www.jobberz.com
(CEP News) - The upside surprise in U.S. initial jobless claims points to a continued deterioration of the U.S. labour market, and the possible loss of up to 750,000 jobs in February's official nonfarm payrolls report. Initial claims rose to 667k in the week ending Feb. 21, well above the 625k level economists had expected. The previous week's reading was also upwardly revised to 631k, the U.S. Department of Labor reported.
Continuing claims rose above expectations as well, coming in at 5.112 million compared to the 5.025 million expected.
Ken Maylan of ClearView Economics called the rise in initial claims "painful," but noted that on an adjusted basis, weekly claims exceeded 1 million claims in the 1982 recession.
The continued increase in claims isn't likely to end any time soon, according to HFE economist Ian Shepherdson. However, he also noted that the current level is still well short of the peaks reached in the mid-1970s and early 80s.
"We fervently hope that does not happen but we are not confident," he said in a client note. "Companies are throwing in the towel as they recognize that no sector is safe."
As a result, Shepherdson is forecasting February's official nonfarm payrolls report to show a loss of up to 750,000 jobs. That would follow a record loss of 598,000 jobs in January, which boosted the unemployment rate 0.6 percentage points to 7.2%.
Also in Thursday's jobless claims report, the less volatile four-week moving average for initial claims rose to 639,000, up from 620,000 in the week prior, while the four-week moving average for continuing claims rose to 4.932 million, up from 4.843 million in the previous week.
By Stephen Huebl, shuebl@economicnews.ca, edited by Sarah Sussman, ssussman@economicnews.ca
CEP Newswires - CEP News ? 2008. All Rights Reserved. www.economicnews.ca
The Copying, Broadcast, Republication or Redistribution of CEP News Content is Expressly Prohibited Without the Prior Written Consent of CEP News.
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Thursday, February 26, 2009
Thrifts lost $3B in 4Q; post record annual loss
www.jobberz.com
By DANIEL WAGNER –
WASHINGTON (AP) — U.S. thrifts lost $3 billion in the fourth quarter and more than $13 billion last year, a record annual loss.
The Office of Thrift Supervision said Thursday that net losses last year surged to $13.44 billion, from $649 million in 2007. But the fourth-quarter loss was actually better than the $4.4 billion loss in the prior quarter and the $8.8 billion loss in the year-ago period.
Thrifts last year set aside $38.7 billion for losses on bad mortgages and other loans, the highest point since 1991, due mainly to increased mortgage delinquencies.
"While painful to the bottom line, the industry is better positioned to absorb loan losses," said James Caton, OTS director of financial monitoring.
Thrifts are important to consumer lending because they must have at least 65 percent of their lending in mortgages and other consumer loans.
But troubled assets now account for more than 2.5 percent of assets, up from nearly 1.7 percent a year ago.
Thrifts need to set aside so much money for loan losses because home prices likely will continue dropping "for some time," said OTS economist Sharon Stark. Northeastern cities with strong financial services industries will be especially hard hit, she added.
The yearly results exclude Seattle-based thrift Washington Mutual Inc., whose failure in September was the largest in U.S. history, and Pasadena, Calif-based IndyMac Bank, which failed in July. Their performance is included in 2007 figures.
JPMorgan Chase & Co., which acquired Washington Mutual's assets, said Thursday it will eliminate about 12,000 jobs as it folds in the company's operations.
There were 26 problem thrifts at the end of 2008, up from 11 a year earlier, but OTS director John Reich said two-thirds of the lending institutions remain profitable.
"What started out to be a housing problem ... has expanded to the broader economy," and now affects virtually all businesses and financial institutions, Reich said.
The agency, a part of the Treasury Department, is working with other regulators on a plan to streamline loan modifications. Thrift mortgage origination fell 43 percent last year to $404.9 billion from $716.2 billion in 2007.
Separately, Reich said the agency is launching a new unit to monitor thrifts with more than $10 billion in assets. The new "large bank unit" will be working onsite at about 25 thrifts.
The agency also will create new standards for reviewing enforcement actions on thrifts that do not meet minimum standards.
By DANIEL WAGNER –
WASHINGTON (AP) — U.S. thrifts lost $3 billion in the fourth quarter and more than $13 billion last year, a record annual loss.
