Bailing Out the Industry
Thursday, January 29, 2009, 07:24 PM - Business
Sometimes I do not know exactly what to write about when I sit down at my desk. There is nothing that gets me going like a little injustice though. Today I knew exactly what I wanted to write about.
I recently heard something that I just could not believe. I discovered that when workers get laid off at General Motors they still are paid 95% of their salary.
Does this make sense to anyone besides a laid off auto worker? I would love it if someone would explain it to me.
They are no longer working but they still are making 95% of their income. At most factories, and in my distant past I have worked in some, people do not look forward to lay offs. Why? Because you stop making money. I am 39 years old and I have always thought that when you were laid off, the company did not pay you to do nothing.
Do not get me wrong, lay offs, for a lack of a better word, are never a good sign for the company that is forced to impose them. They are unfortunate. They are an indication that the company is not doing well but it is supposed to allow them to free up some money so that the company can keep its head above water. - See Bailing Out the Industry for the complete article.
add comment AIG Seeks Funds From JPMorgan, Goldman After Fed Balks at Loan
Monday, September 15, 2008, 07:25 PM - Business
American International Group Inc., the biggest U.S. insurer by assets, may be propped up by $70 billion to $75 billion in loans arranged by Goldman Sachs Group Inc. and JPMorgan Chase & Co., according to people familiar with the situation.
The Federal Reserve urged AIG to seek private capital and discouraged the insurer from expecting a loan from the central bank, according to two people with knowledge of the discussions. Goldman and JPMorgan are working with AIG to determine how much the New York-based insurer needs, said two more people, all of whom declined to be identified because negotiations are private.
Wall Street's biggest firms are working together to avoid a failure at AIG, which sold the banks and other investors protection on $441 billion of fixed-income assets, including $57.8 billion in securities tied to subprime mortgages. The companies convened at the New York Fed for a fourth consecutive day, this time to discuss AIG, which plunged 61 percent today in New York trading. - See AIG Seeks Funds From JPMorgan, Goldman After Fed Balks at Loan for the complete report.
Intel Second-Quarter Profit Climbs 25% on PC Demand
Tuesday, July 15, 2008, 06:50 PM - Business
Intel Corp., the world's biggest chipmaker, reported a 25 percent increase in second-quarter profit and gave a sales forecast that topped analysts' estimates after demand grew worldwide for personal-computer processors.
Net income climbed to $1.6 billion, or 28 cents a share, from $1.28 billion, or 22 cents, a year earlier, Santa Clara, California-based Intel said today in a statement. Sales gained 9.1 percent to $9.47 billion.
Chief Financial Officer Stacy Smith said he's seeing strong demand globally and hasn't felt any impact from a slowing U.S. economy. The outlook signals that technology may be holding up better than housing and financial markets. Intel also expects shipments of more-profitable laptop processors to overtake those of desktop-computer chips for the first time this year.
``The fact that they are maintaining guidance and said they see no slow-up in demand is very positive,'' said Michael Shinnick, a portfolio manager at First Source Bank in South Bend, Indiana, which owns about 190,000 Intel shares. ``We are getting data that the tech sector is doing better than other sectors in this economy.'' - See Intel Second-Quarter Profit Climbs 25% on PC Demand for the complete report.
Ford Chief Abandons 2009 Profit Goal on Rising Costs
Thursday, May 22, 2008, 06:05 PM - Business
Ford Motor Co. abandoned a target of returning to profit next year because of rising costs for steel and gasoline, a month after Chief Executive Officer Alan Mulally said the second-largest U.S. automaker expected to meet its goal.
Ford fell the most in almost a month on the New York Stock Exchange. North American vehicle production will be cut for the rest of this year, the Dearborn, Michigan-based company said today. Mulally told analysts and reporters on a conference call that the sales outlook darkened in May's first half.
The CEO declined to say whether he expects a profit in 2010 and said Ford, which lost $15.3 billion in the past two years, would know more when it reports second-quarter results in July. U.S. sales at the maker of F-Series pickups and Explorer sport- utility vehicles fell 9.8 percent this year through April as gasoline prices approached $4 a gallon.
``It's a stumble,'' said Bernie McGinn, president of McGinn Investment Management Inc. in Alexandria, Virginia, which owns 300,000 Ford shares and bought more this morning. ``It's a punch in the gut to people in Detroit, but the long-term story is still intact. This is still a two- or three-year play.''
