Posted tagged ‘Recession’

Ford Posts Profit of Nearly $1 Billion

November 2, 2009

Ford, the only automaker to dodge direct government aid and bankruptcy court, surprised investors this morning with a net income of nearly $1 billion in the third quarter.

Where did that come from???

From the Associated Press:

The automaker said Monday earnings were fueled by U.S. market share gains, cost cuts and the Cash for Clunkers program, which drew flocks of buyers to showrooms this summer. Ford’s shares rose 68 cents, or 9.8 percent, to $7.68 in morning trading.

The latest results signal that Ford’s turnaround is on more solid ground. The company lost more than $14.6 billion last year and hasn’t posted a full-year profit since 2005. While it made a profit in the second quarter, that was mainly due to debt reductions that cut its interest payments.

Ford, based in Dearborn, Mich., reported third-quarter net income of $997 million, or 29 cents per share. Its profit forecast for 2011 was a step above previous guidance of break-even or better for the year.

Ford’s key North American car and truck division posted a pretax profit of $357 million, the division’s first quarter in the black since early 2005. Ford cited higher pricing, lower material costs and increased market share for the improvement.

Excluding one-time items, Ford earned 26 cents per share, blowing away analysts’ expectations of a loss of 12 cents.

The earnings came despite an $800 million revenue drop. But Ford said it cut costs by $1 billion during the quarter, accomplished through layoffs in North America and Europe, reduced pension and retiree health care costs and improvements in productivity and product development.

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Wall Street Journal Closes Boston Office

October 29, 2009

The Wall Street Journal has announced that it will close its Boston bureau to save money and that the publication will shift its coverage of the mutual fund industry to its money and investing reporting team.

From Reuters:

“The economic background is painfully obvious to us all,” Journal Managing Editor Robert Thomson told the paper’s employees in a memo. “That there has been truly great reporting… out of Boston over many, many years is not in doubt. But we remain in the midst of a profound downturn in advertising revenue and thus must think the unthinkable.”

News Corp, which owns the Journal, will keep sister news organizations Dow Jones Newswires and MarketWatch in Boston, the memo said. An investigative reporting operation for the Journal will remain too, Thomson said.

Nine bureau reporters at the Journal would have to apply for other jobs, the memo said.

A Journal spokesman declined to say how much money the closure will save. There are no plans to close other U.S. or international bureaus, Thomson wrote.

WSJ: Burgerville’s Health-Care Recipe

August 31, 2009

A great article in today’s Wall Street Journal, written by Sarah Needleman, featuring client Burgerville and their affordable employee health care program.

If you don’t believe that a fast food, quick serve or fast casual restaurant chain can provide their employees with affordable health care, you will be pleasantly surprised!

From the Wall Street Journal:

Four years ago, executives of Burgerville, a regional restaurant chain, agreed to pay at least 90% of health-care premiums for hourly employees who work at least 20 hours a week. Today, the executives say the unusual move has saved money by cutting turnover, boosting sales and improving productivity.

Burgerville’s experience is notable for the food-service industry, where turnover is high and fewer than half of chains offer health insurance for part-time hourly employees, according to People Report, a research firm. The chains that do offer benefits pay on average 49% of the cost for employees working at least 30 hours a week, People Report says.

Burgerville’s initiative “not only improves quality of service but it saves money by not having to replace staff as frequently,” said Darren Tristano, executive vice president at Technomic Inc., a Chicago consulting and research firm for the food industry.

Burgerville, a 39-restaurant chain based in Vancouver, Wash., and owned by closely held Holland Inc., has long followed a distinctive path. It offers hormone-free meat, uses wind energy to power its stores and prints nutritional information on its receipts.

Under Burgerville’s plan, individual hourly workers can enroll in a health-maintenance organization for $15 a month, with no deductible. A worker and spouse pay $30 monthly; family plans cost $90. Salaried employees, whose plans didn’t change significantly, pay $84 a month for individual and $240 monthly for family coverage, and have an annual deductible of $500.

