NASD issues rare warning to investors

Related Jobless claims unexpectedly jump 19,000 U.S. stocks headed to lower open MSNBC.com

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NASD issues rare warning to investors

By Michael Mackenzie and Richard Beales in New York

Financial Times

Updated: 9:42 a.m. MT April 11, 2007

A leading US securities regulator Tuesday issued a rare warning to investors over the record $321bn of debt being used to buy stocks and bonds.

The move highlights broader concerns expressed by financial watchdogs in the US and Europe about leverage used by investors of all kinds, including hedge funds.

NASD, which regulates brokers and trading, said the amount of debt taken on by investors to buy securities – known as margin – reached a new high of $321bn in February. Since December, the figure has exceeded the previous peak of $300bn set in March 2000, near the top of the internet stock bubble.

"We are concerned too many investors are unaware they could suffer substantial financial losses by using debt to purchase securities," said Mary Schapiro, chief executive officer of NASD. "By updating our alert on this topic, we hope to remind investors not to underestimate the risks involved."

The regulator's last such alert came in 2003.

An investor who uses margin borrows money, with interest, from a broker to buy securities. When the value of an investment falls, the broker can demand that the investor pay additional cash – known as a margin call – or sell securities to cover the call.

Jim Paulsen, chief market strategist at Wells Capital, said the greater use of margin reflected the growth of sophisticated trading strategies. But he noted that investors now use margin both to buy stocks and to sell them short, meaning the net risk could be lower than during earlier periods.

Stocks tumbled in late February and early March, resulting in margin calls being made to investors. In recent weeks, stocks have recouped most of their losses.

In a sign of broader concern over margin borrowing, watchdogs from the US and Europe are jointly examining whether the collateral that banks require of big clients such as hedge funds is sufficient.

Timothy Geithner, president of the Federal Reserve Bank of New York, said last year that allowing hedge funds to borrow too aggressively could weaken the financial system. Dealers and big banks should take "a cold, hard look" at the amount they lend to hedge funds and their margin practices for derivatives transactions, he said. Mr Paulsen, however, said today's market practices did not seem excessive.

"We are a long way off the frothiness that typified the bull run of the late 1990s," he said.

But Jack Ablin, chief investment officer at Harris Private Bank said the rise in margin was still a good indicator that investors were taking more risk.

"Stocks have had a terrific run and the recent rebound in the market has probably encouraged further risk taking," he said.

© The Financial Times Ltd 2007. "FT" and "Financial Times" are trademarks of the Financial Times.Copyright The Financial Times Ltd. All rights reserved.

Circuit City to Fire 3,400, Rehire Cheaper Workers

Circuit City to Fire 3,400, Rehire Cheaper Workers

Circuit City Stores Inc., the second-largest U.S. electronics retailer, will fire 3,400 sales people and replace them with employees willing to work for less.

Posted Mar 28, 2007 10:13 AM PST
Category: ECONOMY

Now, think very carefully about this. If EVERY company fires their staff and rehires at lower wages and salaries, then the consumer base as a whole (already up to their limits on their credit cards) will stop buying what Circuit City has to offer for sale.

Henry Ford was a very smart man in that he paid his workers MORE than the prevailing wages because he understood that his employees were also his customers and by making sure that Ford employees could buy the cars they were making, the cars would be seen on the roads and become his best advertising.

Ford prospered by making his community around him prosperous. That was smart.

Circuit City's managers are making themselves prosperous by keeping all the money to themselves, and when enough companies follow suit, they will destroy their own customer base.

By Mike Rivero

Lets Broaden Our Focus To Include Economic Issues: It’s Time To ‘Stop The Squeeze’

Another week has passed with most of the progressive community mesmerized by the political game playing in Washington. Don’t we realize yet that a totally compromised political process in Washington, built around wheeling and dealing, will not have the courage or the consciousness to do what must be done to stop the Iraq War?

The House’s latest watered down “withdrawal” bill will never become the law in an environment laced with veto threats and the White House’s efforts to mobilize the military against the Democrats — as if somehow the soldiers can be viewed apart from the war. Alas, the votes to prevail are not there.

Don’t we also realize the debate over what Alberto Gonzalez did or didn’t do is a sideshow. Sure he “did it,” and yes, he’s been caught—but so what?

Let’s acknowledge that the GOP is not the only party that politicizes the Justice System—and, yes, the Clinton Administration did clean house of US Attorneys in its time. The problem here is deeper than mere partisan bickering.

Unfortunately, if Gonzo goes—as he may—another legal Neanderthal who may play the game with an even harder line will replace him.

The mainstream AND indy media focus on every tick and burp in Washington assumes that the politicians are the real power—and often ignores the big money and corporate clout stage-managing the process.

Too many bloggers focus on the smoke and mirrors of politics, as if it is a recreational sport or parlor game, taking polls too seriously and trends not seriously enough. There’s still more of an obsession over the scandal of the day than over the interests in the wings—the people who are financing the politicians and orchestrating their maneuvers.

The political crisis engages the bashing brigade of message point polemicists on the right and left who both tend to ignore economic interests. They are the forces that are devastating the lives of so many Americans who have lost their jobs, can’t pay their bills and are victimized by the growing inequality in our nation, which does not seem to have become a political issue yet.

No one’s marching on the banks or Wall Street to demand economic justice.

Think of all the soldiers who join the military because the pay is better or they have no other choice. Think of all the poor Iraqis being killed by poor Americans who return to find themselves going even more deeply in debt. They are the ones being victimized by payday lenders whose signs advertising easy money line the boulevards outside military bases. Speak to military families and you will find that their lives are harder than ever.

And then meet the folks who are among the 1.1. MILLION Americans on the verge of losing their homes in America because of the subprime loans they took at usurious rates in order to improve their lives by putting a nicer roof over the heads of their families. The companies that gave them the mortgages with no credit checks made small fortunes doing so, but so overplayed their greedy hands that now some have lost BILLIONS and hurt the whole economy. Some economists fear a recession (or worse) because of this time bomb.