Ford will pare North American production 15 percent from a year earlier this quarter, from a previous 12 percent cut. It plans to reduce output in the region as much as 20 percent in the third quarter and up to 8 percent in the fourth quarter.
The company also expects to write down the value of North American auto assets, according to a U.S. regulatory filing. Ford said it can't specify the amount yet.
Ford fell 64 cents, or 8.2 percent, to $7.16 at 4:15 p.m. in NYSE composite trading, the biggest decline since April 25. The shares have risen 6.4 percent this year. The company's bonds fell and its credit-default swaps rose, an indication investors think Ford is less creditworthy. - See Ford Chief Abandons 2009 Profit Goal on Rising Costs for the full report.
Microsoft, Yahoo May Join Forces in Search Business
Monday, May 19, 2008, 07:45 PM - Business
Microsoft Corp., the software maker that scrapped a $47.5 billion bid for Yahoo! Inc. this month, may forge a partnership with the Internet company in the search- advertising market to challenge Google Inc.
Microsoft, which abandoned its takeover attempts May 3, said yesterday that it's exploring a transaction with Yahoo and may renew attempts to buy the entire company. The two may combine units that sell ads that run next to Internet search results, said Morningstar Inc. analyst Toan Tran.
Billionaire investor Carl Icahn is pressuring Yahoo to ally itself with Microsoft to compete with Google, which dominates the Internet search market. Icahn, backed by investors such as hedge- fund manager John Paulson, plans to oust Yahoo's board if Chief Executive Officer Jerry Yang fails to sell to Microsoft.
``Carl Icahn is in this to make a quick buck, so whatever helps him make money he'll be happy with,'' said Tran, who is based in Chicago and doesn't own shares of either company. ``What Carl Icahn definitely wants is an outright sale of Yahoo to Microsoft at some price higher than what it is now.''
Microsoft has offered to buy Yahoo's search unit and take a minority stake in the company after Yahoo gets rid of its holdings in Asia, Reuters reported today, citing a person familiar with the talks. Microsoft spokesman Frank Shaw declined to confirm or deny the report, while Yahoo spokeswoman Diana Wong declined to comment.
Microsoft, based in Redmond, Washington, fell 53 cents to $29.46 at 4 p.m. New York time in Nasdaq Stock Market trading. Sunnyvale, California-based Yahoo rose 2 cents to $27.68, while Google dropped $2.55 to $577.52. - See Microsoft, Yahoo May Join Forces in Search Business for the full report.
CBS Agrees to Purchase Cnet Networks for $1.8 Billion
Thursday, May 15, 2008, 06:49 PM - Business
CBS Corp. agreed to buy Cnet Networks Inc., a technology news provider, for about $1.8 billion in cash to become one of the 10 largest Web site companies.
Cnet investors will receive $11.50 a share, or 45 percent more than yesterday's closing price, the companies said in a statement today. CBS, based in New York, will combine its news, entertainment and sports Web sites with Cnet sites including ZDNet, GameSpot.com, TV.com, Chow and Search.com.
CBS Chief Executive Officer Leslie Moonves is buying a profitable business that increased sales 10 percent last year to $405.9 million as he seeks acquisitions to make up for a drop in television and radio advertising. CBS shares fell 2.4 percent on investor concern the company is paying more than 100 times Cnet's estimated earnings for fiscal 2008.
``Given the growth performance by Cnet, the price is too rich,'' said Robin Diedrich, an analyst at Edward Jones & Co. in New York. She recommends investors hold CBS shares and doesn't own any. ``It's a bold move by CBS management given their position, because the company is struggling for growth.''
Cnet, based in San Francisco, jumped $3.46, or 44 percent, to $11.41 at 4:29 p.m. New York time in Nasdaq Stock Market trading. CBS, down 11 percent this year, declined 59 cents to $24.23 in New York Stock Exchange composite trading.
Proxy Fight
Cnet agreed to the takeover as it tries to fend off a looming proxy fight with Jana Partners LLC, its largest shareholder. The activist hedge fund, founded by Barry Rosenstein, called for a change in strategy as the stock lost about half its value over a two-year period.
Jana is reviewing the CBS transaction, spokesman Charles Penner said. Last month, the New York-based fund rejected an offer from Cnet to give it a seat on its board. - See CBS Agrees to Purchase Cnet Networks for $1.8 Billion for the full report.
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