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Nov
1
American Express Co announced on Thursday that it intends to undertake a host of cost-saving measures including a 10% cut in workforce in an attempt to deal with bad loans and rising funding costs.
The decision of American Express to slash its workforce by 10% would mean a loss of 7000 jobs in the company’s biggest restructuring plan since 2001. the company also said in its announcement that the layoffs will lead to pre-tax restructuring fees of $370 million to $440 million in the fourth quarter. By cutting jobs, freezing hiring for open positions and suspending management-level salary raises for 2009, American Express hopes to save around $700 million in a year. the pruning of staff will take place across markets and business units and mainly apply to those managerial positions that do not directly deal with customers.
Among other cost-saving measures that the company plans to enforce are reducing travel and consulting expenses as well as scaling back investments. Overall American Express expects to generate around $1.8 billion next year by the implementation of various cost-saving policies. American Express is the fourth-largest credit card company in the United States and was one of the first to warn at the beginning of the year that consumer spending was slowing down and delinquencies were on the rise.
Nov
1
US Justice Dept Clears Verizon-Alltel Merger
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The proposed merger between two of the biggest mobile carriers in America, Verizon Wireless and Alltel Corp, took one step closer to reality after the US Department of Justice gave its nod to the deal.
The planned acquisition of rural carrier Alltel by Verizon Wireless will result in the largest cellphone company in United States if Verizon divests in around hundred markets across twenty-two states. Sources close to negotiations have pegged the price of acquisition at $28.1 billion and after the recent credit crisis, there was speculation in some quarters whether Verizon Wireless would go through the deal at all. However after it gets the green light from all government agencies, Verizon Wireless will most likely complete all requirements of the acquisition.
Verizon Wireless agreed to sell operations in the markets that overlap with Alltel so that the anti-trust concerns of federal regulators can be eased. The divestitures are expected to cover the whole of North Dakota and South Dakota as well as large areas of Colorado, Georgia, Kansas, Montana, Utah, Wyoming and South Carolina besides some regions in fourteen other states. The proposed merger is yet to be approved by Federal Communications Commission as well.
Verizon Wireless is a joint venture between Verizon Communications Inc and Vodafone Group PLC.
Nov
1
Exxon Mobil Corp posted a record profit of $14.8 billion in its third quarter results, boosted by triple-digit oil prices of crude oil last summer.
The Irving, Texas-based energy giant announced its third quarter results on Thursday which saw profits shoot up by 58% to a new record of nearly $15 billion. The company said that it earned $14.83 billion or $2.86 a share as opposed to $941 billion or $1.70 a share during the same period last year. Revenues in the quarter rose to $137.74 billion from $102.34 billion of last year.
However Exxon’s streak of posting spectacular profits is most likely to end with the latest quarter. While prices of crude oil had touched almost $150 a barrel in July this year, in recent weeks the prices have plunged to the level of $65 a barrel. This drop in prices is sure to take away a giant chunk from the profits of Exxon Mobil and other oil companies in the next quarter.
Along with announcing its third quarter results, Exxon also said that total production fell by 8% and predicted that its fourth-quarter earnings would fall by $500 million on account of repairs as well as lower volumes of supply. The dismal forecast led to a 1.3% fall in shares of Exxon which came down to $73.66.
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