How did it happen? The federal regulators were absent without leave and, according to the Wall Street Journal, 52% of the loans were made by scores of predatory independent companies that are not regulated. As Alan Fishbein of the Consumer Federation of America put it, “Only when the market experienced losses and lenders started to shut their doors did real attention start to be paid to the issue.”

What we are seeing, according to Robin Blackburn in Counterpunch, is vicious and legitimated loan sharking. He writes: “In recent times high-profile Wall Street investment banks have brought slick financial reasoning to the base art of loan-sharking. The most vulnerable Americans have been targeted for loans they can ill afford. Those with poor credit histories can be charged at double or triple the interest of a customer in good standing with the rating agencies.”

The details of all of this money grubbing are now in the press, which was also asleep at the switch and is just waking up to the impact that this crisis is having on working America. The story has finally moved from the business section to the news section, from page 50 to page l. Unless something is done, these headlines will lead to breadlines.

While some politicians are starting to talk about this crisis, you have to wonder what they are willing to do. If they won’t really challenge the Bush Administration on the war, even as the war and the President’s popularity sinks into the toilet, do they have the guts to take on the power of the big banks?

Knock, knock progressive bloggers and activists: let’s get on this issue like white on rice. (That’s not a racial allusion—a large percentage of the victims here are, predictably, Americans of color.)

Knock, Knock MoveOn: I wrote to one of your decision makers who told me that this issue is not on a list of issues members said they care about. But the list was made last year. Guess what? This crisis that has long been warned about only just erupted! No one anticipated Katrina either.

Let’s expose the real power in this country—the economic engine driven by the financialization of consumerism that sells us what we don’t need and lends us what we can’t pay back. As we fight the military-industrial complex, let’s not ignore the credit and loan complex.

Last week, in a story about mounting foreclosures, the Journal noted that most of us need not worry about the problem, which, translated, means that the upper class and parts of the middle class can ride out the crisis. That struck one of the readers of the News Dissector blog on MediaChannel.org as amusing. Faith Carr wrote:

“My family was ahead of the curve on this insanity. After a job loss, losing our 5/3 home, and the bankruptcy before the legislation change, we are living humbly in a 27-year-old trailer in the country. Just wait until those making 100K + have one tiny little bubble in their lives. Gonna fall like the house of cards it is.”

So beware: this crunch affects all of us, and yes, we can do something about it. My film IN DEBT WE TRUST is just rolling out. Help us organize screenings to educate people about the roots of the crisis. The website STOPTHESQUEEZE.ORG just announced a campaign by Americans for Debt Relief Now to make this issue our own.

Join it, because it’s time to fight back.

By Danny Schechter.

– News Dissector and filmmaker Danny Schechter is the blogger in chief of MediaChannel.org. Comments to Dissector@mediachannel.org

Business-Spending Slowdown May Sap Job Growth, Surprising Fed

By Joe Richter, Simon Kennedy and Rich Miller

March 26 (Bloomberg) -- A slowdown in business investment that the Federal Reserve expects to end without much damage to the economy may instead linger long enough to hurt job growth.

Business spending may be a significant overlooked risk to the Fed's forecast of moderate economic growth this year, economists say. When spending growth tapers off, a slowdown in hiring almost always follows, according to researchers at Commerzbank AG.

``The weakness in capital spending is alarming,'' says Joseph LaVorgna, chief U.S. economist at Deutsche Bank Securities Inc. in New York. ``If capital spending is weak and getting weaker, the next thing companies will do is slow hiring.''

Fewer new jobs would mean less consumer spending, deepening the malaise in a U.S. economy already burdened by slumping housing demand. The combination might force the Fed to shift its focus more toward shoring up growth.

Fed policy makers, led by Chairman Ben S. Bernanke, last week stuck to their view that the economy will keep expanding ``at a moderate pace.'' Their most recently published minutes, from the January meeting, indicated that while business investment had proven weaker than anticipated, they still expect improvement before year's end.

Private economists may not be so sanguine. They have cut their forecasts of business spending three times since December, and now expect it will grow this year at the slowest pace since 2003, according to surveys by Blue Chip Economic Indicators. That's after expenditures on equipment and software fell last quarter by the most in four years.

`Under the Radar'

``With so much attention on the housing market, this is perhaps a serious risk that's flying under the radar,'' says Brian Sack, a former Fed economist and now vice president of Macroeconomic Advisers LLC in Washington. ``We still think business spending will grow at a solid pace this year, but recent data has alerted us to the risks.''

The Fed's statement last week said inflation remains the main risk to the economy, even as policy makers dropped their bias toward raising interest rates. The change gives them room to maneuver in case the economy slows more than they expect.

Some suppliers of business equipment say the Fed's optimism about investment may yet be borne out.

Optimism

``I've seen a significant change in optimism recently,'' says Roland Chalons-Browne, chief executive officer of Iselin, New Jersey-based Siemens Financial Services Inc., the commercial- finance unit of German engineering company Siemens AG. ``The hesitancy that has been in the marketplace is disappearing.''

U.S. businesses have no shortage of funds to invest, thanks to a five-year surge in earnings that took profit margins at non- financial corporations to the highest level in 37 years in the third quarter of 2006, according to the Commerce Department.

Some companies would rather use their cash to purchase their own shares than invest it in new plants or expanding payrolls. Last year, non-financial companies retired a record $602.1 billion of equity through buybacks and other means, according to Fed statistics. That's up 66 percent from $363.4 billion retired in 2005.

Houston-based ConocoPhillips, the third-largest U.S. oil company, plans to quadruple share buybacks this year to $4 billion while cutting its capital budget 25 percent.

This year, profit growth is slowing as margins shrink. Analysts surveyed by Bloomberg News see per-share earnings growth among S&P 500 companies slowing to 6.8 percent this year from 16.6 percent in 2006.