Executives say the plan paid for itself, and more. Turnover in 2006 plunged to 54%, from 128% in 2005. That’s a big deal when it costs an average of $1,700 to replace and train a restaurant worker, according to People Report.

Government Optimistic on State of Economy

August 13, 2009

The Federal Reserve said yesterday that it appears that the economy in the US has halted the longest period of decline since the Great Depression, although it has cautioned that economic activity is likely to remain weak in the near term.

From CNN:

The central bank left its key overnight interest rate at a 0% to 0.25% range, as expected. Its statement at the conclusion of its two-day meeting said “economic activity is leveling out.”

That is the Fed’s most bullish assessment of the economy in more than a year, and suggests that a recovery may have started.

It said it still expects “inflation will remain subdued for some time” and said that it expects rates to remain near zero percent “for an extended period.”

The Fed cut interest rates to the record low range at its December meeting in an effort to spur the struggling U.S. economy at that time.

It also pumped about $1 trillion of cash into the economy during the last year through a number of extraordinary programs, including the purchase of Treasurys and mortgage-backed securities, as well as new programs to get banks and other lenders to extend credit to consumers.

Barack Obama Selects Sonia Sotomayor as Supreme Court Choice

May 26, 2009

President Barack Obama has nominated federal judge Sonia Sotomayor of New York for the Supreme Court, making the longtime federal jurist the first Latino member of the nation’s highest court.

From the Los Angeles Times:

Sotomayor, first appointed to the federal district court for the Southern District of New York by Republican President George H.W. Bush in 1991, sits on the 2nd Circuit Court of Appeals. She was elevated to the circuit court, one of the nation’s most prestigious, by Democratic President Bill Clinton in 1998.

Obama, who has said that he wants a new justice with “a common touch” and a measure of “empathy,” also is offering a measure of ethnic diversity to a court dominated by white men in his replacement of the retiring Justice David Souter. The nine-member court includes just one female justice, Ruth Bader Ginsburg, and one black justice, Clarence Thomas.

“I have decided to nominate an inspiring woman, who I believe will make a great justice,” said Obama, standing with Sotomayor by his side in the East Room of the White House.

Southwest CEO: Air Traffic Fizzling in May

May 20, 2009

Interesting article.

CEO Gary Kelly of Southwest Airlines says an April boost in travel has fizzled in May, which has forced the company to speed up plans to raise more revenue.

I fly Southwest as often as I can and I’ve seen both Southwest and Alaska Airlines flights that were nowhere near full. Very sad as these are two of the best in the business,  in my opinion.

From the Associated Press:

Chief Executive Gary Kelly said Wednesday that the airline has been hurt by the swine flu outbreak, which made travelers nervous about getting on a plane.

The global economic slowdown has left Southwest uncertain what the rest of the year will bring.

“June is typically our strongest month of the year, so I think June will tell us a lot,” Kelly told reporters after the company’s annual shareholder meeting.

American Airlines parent AMR Corp. also held its annual meeting a few miles away in Fort Worth. Employees — and in one case, the teenage son of employees — challenged CEO Gerard Arpey over AMR’s reluctance to approve pay raises.

Times are tough at American, until last year the world’s largest airline, and at Southwest, which now carries more U.S. passengers than any carrier.

GM To Cut More Than 1100 US Dealers

May 15, 2009

General Motors notified 1,100 of its 6,000 dealerships today that it is terminating their contracts with the struggling automaker.

From CNN:

GM spokeswoman Susan Garontakos said that the dealers receiving notice Friday are being told that their contracts will not be renewed in October 2010. Many of them are expected to close shop this year.

The company has told the Obama administration that it plans to cut its network down to 3,600 dealers by next year.

Much of the rest of the cuts will come from GM’s plans to sell or close four brands – Saturn, Hummer, Saab and Pontiac.

Those four brands have about 600 dealerships that do not include other GM brands. But most Pontiac and Hummer dealers will stay in the GM family because they have one of the four remaining GM brands as part of their operation.