The Office of Thrift Supervision said Thursday that net losses last year surged to $13.44 billion, from $649 million in 2007. But the fourth-quarter loss was actually better than the $4.4 billion loss in the prior quarter and the $8.8 billion loss in the year-ago period.
Thrifts last year set aside $38.7 billion for losses on bad mortgages and other loans, the highest point since 1991, due mainly to increased mortgage delinquencies.
"While painful to the bottom line, the industry is better positioned to absorb loan losses," said James Caton, OTS director of financial monitoring.
Thrifts are important to consumer lending because they must have at least 65 percent of their lending in mortgages and other consumer loans.
But troubled assets now account for more than 2.5 percent of assets, up from nearly 1.7 percent a year ago.
Thrifts need to set aside so much money for loan losses because home prices likely will continue dropping "for some time," said OTS economist Sharon Stark. Northeastern cities with strong financial services industries will be especially hard hit, she added.
The yearly results exclude Seattle-based thrift Washington Mutual Inc., whose failure in September was the largest in U.S. history, and Pasadena, Calif-based IndyMac Bank, which failed in July. Their performance is included in 2007 figures.
JPMorgan Chase & Co., which acquired Washington Mutual's assets, said Thursday it will eliminate about 12,000 jobs as it folds in the company's operations.
There were 26 problem thrifts at the end of 2008, up from 11 a year earlier, but OTS director John Reich said two-thirds of the lending institutions remain profitable.
"What started out to be a housing problem ... has expanded to the broader economy," and now affects virtually all businesses and financial institutions, Reich said.
The agency, a part of the Treasury Department, is working with other regulators on a plan to streamline loan modifications. Thrift mortgage origination fell 43 percent last year to $404.9 billion from $716.2 billion in 2007.
Separately, Reich said the agency is launching a new unit to monitor thrifts with more than $10 billion in assets. The new "large bank unit" will be working onsite at about 25 thrifts.
The agency also will create new standards for reviewing enforcement actions on thrifts that do not meet minimum standards.
Apple Board Forced Into Spotlight With Jobs on Leave
www.jobberz.com
By Connie Guglielmo
Feb. 26 (Bloomberg) -- Apple Inc.’s directors, after taking a back-seat role for years to Chief Executive Officer Steve Jobs, were forced to respond to investors yesterday as they pushed for an update on Jobs’s health.
Apple’s co-lead directors, Arthur Levinson and Bill Campbell, each answered questions at the company’s annual meeting on how the board has handled disclosures about Jobs’s health, succession planning and executive pay at Apple. In past years, Jobs has dominated the meeting, with board members sitting quietly in the first row of the audience.
“The dynamism of him controlling the meeting has changed,” Scott Adams, a representative of the American Federation of State, County and Municipal Employees, said in an interview after the meeting. His organization owns 18,218 Apple shares. In the past, “Jobs would not allow questions to go to directors.”
Standing up to address a packed room, Levinson, the CEO of Genentech Inc., said yesterday that “nothing has changed,” since Apple’s disclosure on Jan. 14 that Jobs was taking a five- month medical leave.
“He certainly remains the CEO -- he’s responsible and deeply involved in all strategic matters,” said Levinson, who’s served on Apple’s board since 2000. “If there’s new information that we deem important to disclose, that will happen. At this point we feel we’ve met all disclosure obligations and responsibilities.”
Apple’s Disclosures
Corporate governance experts have faulted Apple’s board, which includes former U.S. Vice President Al Gore and Google Inc. CEO Eric Schmidt, for not talking about Jobs’s health sooner and in more detail after concern about his weight loss last year caused movements in the stock price. Jobs, a cancer survivor, missed the annual meeting for the first time in more than a decade.
While giving shareholders updates isn’t a hard and fast rule, Apple’s board will probably be compelled to talk more about Jobs’s health if anything changes significantly, said Jahan Raissi, a partner at Shartsis Friese LLP in San Francisco. He was a former senior counsel in the enforcement division of the Securities and Exchange Commission.
“If in two months it comes out that something changed and people knew two months ago and they didn’t say anything, there could be hell to pay,” Raissi said in an interview. “If they don’t say anything more, then it’s reasonable to believe that the company doesn’t know any different information.”