Seattle-based Amazon.com Inc., the world's biggest online retailer, announced this month that it will slow spending on technology after its profit margin fell to the lowest since 1999.

Defending the Economy

``When earnings growth slows and margins narrow, American business is very quick to cut back on expenses,'' says Allen Sinai, chief global economist at New York-based Decision Economics Inc. ``If this turns out to be a case of business- sector-initiated weakness, the Fed will be late in defending the economy.''

Interest-rate futures show a 28 percent chance the Fed will lower its target lending rate a quarter percentage point to 5 percent by June 28, compared with 10 percent odds a month ago.

Deutsche Bank's LaVorgna says the Fed's latest statement shows policy makers are ``acknowledging risks to the economy. But they're still not going to leap to cut rates.''

The Blue Chip survey shows business fixed investment may rise 4.3 percent this year, the slowest pace since 2003. That forecast is down from a 6.2 percent rise estimated in December.

Job Growth

``Once investment spending slows, job growth tends to follow,'' says Patrick Franke, an economist at Commerzbank in Frankfurt. He says capital spending is ``decisive'' in any change in direction for the economy ``because it is closely connected with trends in the labor market.''

LaVorgna says he expects monthly payroll growth to slow to an average 50,000 to 75,000 by year-end, from 189,000 in 2006, pushing the unemployment rate up to 5 percent from 4.5 percent now. A Manpower Inc. survey of 14,000 companies this month showed employers plan to slow hiring next quarter. Construction companies and makers of durable goods plan to trim hiring the most, according to Milwaukee-based Manpower, the world's second- largest provider of temporary workers.

The U.S. economy will probably avoid a collapse in capital spending like the ones that occurred in 1982, 1991 and 2001, says Franke. Still, ``a significant flattening'' is likely, with investment growth of around 4 percent this year, he says.

Offsetting the Slowdown

For the global economy, increasing business investment in Europe and Japan may offset the slowdown in the U.S.

Japan's largest manufacturers, encouraged by the lowest interest rates in the industrial world, plan to spend the most this quarter since 1991, according to the Bank of Japan. Sharp Corp., the country's largest maker of liquid-crystal displays and mobile phones, is spending 200 billion yen ($1.66 billion) to triple output of the panels.

``Companies have yet to spend as much as they want,'' says Yasuo Yamamoto, an economist at Mizuho Research Institute in Tokyo. ``Business investment will remain solid.

European companies are also spending more amid signs the economy of the 13 euro nations will sustain its best expansion since the single currency began trading in 1999. The European Central Bank reported in January that business demand for fixed investment loans was the strongest since it began surveying banks in April 2003.

``The business investment cycle has been slow to get going, but is now firmly positive,'' says James Nixon, an economist at Societe Generale SA in London and a former ECB forecaster. ``We're pretty upbeat about the outlook.''

Even some U.S. companies that have cut spending at home are still investing abroad. Rajiv Gupta, chief executive officer of Philadelphia-based Rohm & Haas Co., the world's biggest maker of acrylic paint ingredients, says half the company's capital spending will be overseas, and it will boost its global workforce while cutting U.S. jobs.

``Demand has been very robust in Asia and we have been positively surprised by the turn in Europe,'' he says. ``We have seen a slowdown in the U.S.''

To contact the reporters on this story: Joe Richter in Washington at Jrichter1@bloomberg.net ; Simon Kennedy in Paris at skennedy4@bloomberg.net ; Rich Miller in Washington at rmiller28@bloomberg.net .

Last Updated: March 25, 2007 19:07 EDT

Kraft says up to 8,000 jobs cut

By ASHLEY M. HEHER, AP Business Writer Tue Feb 20, 10:51 AM ET

The head of Kraft Foods Inc. said Tuesday that as many as 8,000 jobs could be cut as part of a plan to help the world's second-largest food and beverage maker revive its slumping sales.

Kraft says it may eliminate up to 9 percent of its work force and exit up to 20 production facilities, according to a document outlining the plan.

Since 2004, Kraft has eliminated 5,500 jobs.

Kraft says the restructuring program will include one-time pretax costs of $2.5 billion and it expects the cuts to save the company about $700 million.

The Pentagon lies go on and on: understate disabled veterans job woes

Related

The Pentagram doesn't like my 'tude. They check in once in awhile. Find out if they're checking up on you: IP Blocks Used by US Terrorist Surveillance Program.

Abstract

• Military Personnel: Additional Actions Needed to Improve Oversight of Reserve Employment Issues, GAO-07-259, February 8, 2007
  Highlights-PDF PDF Accessible Text

  Since September 11, 2001, the Department of Defense (DOD) has mobilized more than 500,000 reservists. As reservists demobilize, concerns exist about difficulties with their civilian employment. Public Law 109-163 required GAO to report on reservists' civilian employer data and employment matters. GAO assessed (1) the status of DOD's efforts to capture reservists' employer data; (2) DOD, Labor, Justice, and Office of Special Counsel processes to track and address reservists' Uniformed Services Employment and Reemployment Rights Act (USERRA) complaints; and (3) the four federal agencies' efforts to track reservists' USERRA complaints related to disabilities incurred while on active duty. GAO reviewed policies and procedures for reporting and tracking complaints; DOD's civilian employer database for reservists and reservists' USERRA complaints; and data reliability and quality checks.

