Posted tagged ‘Stock Market’

Tribune Co. Files for Bankruptcy

December 8, 2008

The Tribune Co., owner of the Los Angeles Times, The Chicago Tribune and numerous other dailies, filed for bankruptcy today in what can be seen as the latest blow to a newspaper industry reeling from a drop in advertising and the rise of online media.

From the New York Times:

The move came less than a year after Samuel Zell, a Chicago real estate tycoon, took control of the Tribune chain and took on most of the $13 billion debt burden that now threatens to cripple it in the face of a sinking economy and a collapse in advertising.

Mr. Zell said the company had enough cash to continue operating its 12 newspapers, 23 television stations, national cable channel and assorted other media holdings, and the company insisted that the filing would have no effect on employees’ payroll and benefits, or on the vast majority of their retirement accounts.

But in light of its shrinking cash flow, Tribune decided to file for bankruptcy in a Delaware court, with the urging of some of its major creditors who met with Tribune representatives over the previous three days.

The recession and the shift of advertising to the Internet have hit newspapers with the sharpest drop in advertising revenue since the Depression — Tribune’s papers were down 19 percent in the third quarter — and some major newspapers have defaulted on debt or been put up for sale, with no takers. But Tribune’s problems were made significantly worse by the unusual $8.2 billion deal put together last year by Mr. Zell, which took the company private and nearly tripled its debt load, driving the company deeper into debt than any other major newspaper publisher.

The company has cut its staff and products, deeply and repeatedly, in an attempt to stay ahead of debt payments. In May, it also sold one of its most profitable newspapers, Newsday, to Cablevision for $650 million.

Tribune faces more than $900 million in interest payments over the next year, and a $512 million principal payment due in June.

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Merrill Lynch Chief Executive Wants His Bonus

December 8, 2008

According to sources close to the company, Merrill Lynch  Chief Executive John Thain has suggested to directors that he get a 2008 bonus of as much as $10 million, but the battered company’s compensation committee is resisting his request.

And we should give it to him, right? No!

From Reuters:

The compensation committee has not reached a decision, but is leaning toward denying Thain and other senior executives bonuses for this year, the people told the paper.

Merrill could not be immediately reached for comment.

Shareholders on Friday approved Bank of America Corp’s takeover of Merrill, a deal fraught with risk but one that would create a banking giant with a leading position in almost every major area of the financial system.

Merrill was arguably saved from extinction when it agreed to merge on September 15, an hour before Lehman Brothers Holdings Inc filed for bankruptcy. The fear was that Merrill could be next if shareholders and trading partners fled, as many did at Lehman and the former Bear Stearns Cos.

Thain has said he deserves a bonus because he helped avert what could have been a much larger crisis at the firm, people familiar with his thinking told the WSJ.

Members of Merrill’s compensation committee agree with Thain that the takeover is in shareholders’ best interest, but believe it would be foolish to ignore strong public sentiment against large compensation packages, the paper said, citing people familiar with their thinking.

Committee members are also weighing the fact that other Wall Street firms, including Goldman Sachs Group Inc, which did better than Merrill this year, are not giving out bonuses to top executives, the paper said.

Dow Chemical to 3,000 Slash Jobs

December 8, 2008

The struggling economy bites again! Dow Chemical Co. said Monday it will slash 5,000 full-time jobs — about 11 percent of its total work force — close 20 plants and sell several businesses to control costs amid the economic recession.

From the Associated Press:

The company, one of the largest chemical makers in the world, expects the moves to save about $700 million per year by 2010. Dow also will temporarily idle 180 plants and prune 6,000 contractors from its payroll.

“We are accelerating the implementation of these measures as the current world economy has deteriorated sharply, and we must adjust ourselves to the severity of this downturn,” Chief Executive and Chairman Andrew N. Liveris said in a statement.

Last month, Dow Chemical had said it would review all options to reduce costs and eliminate or defer capital spending. “We are going to take necessary, bold and proactive measures to manage our transformation through these extremely challenging times,” Liveris said at the time.

The company said it will take a fourth-quarter charge of $700 million, or 50 cents to 60 cents per share, to cover $350 million in severance payments and $350 million worth of plant shutdown costs.

But the company denied it will suspend dividend payments as a way to conserve cash. In a conference call Monday, Liveris said Dow has paid a dividend each quarter for nearly 100 years, and has no plans to stop that trend.

“We will not break that string…not on my watch,” he said.

The Midland, Mich.-based company expects “the new Dow” to be comprised of three units: joint ventures; performance products; and health and agriculture, advanced materials and other market-facing businesses.

Barack Obama Steps Into Leadership Gap

December 8, 2008

Barack Obama has chosen not to observe the tradition requiring a president-elect to keep quiet on the sidelines until Inauguration Day. He made a series of bold calls this weekend for action on the economy, including a fiscal stimulus package and a plan to help homeowners. “I am disappointed that we haven’t seen quicker movement on this issue by the administration,” he said Sunday on NBC’s “Meet the Press.”

From Financial Times:

With dutiful regularity, America’s president-elect has reminded the US public since November 4 that the country only has one president at a time. What he forgot to add was that his name is Barack Obama, not George W. Bush.

In a series of weekend statements – a radio address to the public on Saturday, a prime time Sunday morning interview and an afternoon press conference in Chicago – Mr Obama made it plain that economic events will not respect America’s oddly archaic 77-day transition.