Apple rose 93 cents to $92.09 at 9:33 a.m. New York time in Nasdaq Stock Market trading. The shares had gained 6.8 percent this year before today.
Biggest Assembly
Yesterday’s gathering -- held in the same auditorium at Apple’s Cupertino, California, headquarters where Jobs typically introduces new products -- was the biggest public assembly of directors at an annual meeting in the past three years.
Levinson and Intuit Inc. Chairman Campbell, seated in the front row, were flanked by four other independent directors: Gore, J. Crew Inc. CEO Millard “Mickey” Drexler, Avon Inc. CEO Andrea Jung and former International Business Machines Corp. finance chief Jerome York. The only board members absent were Jobs and Schmidt.
Last year, Jobs was joined by Gore, Schmidt, Levinson and Campbell. In 2007, Levinson, Campbell and Schmidt also attended.
On Jan. 5, Jobs said treatment for his weight loss was “relatively simple.” Nine days later, he announced he would take leave after learning his health issues were “more complex” than he originally thought.
SEC Probe
The SEC started an investigation into the disclosures to determine whether investors were misled, a person familiar with the matter said last month. The review doesn’t mean investigators have seen evidence of wrongdoing. Apple general Counsel Daniel Cooperman declined to comment on the SEC investigation yesterday.
Jobs, who co-founded Apple in 1976 and was ousted in a management coup in 1985, returned to lead the company in 1997. One of the first things he did was to replace all but two of the board members. His picks included Campbell, a former Apple executive, and York, an adviser to Tracinda Corp. CEO Kirk Kerkorian.
“It’s a very secretive culture, a very closed culture,” said Conrad Mackerron, director of corporate social responsibility for As You Sow, an environmental advocacy group in San Francisco. The group, which met with Jobs two years ago to talk about Apple’s environmental policies, submitted a shareholder proposal asking that the company provide more details on its effort to cut carbon emissions. “It’s hard to talk in an open manner.”
No Mobile Phones
Only shareholders were allowed into the meeting hall and able to ask questions. Reporters, and latecomers, watched the 75-minute event on video in a separate room. Apple banned the use of mobile phones, personal computers, cameras and recording devices. Apple typically doesn’t make a transcript of the event available.
Campbell, 68, used his time at the microphone to talk about the board’s decision to vote against a “say-on-pay” proposal. Campbell said the board wanted to retain the flexibility to reward executives as “we see fit.”
“You can sense there’s more disclosure,” in that board members were forced to answer questions, said Gene Munster, an analyst with Piper Jaffray & Co. in Minneapolis, who has recommended investors buy Apple’s shares since June 2004. “It’s a good thing that Apple is more transparent.”
Investors still want more information, said Andy Hargreaves, an analyst at Pacific Crest Securities in Portland, Oregon.
“If I was a shareholder, I would have been upset if I heard them say, ‘He was fine, it’s a hormone imbalance’ and then nine days later, hear him say ‘I’m taking leave,’” said Hargreaves, who rates Apple shares “outperform.” “That’s misleading at best. It’s possible that things change that quickly. That’s why the lack of disclosure is disconcerting.”
To contact the reporter on this story: Connie Guglielmo in San Francisco at cguglielmo1@bloomberg.net
By Connie Guglielmo
Feb. 26 (Bloomberg) -- Apple Inc.’s directors, after taking a back-seat role for years to Chief Executive Officer Steve Jobs, were forced to respond to investors yesterday as they pushed for an update on Jobs’s health.
Apple’s co-lead directors, Arthur Levinson and Bill Campbell, each answered questions at the company’s annual meeting on how the board has handled disclosures about Jobs’s health, succession planning and executive pay at Apple. In past years, Jobs has dominated the meeting, with board members sitting quietly in the first row of the audience.
“The dynamism of him controlling the meeting has changed,” Scott Adams, a representative of the American Federation of State, County and Municipal Employees, said in an interview after the meeting. His organization owns 18,218 Apple shares. In the past, “Jobs would not allow questions to go to directors.”
Standing up to address a packed room, Levinson, the CEO of Genentech Inc., said yesterday that “nothing has changed,” since Apple’s disclosure on Jan. 14 that Jobs was taking a five- month medical leave.