  DOD has made progress in capturing employment information on reservists, but challenges remain. The percent of reservists reporting employer information increased from about 60 percent in August 2005 to about 77 percent as of August 2006. However, only one of seven reserve components has met DOD's employment reporting goal of 95 percent for the Selected Reserve--the largest category of reservists. DOD does not have specific time frames for reserve components to achieve the reporting goals. In addition, some employment information reported may not be current because the services have not established a formal mechanism to remind reservists to update their reported employment information. Finally, DOD's verification process is not adequate to verify civilian employer data for 24 percent of reservists that reported employer information. The four federal agencies responsible for assisting reservists with USERRA complaints--DOD, the departments of Labor and Justice, and the Office of Special Counsel--track and address these complaints. Between fiscal years 2004 and 2006, the four agencies addressed approximately 16,000 informal and formal complaints. However, no one agency has total visibility over all the complaints, and only a small percentage of complaints are reported to Congress. For example, DOD has visibility over all complaints in its system, but its visibility over complaints in Labor's system is limited to those originally filed with DOD and then later refiled with Labor. The Department of Labor does not make aggregate complaint data available to DOD. Furthermore, Labor's annual report to Congress on reservists' complaints for fiscal years 2004 and 2005 did not include almost 10,000 informal complaints filed with DOD, or 80 percent of the total informal and formal complaints addressed by the four agencies during this period. Labor is required to report formal complaints addressed by the three agencies, but not DOD. Consequently, Congress does not have the comprehensive information necessary to allow for complete oversight of reservists' employment and reemployment problems. Finally, the information GAO obtained on the approximately 16,000 reservists' complaints filed between fiscal years 2004 and 2006 showed that the nature of those complaints has not been uniformly categorized to completely reveal trends in the kinds of problems some returning reservists experience because the agencies use different complaint categories to characterize the complaints. Agencies responsible for assisting reservists with USERRA issues can not systematically record and track disability-related employment complaints because they do not use consistent and compatible complaint categories or have a mechanism in place for distinguishing disability-related complaints from others. Without the ability to track disabled reservists' USERRA complaints, DOD may be unaware of the effect disabilities incurred while on active duty have on reservists' employment and what additional assistance may be needed to help transition this population back into the workforce.

  Subject Terms

  Armed forces reserves
  Employment
  Federal aid programs
  Interagency relations
  Military reserve personnel
  Performance appraisal
  Persons with disabilities
  Policy evaluation
  Reporting requirements
  Veterans
  Veterans employment programs
  

Alcatel-Lucent to axe 12,500 jobs

While our friends and neighbors continue to die, fighting and killing in the name of a freedom that hardly exists anymore, corporate extremists around the world continue to pillage and plunder our economies unopposed, robbing us of what little freedom we have left.

Alcatel-Lucent, the world's second-largest telecoms equipment maker, said today it would axe 12,500 jobs or 15% of its workforce after posting severe net losses and a steep decline in sales in the fourth quarter.

The Franco-American group, merged late last year, faces the immediate threat of industrial action over the redundancies, with French unions calling a strike for Thursday next week.

Alcatel-Lucent issued a profits warning last month and initially said it would axe 9,000 jobs, prompting a series of downgrades on its shares.

It made a net loss of €618m (£413m) in the final quarter of 2006 compared with a profit of €381m in 2005, with sales down 16% to €4.4bn from €5.25bn.

Pat Russo, the US chief executive, said the results were "clearly disappointing" after declaring operating earnings of €1bn for the full year compared with €1.4bn in 2005.

She said revenues this year would be up about 5% -in line with the sector.

Oh, boo-hoo - only 5% profit - what's a poor corporate terrorist to do?

Why - cut thousands of jobs, of course! Let the plebians eat the loss!

The group, whose US business almost went under during the 2001 dot-com collapse, said the new restructuring would save €1.7bn over the next three years - and cost as much to implement.

Am I the only one who sees something grotesquely perverse in this statement?

But some analysts believe the costs will be higher, especially as the job cuts may be even higher.

Of course, all these declared 'costs' are measured in their filthy, fraudulent, and corrupt dollars - not in the sweat, blood, and tears of all the families that will be destroyed in the process.

Alcatel-Lucent, which began life on December 1, also has unfunded pension and healthcare liabilities of around €5bn.

ARRGGHH!!!!

This is precisely the kind of corporate fundamentalism that is destroying our planet!!!

CORPORATIONS ARE NOT ALIVE!!!!!

THEY DO NOT LIVE!

THEY DO NOT EAT!

THEY DO NOT BREATHE!

Corporations are just corrupt figments of our collective imagination!

But, who's listening, right?

Analysts said funding could be hard, with a capital-raising exercice [sic] the most likely option.

Read: bond and interest orgy for moneylenders.

Jean-Pascal Beaufret, finance director, said that "the fourth-quarter does not reflect the benefits of the tie-up between Alcatel and Lucent and the growth potential of our company today".

"We have suffered from tough trading conditions, namely in North America as many of our clients there are consolidating ... so when they merge they delay certain investments."

They're waiting for everything to become dirt cheap when they pull the financial rug from underneath US.

Submitted by qrswave on Fri, 2007-02-09 04:31.

Kodak to Cut Up to 5,000 More Jobs in Restructuring

(Update4)

By Gillian Wee

Feb. 8 (Bloomberg) -- Eastman Kodak Co., the world's biggest photography company, will eliminate as many as 5,000 more jobs than originally planned as it accelerates its withdrawal from the consumer film business.

Kodak now expects job cuts to total 28,000 to 30,000, shrinking the workforce to about half its size four years ago, compared with an earlier forecast of 25,000 to 27,000. That will boost restructuring costs to as much as $3.8 billion, the Rochester, New York-based company said today in a statement.

Chief Executive Officer Antonio Perez is stepping up his restructuring plans to deliver on his promise to complete Kodak's transformation into a digital company this year amid slumping film demand. The additional cuts are being driven by the sale of Kodak's health-imaging unit, the company said. Perez began the revamping in 2004 and has so far sliced 23,400 jobs at a cost of $2.7 billion.

``The metamorphosis they're going through is going to take longer,'' said Rusty Robinson, president of Robinson Investment Group in Brentwood, Tennessee, which has been selling Kodak shares and currently owns more than 27,000. ``I feel better, I don't feel great. It's just like when you have a terminal illness and you've been told you've got longer to live.''