Since his emphatic victory last month, Mr Obama has watched the economy fall off a cliff. The most recent data came on Friday, with the largest single monthly jump in unemployment since 1974. The Obama transition team, which has produced the fastest series of economic appointments “in history”, according to Mr Obama, has observed Mr Bush’s abdication of presidential authority with mounting concern.

Almost two million jobs have been lost since September. One in ten American mortgage holders are either in arrears or have had their homes repossessed by the banks. In what may well qualify as an understatement, Mr Obama on Sunday told NBC’s Meet the Press: “I am disappointed that we haven’t seen quicker movement on this issue [to assist struggling homeowners] by the administration.”

Mr Obama’s chief source of frustration with the outgoing president is Mr Bush’s refusal to agree to a second fiscal stimulus package, at a time when economists of all political stripes are calling for what the president-elect described as a “blood transfusion” to stabilise the patient. Hence Mr Obama’s intervention this weekend.

Without putting a cost-estimate on the package, Mr Obama on Sunday outlined the contours of a fiscal stimulus that would keep the US economy alive pending more substantial action. The plan, which emphasises aid to struggling states, many of which are deepening the crisis by cutting spending to meet their legal balanced budget requirements, could be passed by Congress some time in January.

Some hope the plan, which would cost at least $500bn, may even be ready for Mr Obama to sign on January 20 after he has taken the oath of office. The 111th Congress starts work on 6 January. “Things are going to get worse before they get better,” said Mr Obama yesterday. “My number one priority going in is to make sure we have an economic recovery plan that is equal to the task.”

Congress Agrees on Auto Bailout Plan

December 5, 2008

Democratic Congressional leaders said late today that they were ready to provide a short-term rescue plan for the American automakers, and they expect to hold votes on the legislation during a special session next week.

From the New York Times:

Details of the rescue package were not immediately available but senior Congressional aides said that it would include billions of dollars in short-term loans to keep the automakers afloat at least until President-elect Barack Obama takes office.

Ending a weeks-long stalemate between the Bush administration and House Speaker Nancy Pelosi, senior aides said that the money would likely come from $25 billion in federally subsidized loans intended for developing advanced fuel efficient cars.

Ms. Pelosi had resisted using that money, which was approved as part of an energy bill last year, and Democrats had called repeatedly on the Bush administration or the Federal Reserve to act unilaterally, using existing authority, to aid the auto companies.

On Friday, Ms. Pelosi said that she would allow that money to be used provided “there is a guarantee that those funds will be replenished in a matter of weeks” and that there was no delay in working toward higher fuel-efficiency.

Word of a breakthrough came as Congress wrapped up two days of hearings at which lawmakers grilled the chief executives of the companies, Chrysler, Ford and General Motors, and experts warned that GM could collapse by the end of this month.

Gas to Hit $1 a Gallon?

December 5, 2008

I can’t believe it but it may be true! Oil prices hit four-year lows Friday as employers cut the highest number of jobs in 34 years. The continuing decline in prices is so dramatic and so sudden that it is raising the prospect that gas prices could soon fall below $1 a gallon.

Energy Information Administration

Credit: Energy Information Administration

From the Associated Press:

The worst jobs data in 34 years on Friday just added more fuel to the deepening global recession as U.S. employers slashed a far worse-than-expected 533,000 jobs in November and the unemployment rate rose to a 15-year high of 6.7 percent.

A gallon of gasoline can be had for 50 cents less than it cost just last month, and people are starting to talk about $1 gas.

Granted, gas prices are a long way off from that magic number last seen in March 1999 when prices were at 97 cents a gallon, according to motor club AAA. Prices at the pump fell 1.6 cents overnight to $1.773 nationally, according to AAA, the Oil Price Information Service and Wright Express.

But consider what has happened since July 11 when a barrel of oil hit a record $147.27 and a gallon of gas was $4.117 on July 17. In less than five months, oil has fallen 72 percent.

Just this week, in which the National Bureau of Economic Research determined that the U.S. is in recession, oil has fallen 25 percent.

On Friday, light, sweet crude for January delivery settled at $40.81 a barrel on the New York Mercantile Exchange, down by nearly $3 per barrel. Prices fell as low at $40.50, levels last seen in December 2004.

For gas prices to get close to a $1, oil prices probably would need to fall another $10 a barrel — something that would have impossible to fathom during first part of this year as oil prices soared near $150 per barrel.

Family of Trampled Worker to Sue Wal-Mart

December 3, 2008

Two customers are suing Wal-Mart for negligence after being injured in a mad rush for post-Thanksgiving bargains that left one store employee dead this past weekend.

From CNN:

Temporary Wal-Mart worker Jdimytai Damour, 34, was crushed to death as he and other employees attempted to unlock the doors of a store on Long Island at 5 a.m. Friday.

Attorney Kenneth Mollins said Fritz Mesadieu and Jonathan Mesadieu were “literally carried from their position outside the store” and are now “suffering from pain in their neck and their back from being caught in that surge of people” that rushed into the Wal-Mart.

New York Newsday reported that the Mesadieus are father and son, ages 51 and 19.

The lawsuit alleges that the Mesadieus’ injuries were a result of “carelessness, recklessness, negligence.”

In a claim against the Nassau County police department, the men also contend that they “sustained monetary losses as a result of health care and legal expenses … in the sum of $2 million.”

“This is a tragic situation that could have and should have been avoided with the exercise of reasonable care. There are very simple measures that could have been put in place to avoid this, such as barriers along the line to spread people out, extra security and a better police presence,” Mollins said.