“He certainly remains the CEO -- he’s responsible and deeply involved in all strategic matters,” said Levinson, who’s served on Apple’s board since 2000. “If there’s new information that we deem important to disclose, that will happen. At this point we feel we’ve met all disclosure obligations and responsibilities.”
Apple’s Disclosures
Corporate governance experts have faulted Apple’s board, which includes former U.S. Vice President Al Gore and Google Inc. CEO Eric Schmidt, for not talking about Jobs’s health sooner and in more detail after concern about his weight loss last year caused movements in the stock price. Jobs, a cancer survivor, missed the annual meeting for the first time in more than a decade.
While giving shareholders updates isn’t a hard and fast rule, Apple’s board will probably be compelled to talk more about Jobs’s health if anything changes significantly, said Jahan Raissi, a partner at Shartsis Friese LLP in San Francisco. He was a former senior counsel in the enforcement division of the Securities and Exchange Commission.
“If in two months it comes out that something changed and people knew two months ago and they didn’t say anything, there could be hell to pay,” Raissi said in an interview. “If they don’t say anything more, then it’s reasonable to believe that the company doesn’t know any different information.”
Apple rose 93 cents to $92.09 at 9:33 a.m. New York time in Nasdaq Stock Market trading. The shares had gained 6.8 percent this year before today.
Biggest Assembly
Yesterday’s gathering -- held in the same auditorium at Apple’s Cupertino, California, headquarters where Jobs typically introduces new products -- was the biggest public assembly of directors at an annual meeting in the past three years.
Levinson and Intuit Inc. Chairman Campbell, seated in the front row, were flanked by four other independent directors: Gore, J. Crew Inc. CEO Millard “Mickey” Drexler, Avon Inc. CEO Andrea Jung and former International Business Machines Corp. finance chief Jerome York. The only board members absent were Jobs and Schmidt.
Last year, Jobs was joined by Gore, Schmidt, Levinson and Campbell. In 2007, Levinson, Campbell and Schmidt also attended.
On Jan. 5, Jobs said treatment for his weight loss was “relatively simple.” Nine days later, he announced he would take leave after learning his health issues were “more complex” than he originally thought.
SEC Probe
The SEC started an investigation into the disclosures to determine whether investors were misled, a person familiar with the matter said last month. The review doesn’t mean investigators have seen evidence of wrongdoing. Apple general Counsel Daniel Cooperman declined to comment on the SEC investigation yesterday.
Jobs, who co-founded Apple in 1976 and was ousted in a management coup in 1985, returned to lead the company in 1997. One of the first things he did was to replace all but two of the board members. His picks included Campbell, a former Apple executive, and York, an adviser to Tracinda Corp. CEO Kirk Kerkorian.
“It’s a very secretive culture, a very closed culture,” said Conrad Mackerron, director of corporate social responsibility for As You Sow, an environmental advocacy group in San Francisco. The group, which met with Jobs two years ago to talk about Apple’s environmental policies, submitted a shareholder proposal asking that the company provide more details on its effort to cut carbon emissions. “It’s hard to talk in an open manner.”
No Mobile Phones
Only shareholders were allowed into the meeting hall and able to ask questions. Reporters, and latecomers, watched the 75-minute event on video in a separate room. Apple banned the use of mobile phones, personal computers, cameras and recording devices. Apple typically doesn’t make a transcript of the event available.
Campbell, 68, used his time at the microphone to talk about the board’s decision to vote against a “say-on-pay” proposal. Campbell said the board wanted to retain the flexibility to reward executives as “we see fit.”
“You can sense there’s more disclosure,” in that board members were forced to answer questions, said Gene Munster, an analyst with Piper Jaffray & Co. in Minneapolis, who has recommended investors buy Apple’s shares since June 2004. “It’s a good thing that Apple is more transparent.”
Investors still want more information, said Andy Hargreaves, an analyst at Pacific Crest Securities in Portland, Oregon.
“If I was a shareholder, I would have been upset if I heard them say, ‘He was fine, it’s a hormone imbalance’ and then nine days later, hear him say ‘I’m taking leave,’” said Hargreaves, who rates Apple shares “outperform.” “That’s misleading at best. It’s possible that things change that quickly. That’s why the lack of disclosure is disconcerting.”