Restructuring will cost the company $575 million to $625 million this year. Kodak eliminated 1,200 jobs in the fourth quarter as it posted its first profit in more than two years.

``The most important thing for me is to complete this transition,'' Perez said today at a meeting with investors in New York. ``I want the $500 to $600 million we keep using every year to do the layoffs to remain in our pockets starting 2008.''

Shares of Kodak fell 70 cents to $25.99 at 12:39 p.m. in New York Stock Exchange composite trading. They had risen 11 percent in the past year before today.

New Focus

Kodak is targeting gross profit margins of 28 percent to 29 percent by 2009, compared with the 25.5 percent last year, which excludes the health unit's contribution, it said today. Earnings from operations will make up 8 percent to 9 percent of revenue in two years, compared with 2.6 percent last year.

The company said today it expects digital earnings from operations of as much as $300 million this year on revenue growth of 3 percent to 5 percent as Perez starts selling inkjet printers and licenses more technology.

The company's new focus comes as it sheds its health business. Last month, it agreed to sell the unit, which makes digital X-ray machines and mammography equipment, to Canada's Onex Corp. for as much as $2.55 billion.

The new cuts mean Kodak might eliminate as much as 15 percent of its global workforce this year, leaving about 35,000 workers, said spokesman Dave Lanzillo. That's about a quarter of the company's 145,300 employees in 1988.

Sales Forecast

Revenue, excluding the health group's contribution, will be $10 billion to $10.4 billion this year, compared with $10.8 billion in 2006. Gross margins will be 25 percent to 26 percent compared with 25.5 percent last year.

Kodak's 7.25 percent note due in 2013 was little changed at 100.25 cents on the dollar, the yield at 7.2 percent and the spread widening 5 basis points to 245 basis points over government debt.

The perceived risk of owning Kodak's bonds rose, according to traders who bet on the creditworthiness of companies in the credit- default swap market. Credit-default swaps based on $10 million of the company's rose to $174,840 from $171,965, according to prices compiled by CMA Datavision in London. An increase in the contracts, used by traders to speculate on a company's ability to repay debt, suggests a deterioration the perception of credit quality.

Printer Foray

This week, Perez introduced Kodak's line of printers that use lower-cost ink cartridges to compete with Hewlett-Packard Co. Kodak also is developing commercial inkjet machines that will produce customized documents for users such as credit card companies, Bill Lloyd, Kodak's chief technical officer, said in a Feb. 6 interview.

``It generally seems that Antonio has converted Kodak to be a printer company,'' said Ron Glaz, program director at researcher IDC Corp. in Framingham, Massachusetts. ``There's still the issue that consumers aren't printing.''

Kodak, founded by George Eastman in 1880, began marketing the first consumer camera in 1886 with the slogan ``You press the button -- we do the rest.''

The company forecast digital revenue for its graphic communications group, which makes digital plates and commercial printers, to grow 6 percent to 9 percent this year.

Digital Decline

Technology licensing, which helped widen profit margins in the past quarter, will generate revenue and earnings of more than $250 million this year, Kodak said. Typical deals run 3 to 5 years, and Kodak already has agreements with more than 20 companies.

The company also seeks to boost revenue from its CMOS imaging sensor business, which will help widen margins, Perez said. The sensors might be used in products such as cell-phone cameras. Kodak has previously agreed to supply Motorola Inc. with technology to develop such devices.

Kodak lost its lead in the U.S. digital camera market last year, sliding to third as it limited sales of lower-priced models to bolster profit, researcher IDC said.

Sales last year fell 7 percent to $13.3 billion as the company limited sales to focus on profit. Kodak posted a loss of $600 million for the year, narrower than $1.35 billion the previous year.

Digital revenue fell 5.3 percent to $2.45 billion in the past quarter, making up 64 percent of total sales, as the company limited sales of lower-priced products to shore up profit margins. Profit rose 92 percent to $271 million. Traditional film revenue fell 15 percent to $1.36 billion.

To contact the reporter on this story: Gillian Wee in New York at gwee3@bloomberg.net .

Last Updated: February 8, 2007 12:50 EST

Jobless claims rise to 16-month high

By MARTIN CRUTSINGER, AP Economics Writer 40 minutes ago

The number of Americans filing applications for unemployment benefits shot up last week by the largest amount in 16 months, reversing two weeks of big declines.

The Labor Department reported Thursday that 325,000 newly laid-off workers filed claims for jobless benefits last week, an increase of 36,000 from the previous week. That was the biggest one-week rise since a surge of 96,000 claims the week of Sept. 10, 2005, when devastated Gulf Coast businesses laid off workers following Hurricane Katrina.

The increase of 36,000 was bigger than the 20,000 rise that had been forecast. Analysts, however, cautioned that it is difficult to read the claims figures at this time of year because of unusually wide swings caused by the holidays and other factors.

Based on past trends, claims numbers often surge in third week of the month as retail businesses shed seasonal workers hired to help with the crush of holiday shoppers. However, this year, the layoffs were much higher than in past years.

The jump in jobless layoffs followed a string of reports showing the economy was performing at a better-than-expected pace at the end of 2006 and the beginning of the new year. Employers added 167,000 new jobs in December, helping to keep the unemployment rate at 4.5 percent.

Economists believe that while growth has slowed because of the steep downturn in housing, they expect the United States will be able to avoid an outright recession.

The 36,000 increase in layoffs followed two weeks in which jobless claims had fallen by a combined 36,000. The four-week moving average for layoffs, designed to smooth out the weekly volatility, edged up slightly to 309,250 from 207,750 the previous week.

For the week ending Jan. 13, a total of 33 states and territories reported an increase in claims before adjusting for seasonal variations while 20 states and territories reported declines in claims.

The increases were led by California, which saw jobless claims rise by 10,115, an increase blamed on higher layoffs in construction and service industries. Layoffs were up by 8,870 in Michigan and 6,418 in Texas.

