold much of this year’s production at higher prices negotiated before the recession hit last September. Coal prices are expected to stay low throughout 2009 until production cuts by major miners begin to restrict the coal supply.

• Madoff Securities International Ltd., filed for bankruptcy protection in Florida under Chapter 15 of the federal bankruptcy code. The code is designed to block U.S. lawsuits against foreign companies reorganizing overseas that have U.S. operations, Bloomberg reported. Bernard Madoff pleaded guilty last month to 11 counts including fraud and money laundering for directing the largest Ponzi scheme ever.

Source: Global Investment News Briefs Wednesday April 15, 2009

Monday began with several European companies, including electronics giant Philips (PHG) and insurance and banking conglomerate ING, announcing job cuts of 6,000 and 7,000 employees respectively.

The gloomy start to the workweek quickly turned into a bloodbath as more than 75,000 jobs were lost in a single day, when a who’s who of U.S. household names launched a gauntlet of layoffs:

● Sprint Nextel Corp. (S), the wireless phone carrier said it is eliminating about 8,000 positions in the first quarter.

● Caterpillar Inc. (CAT), the world’s largest maker of mining and construction equipment, is in the process of shedding about 20,000 jobs.

● Pharmaceutical company Pfizer Inc. (PFE), is buying rival drugmaker Wyeth (WYE) for $68 billion, and said it would cut 8,000 jobs as part of the merger strategy.

● Home Depot Inc. (HD) the home-improvement retailer said it was closing four small business units, trimming about 7,000 jobs in the process.

● General Motors Corp. (GM) said it will cut 2,000 jobs at plants in Michigan and Ohio.

● Texas Instruments Inc. (TXN), which makes chips for cell phones and other gadgets, said it will axe 3,400 jobs.

And the bad news continued yesterday (Tuesday) as Owens Corning (OC) said it is cutting 3,500 jobs, or 13% of its payroll.
It was a stark reminder of how rapidly the recession is claiming jobs. Already 170,000 jobs have been lost in January. The U.S. economy lost 2.6 million jobs in 2008.

Moreover, a growing number of economists say the U.S. has only reached the halfway mark of job losses expected for this recession.

“Some of the worst job losses are ahead of us, not behind us,” Wells Fargo & Co. (WFC) senior economist Scott Anderson told USA Today.

Anderson expects 3 million Americans to lose their jobs in 2009. Approximately 2.6 million were cut last year – the most since 1945, the final year of World War II. The layoffs are happening in “all industries in all areas of the world,” Anderson says.

The worst news, though may be that the U.S. economy is not just shedding jobs temporarily, but is undergoing a fundamental restructuring process that will eliminate some types of jobs for good.

“They [represent] structural, not cyclical, changes to the economy,” Peter Morici, a professor at the Robert H. Smith School of Business at the University of Maryland told BusinessWeek. “We’re looking at a permanently smaller economy with prolonged unemployment at an unacceptable level.”

Morici says that housing, real estate, automobiles, finance, and retail sectors are resetting to “permanent lower levels” of employment.

Mike Montgomery, an economist with IHS Global Insight, asserts that many jobs in autos, manufacturing, apparel, and textiles aren’t coming back. Those industries “have been in a long-term decline, and the recession is knocking them out.”

Jobs began disappearing in home building and mortgage operations early in the recession, then across finance and banking more generally. Now the ax is falling across large swaths of manufacturing, retailing and information technology sectors.

The news ratchets up the pressure on the Obama administration and Congress as lawmakers debate an $825 billion stimulus package intended to save or create millions of jobs.

“These are not just numbers on a page,” President Obama said citing the layoff announcements in remarks Monday. “As with the millions of jobs lost in 2008, these are working men and women whose families have been disrupted and whose dreams have been put on hold.”

The House of Representatives will vote on its version of the bill today (Wednesday), and Senate committees will begin pulling together a companion bill this week.

But Obama’s stimulus package is based largely on an estimate that the unemployment rate will rise to between 8% and 9% this year, according to the proposal summary from the House Appropriations Committee. If unemployment soars into double digits, as some economists expect, the financing may not be enough.

Many economists see the nationwide jobless number rising to at least 9% this year, possibly reaching double digits in 2010. Thirteen states are already above the national average of 7.2%, with Michigan (9.6%), Rhode Island (9.3%), California (8.4%), and South Carolina (8.4%) topping the list.

But as Money Morning reported Monday, the government’s recently released official unemployment number of 7.2%, already vastly understates the number of jobless Americans because it fails to account for “discouraged” and “unattached” workers who have given up even looking for work.

Our research further indicates that if the number included unemployed farm and self-employed workers, “real” unemployment levels would approach 18%.  Whatever the unemployment number is, the new administration’s stimulus plan is the only glimmer of hope for newly laid-off workers.

While stimulus spending on public works may take some time to get going, some companies could bring back displaced workers quickly if the government initiative generates new orders.

And because many businesses were already operating with a lean workforce when the recession began, there is some hope they will fill vacated positions when the economy improves.

“The vast majority of the job loss is strictly short-term,” said Global Insight’s Montgomery. “When consumer demand and sales come back, the jobs will come back.”

But as Univeristy of Maryland’s Morici contends, many companies may not rush to increase staffs even if business begins to pick back up.  “We are very early in the cycle,” he said. “We are going to see the fury of the Old Testament for what we have done to the economy.”

Source: Black Monday Brings Massive Layoffs – Economists Say Some Jobs Could be Gone for Good