To contact the reporter on this story: Connie Guglielmo in San Francisco at cguglielmo1@bloomberg.net
Limited Predicts First-Quarter Loss, Cuts 400 Jobs
www.jobberz.com
By Allison Abell Schwartz
Feb. 26 (Bloomberg) -- Limited Brands Inc., the owner of the Victoria’s Secret chain, predicted a first-quarter loss and cut 400 jobs as consumers reduce spending on lingerie.
The loss will be 7 cents to 12 cents a share, the Columbus, Ohio-based company said today. Eight analysts estimated profit of 2 cents a share, on average. Sales at stores open at least a year may decline by “high-single digits” on a percentage basis, executives said on a conference call with investors and analysts.
Saks Inc. and Macy’s Inc. are among retailers eliminating jobs to slash costs as declining home values and the highest unemployment in 16 years cause consumers to reduce spending. Limited is also suspending pay increases, reducing capital spending and slowing store growth, Chief Administrative Officer Martyn Redgrave said on the call.
“There is extraordinary uncertainty and lack of visibility in all of our businesses,” Redgrave said. “In this unprecedented environment, we are choosing to take aggressive actions.”
Limited fell 73 cents, or 8.2 percent, to $8.19 at 11:52 a.m. in New York Stock Exchange composite trading. The shares lost 11 percent this year before today.
Fourth-quarter net income dropped 96 percent to $16.1 million, or 5 cents a share, after a writedown on the value of its La Senza brand. Revenue fell 8.7 percent to $2.99 billion.
The retailer took a charge in the period for the elimination of about 10 percent of the jobs at its corporate headquarters. Most of the jobs cut at Limited Brands will remain on its payroll until March 7, spokeswoman Tammy Roberts Myers said in an e-mail.
Profit excluding the pretax impairment charge and severance costs was 68 cents a share, the company said. Fourteen analysts surveyed by Bloomberg estimated profit of 65 cents.
Full-year profit will be 60 cents to 85 cents, the company said. Fourteen analysts estimated profit of 88 cents, on average.
Limited’s 3,014 retail locations include Bath & Body Works and Henri Bendel as well as Victoria’s Secret.
To contact the reporter on this story: Allison Abell Schwartz in New York at aabell@bloomberg.net.
Last Updated: February 26, 2009 11:55 EST
By Allison Abell Schwartz
Feb. 26 (Bloomberg) -- Limited Brands Inc., the owner of the Victoria’s Secret chain, predicted a first-quarter loss and cut 400 jobs as consumers reduce spending on lingerie.
The loss will be 7 cents to 12 cents a share, the Columbus, Ohio-based company said today. Eight analysts estimated profit of 2 cents a share, on average. Sales at stores open at least a year may decline by “high-single digits” on a percentage basis, executives said on a conference call with investors and analysts.
Saks Inc. and Macy’s Inc. are among retailers eliminating jobs to slash costs as declining home values and the highest unemployment in 16 years cause consumers to reduce spending. Limited is also suspending pay increases, reducing capital spending and slowing store growth, Chief Administrative Officer Martyn Redgrave said on the call.
“There is extraordinary uncertainty and lack of visibility in all of our businesses,” Redgrave said. “In this unprecedented environment, we are choosing to take aggressive actions.”
Limited fell 73 cents, or 8.2 percent, to $8.19 at 11:52 a.m. in New York Stock Exchange composite trading. The shares lost 11 percent this year before today.
Fourth-quarter net income dropped 96 percent to $16.1 million, or 5 cents a share, after a writedown on the value of its La Senza brand. Revenue fell 8.7 percent to $2.99 billion.
The retailer took a charge in the period for the elimination of about 10 percent of the jobs at its corporate headquarters. Most of the jobs cut at Limited Brands will remain on its payroll until March 7, spokeswoman Tammy Roberts Myers said in an e-mail.
Profit excluding the pretax impairment charge and severance costs was 68 cents a share, the company said. Fourteen analysts surveyed by Bloomberg estimated profit of 65 cents.
Full-year profit will be 60 cents to 85 cents, the company said. Fourteen analysts estimated profit of 88 cents, on average.
Limited’s 3,014 retail locations include Bath & Body Works and Henri Bendel as well as Victoria’s Secret.
To contact the reporter on this story: Allison Abell Schwartz in New York at aabell@bloomberg.net.
Last Updated: February 26, 2009 11:55 EST
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