The states with the biggest decline in layoffs were New York, down by 26,764; North Carolina, down by 10,072 and Georgia, down by 8.987.

The state data is not adjusted for seasonal variations.

Travel to U.S. has dropped 17 percent since 9/11

2 hours, 1 minute ago

A 17 percent drop in overseas travelers to the United States since the September 11 attacks has cost the country more than $15 billion in lost taxes and nearly 200,000 jobs, a study showed on Tuesday.

Since the September 11 attacks, the United States has tightened security measures and toughened its visa and entry requirements. As a result, the country was ranked as the world's most unfriendly to visitors in a survey conducted last year of travelers from 16 nations.

"Our economic security is suffering from a drastic decline in overseas travelers and we are missing an extraordinary opportunity to strengthen America's image around the globe," said Stevan Porter, president of Intercontinental Hotels Group and chairman of the association's Discover America Partnership. "We are in the midst of a travel crisis."

The study released on Tuesday by the Travel Industry Association said the U.S. market share of the $6 trillion worldwide travel market had dropped to about 6.1 percent in 2006, from about 7.5 percent in 2000. Since September 11, overseas travel to the United States has dropped by 17 percent.

The study, which looked at the economic ripple effect over time, said the drop resulted in 194,000 lost jobs, $25.9 billion in lost payroll and $15.6 billion in lost taxes to federal, state and local governments.

Pfizer to Cut Up to $1 Billion in Costs, Fire 10,000

(Update2)

By Shannon Pettypiece

Jan. 22 (Bloomberg) -- Pfizer Inc., the world's largest drugmaker, will fire 10,000 workers as generic copies of its top- selling medicines cut into sales.

The job cuts are the equivalent of 10 percent of Pfizer's global workforce and are part of a plan to lower costs by $500 million to $1 billion a year, Pfizer said today in a statement. The New York-based drugmaker will close two U.S. plants and research centers in the U.S., Japan and France.

Chief Executive Officer Jeffrey Kindler is deepening cost- cuts after the company reported a 43 percent drop in fourth- quarter profit. New medicines under development are expected by analysts to generate just half the revenue that will be lost in the next five years as patents expire on older drugs.

``Cuts need to happen, and they need to come from basically any place they can,'' said Jeffrey Malcom, a portfolio manager at Horan Capital Management, which owns Pfizer shares, in an interview. ``As revenue decreases, they do need to make their cost structure in line with the fact that they are going to be a smaller company.''

Competing drugmakers including GlaxoSmithKline Plc and Sanofi-Aventis SA face similar problems and may follow Pfizer in cutting staff.

``A reshaping of Pfizer and the industry's cost structure is beginning to unfold, largely precipitated by the punishing effects of rampant generic competition,'' said Deutsche Bank analyst Barbara Ryan in a Jan. 16 research report.

Shares Fall

Pfizer shares declined 52 cents, or 1.9 percent, to $26.70 at 1:16 p.m. in New York Stock Exchange composite trading. The stock gained 10 percent in the 12 months through Jan. 19.

Kindler announced the new round of cuts to Pfizer's 100,000- member workforce at a meeting today in New York with analysts and investors, expanding an earlier plan by former Chief Executive Officer Hank McKinnell to trim $4 billion in yearly spending by 2008. In 2006, the company eliminated 8,000 positions.

The Kindler plan will bring the total reduction in annual expenses by the end of next year to $4.5 billion to $5 billion, Pfizer said. Of that, $3 billion will be reinvested in new products and business development.

Pfizer said it plans to close a production site in Brooklyn, New York, where the company was founded in 1849. Other closings will include a plant in Omaha, Nebraska, and research operations in Ann Arbor and Kalamazoo, Michigan; Nagoya, Japan; and Amboise, France. The number of plants will be reduced to 48 in 2008 from 93 in 2003, Pfizer said.

Plant in Germany

The company said it ``will pursue'' the sale of a plant in Feucht, Germany, subject to local labor laws and consultations with work councils. The European sales force will be reduced by more than 20 percent under the plan.

Pfizer said it will simplify its research and development organization and will drop discovery research in gastroenterology and dermatology. The pharmaceutical business will be reorganized into four units, each led by a general manager, the company said.

Excluding certain costs, profit this year will be $2.18 to $2.25, Pfizer said, in line with the $2.19 average estimate of 19 analysts in a Bloomberg survey of analysts. For 2008, adjusted earnings will be $2.31 to $2.45 a share, higher than the $2.31 average of 15 estimates in a Bloomberg survey.

Fourth-Quarter Results

Pfizer forecast net income of $1.45 to $1.55 a share for 2007 and $1.75 to $1.93 in 2008. In 2006, the company reported net income of $19.3 billion, or $2.66 a share, including a $7.9 billion profit from the sale of a consumer division.

The company repeated a forecast that revenue won't change in 2007 and 2008 from this year's $48.4 billion.

In the fourth quarter, revenue rose less than a percent to $12.6 billion as generic competition weighed on sales of the antidepressant Zoloft, Pfizer's third-biggest drug. Excluding the sale of Pfizer's consumer business, earnings fell to $1.5 billion, or 21 cents a share, from $2.6 billion, or 35 cents, a year earlier. The gain on the unit's sale helped net income more than double to $9.45 billion, or $1.32 a share

Pfizer's revenue will drop sharply after 2011 when it loses patent protection on the Lipitor cholesterol pill, which accounts for almost half of profit, analysts predicted. In the fourth quarter, sales of the drug declined to $3.34 billion from $3.36 billion a year earlier. Revenue for 2006 rose 6 percent to $12.9 billion, missing the company's goal of $13 billion.

Revenue Shortfall

When a drug's patent expires and other companies are allowed to sell copies, the price typically falls as much as 70 percent. Pfizer doesn't have enough drugs in development with the potential to replace revenue from Lipitor, the world's best- selling drug.

``We project that the current late-stage pipeline will generate more than $7 billion in sales from 2011 to 2012,'' said J.P. Morgan analyst Chris Shibutani, who carries StarMine Corp.'s top rating, in a Jan. 3 research report. ``But even that amount would be insufficient to offset the almost $14 billion in sales that we estimate will be lost during the same period from the Lipitor patent expiry.''

Analysts expect Pfizer to lose patent protection through 2011 on five other drugs with $8.69 billion in 2005 sales.

Pfizer was counting on replacing sales of Lipitor with a newer cholesterol drug called torcetrapib. The company halted testing of torcetrapib early after a study showed an increased number of deaths in patients taking the medicine.

Pfizer is among at least four drugmakers cutting staff and expenses because of mergers and the onset of generic competition. Kindler cut 20 percent of Pfizer's sales force, or 2,200 jobs, in December. The company has fired more than 5,325 employees, mainly in manufacturing, sales and research, as of Oct. 1, according to a November regulatory filing.

Opportunity for Rivals

Other drugmakers may follow Pfizer's lead, analysts said. GlaxoSmithKline and Sanofi-Aventis would benefit the most from cutting sales jobs, said Susanna Matter, an analyst with Leerink Swann & Co. in Boston, in a Jan. 3 note to clients.

``Pfizer's plans to cut its U.S. sales force by at least 20 percent offers an opportunity for companies with large primary- care sales forces to further reduce headcount,'' Matter said.

Germany's Bayer AG said in November it would cut more than 800 U.S. jobs, many in research, after completing its purchase of Schering AG. The move will save Bayer $210 million a year by the end of 2008.

Eli Lilly & Co. announced in late 2005 that it aimed to trim $250 million in costs this year and cut staff by 6 percent. Last year Merck & Co. began eliminating 7,000 jobs and closing plants to reduce $5 billion in costs by 2010, and as of December it had already fired more than 3,000 workers.

(For Pfizer's conference with analysts, see {LIVE }.)

To contact the reporter on this story: Shannon Pettypiece in Washington at spettypiece@bloomberg.net

Last Updated: January 22, 2007 13:23 EST

Motorola Plans 3500 Job Cuts

By DAVE CARPENTER

CHICAGO - Motorola Inc. CEO Ed Zander said Friday the cell-phone maker will cut 3,500 jobs, or about 5 percent of its work force, as it moves to improve operating costs after a disappointing fourth quarter.

Zander, speaking to analysts at a meeting in New York, said the move will save the company about $400 million over two years. The job cuts are to be completed by mid-2007.

Motorola has about 67,000 employees worldwide.

The announcement came after the world's No. 2 handset manufacturer reported that fourth-quarter profits fell 48 percent despite record sales as operating results stumbled during the key holiday selling season.

The Schaumburg, Ill.-based company had warned two weeks ago that results would come in well below expectations after a decline in its operating profitability.

Zander said a variety of factors, including missed forecasts, had resulted in a worse-than-expected quarter despite strong sales. He said Motorola is sticking with its strategy, which many analysts had said was in need of overhaul following the company's Jan. 5 profit warning.

"There's no change in strategy," he told analysts at the meeting, which was broadcast over the Internet. "There may be some changes in tactics."

He also dismissed suggestions that the trend-setting Razr phone, which turned around the company's fortunes two years ago, is running out of momentum.

"It's funny, I keep reading about Razrs being tired," he told analysts on an earlier conference call. "We sold more Razrs in quarter four than in any quarter we ever had. We now have sold over 75 million Razrs worldwide."

Shares in the company rose 56 cents, or 3 percent, to $19.27 in morning trading on the New York Stock Exchange. The stock began the session down 9 percent this year after a 9 percent decline in 2006.

Net profit for the last three months of 2006 was $624 million, or 25 cents per share, down from $1.2 billion, or 46 cents per share, a year earlier.

Results included a net gain of 5 cents per share for various charges. Excluding those items, Motorola said earnings from continuing operations were 21 cents a share, or better than the 13 cents to 16 cents it forecast two weeks ago.

Analysts surveyed by Thomson Financial had lowered their consensus estimate to 25 cents per share following Motorola's Jan. 5 warning.

Revenue was $11.8 billion, up 17 percent from $10 billion a year ago and slightly above Wall Street's $11.7 billion estimate.

The company said it expects sales between $10.4 billion and $10.6 billion in the first quarter, in line with analysts' forecast of $10.5 billion.

Edward Jones analyst Rick Franklin said that while results remained strong in Motorola's networks and enterprise and connected home segments, the company has to reduce costs in the handset business, where the operating margin sank to 4.4 percent from 11.6 percent in the third quarter.

"When you see this level of margins, there's something that needs fixing and it's not a three-month fix," he said.

The company, which trails Finland's Nokia Corp., said its world market share grew nearly 1 percent in the quarter to 23.3 percent.

Operating earnings from the mobile devices division, the company's largest business, fell 49 percent to $341 million despite a 19 percent increase in sales to $7.8 billion. The company shipped a record 65.7 million handsets in the quarter, up 47 percent from a year earlier.

"It definitely was a pricing issue, being very aggressive on pricing _ particularly in the emerging markets," said Morningstar analyst John Slack. "It may take a couple quarters for them to get back to where they want to be."

For the full year, net earnings were $3.67 billion, or $1.46 per share, down 20 percent from $4.58 billion, or $1.81 per share, in 2005. Sales rose 22 percent to $42.9 billion from $35.3 billion.

On the Net:

http://www.motorola.com

A service of the Associated Press(AP)

U.S. private sector shed 40,000 jobs in Dec

UPDATE 1-U.S. private sector shed 40,000 jobs in Dec-report

(adds details, market reaction)

NEW YORK, Jan 3 (Reuters) - U.S. private sector employment contracted in December, the first time since April 2003, a private employment service report showed on Wednesday.

The monthly ADP National Employment Report showed private sector employers shed 40,000 jobs after adding 158,000 jobs in November. The report is based on payroll data and measures the change in total private sector nonfarm employment each month.

"These findings suggest an abrupt slowing of employment, following three months during which, according to the ADP National Employment Report, gains in private nonfarm employment averaged 121,000 per month," said Joel Prakken, chairman of Macroeconomic Advisers.

The median forecast for the ADP report from 10 economists surveyed by Reuters pointed to a reading of gains of 128,000 jobs for the December.

Government bond prices rallied on the report, which hinted that the government's closely watched nonfarm payrolls report for December, due on Friday, might prove soft, although economist debate the extent of the correlation between the two reports.

"This is a big surprise ... there is no evidence of systematic problems in the ADP survey," said Ian Shepherdson, chief U.S. economist at High Frequency economics in New York. He said his firm would cut its estimate for the Labor Department's report to 75,000 jobs created, from an original estimate of 100,000.

"ADP is not perfect and is sometimes horribly wrong, but it is the best of a bad bunch of payroll indicators and cannot be completely ignored."

According to the latest Reuters poll of economists, Friday's report is expected to show that 110,000 nonfarm payroll jobs were created in December, down from 132,000 in November.

Investors will be looking to the nonfarm payrolls report for clues on the timing of the first interest rate cut after the Federal Reserve tightened monetary policy 17 times between June 2004 and June 2006.

DuPont cutting 1,500 jobs

By ALEX DOMINGUEZ, Associated Press Writer 59 minutes ago

DuPont Co. is cutting 1,500 jobs and consolidating manufacturing in its agriculture and nutrition division, and the chemical company said it will put the $100 million in annual savings into its seeds business as it steps up competition with rival Monsanto.

The changes announced Monday are expected to affect about 10 of the division's 250 sites worldwide, but DuPont spokesman Doyle Karr said the company was not disclosing which sites would be affected.

"It's a commitment that DuPont made earlier about realigning its resources toward high growth opportunities, so Ag and Nutrition is looking at streamlining its low return activities and low growth areas and then investing those savings into high growth areas," Karr said.

The changes include the closing or streamlining of the manufacturing units, with most of the changes expected to be completed in 2007, the company said.

DuPont expects to book a related $200 million pretax charge in the fourth quarter to cover the restructuring.

In a separate announcement, the company sharply increased its fourth-quarter earnings target to reflect a series of tax gains that will more than offset the restructuring charges.

Wilmington, Del.-based DuPont said it now expects to earn $3.25 per share in the quarter, including $370 million, or 39 cents per share, in net one-time gains. The previous estimate was for profit of $2.86 per share, including a gain of 1 cent per share.

The $370 million includes a gain of $500 million to reverse tax accruals and tax valuation allowances, and finalize taxes related to the return to the United States of profits earned abroad. The amount also includes a pretax gain of about $60 million related to insurance recoveries.

Karr said the $500 million was money the company had set aside for taxes. DuPont plans to report fourth-quarter earnings Jan. 23.

Shares of DuPont rose 54 cents to $47.44 in morning trading on the New York Stock Exchange.

NY state hemorrhages factory jobs

State hemorrhages factory jobs

One of every 4 manufacturing positions in 2000 is gone by 2005

Mary Chao
Staff writer


(November 27, 2006) — The number of manufacturing jobs in New York fell by 26 percent during the first half of the decade, a new census report shows.

Almost every major category of goods-producing employment contributed to the loss of 191,000 jobs between 2000 and 2005. Apparel manufacturing was the hardest hit.

Furniture making was the sole exception to the decline among industries employing at least 20,000 people. It added about 1,300 jobs during the five-year period.

New York fared worse than the nation as a whole, but not by much. Overall U.S. manufacturing employment dropped 21 percent, or about 3.5 million jobs, to a 2005 level of 13.2 million.

"A lot of what happens in New York follows national trends," said Kevin Jack, principal economist at the state Labor Department in Albany.

Despite the decline, manufacturing remains an important part of the New York economy — and nowhere more than in the Rochester/Finger Lakes region.

Separate data from the state Labor Department show that manufacturing accounts for 16 percent of the jobs in the nine-county area, the highest of any region in the state.

"Manufacturing just dominates our local economy," said Tammy Marino, associate economist for the Labor Department in Rochester.

The region was mostly affected by the loss of manufacturing jobs in the chemicals category, which covers many of the cutbacks at Eastman Kodak Co. Chemical manufacturing positions in the state fell to about 53,000 last year from 65,000 in 2000.

Marino noted that Kodak, Xerox Corp., Bausch & Lomb Inc. and others still employ substantial numbers of workers at manufacturing facilities in our region.

While the major employers, especially Kodak, have had their share of cutbacks, "just recently the pace of manufacturing layoffs has slowed," she said.

Some companies in the area are hiring, Marino noted, and defense manufacturers such as Harris Corp.'s RF Communications division in Rochester have fared well recently.

The types of manufacturing jobs have changed, said Matt Hurlbutt, managing director of the Finger Lakes Partnership and director of RochesterWorks, a nonprofit agency that connects businesses with job seekers.

"It's gone from assembly-line work to computer-, technology-based work," Hurlbutt said. "Some low-skill, high-wage positions have been lost, but there are still jobs in manufacturing."

Smaller businesses without the recruiting budgets of large companies are hiring, but job seekers may not know about the positions or even about the smaller companies, he said.

The optics field is always looking for workers and many of those positions pay from $10 to $22 an hour, Hurlbutt said. Such jobs usually require an associate's degree, with Monroe Community College offering many courses in optics and engineering.

Gone are the days when few skills were needed for manufacturing jobs, Hurlbutt said, noting that many positions in the field have evolved into skilled labor, requiring math and science skills.

"You need to own your career and manage it," he said.

MCHAO@DemocratandChronicle.com

http://www.rochesterdandc.com/apps/pbcs.dll/article?AID=/20061127/BUSINESS/611270314