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Boeing to cut 10,000 jobs
PITTSBURGH - FACING falling air traffic and pressure on military budgets, Boeing Co announced plans to cut 10,000 jobs after reporting a surprise fourth-quarter loss on Wednesday.
The Chicago-based company, which makes passenger and military jets, became the latest blue chip company to mirror a slowdown in the world economy, as air travel wanes, airlines cut costs, and the government shifts focus to construction spending.
Boeing, whose orders plunged in 2008 following three years of very strong bookings, also announced lower-than-expected earnings for this year.
'The global economy continues to weaken and is adversely affecting air traffic growth and financing,' Jim McNerney, Boeing's chairman, president and chief executive, said in a conference call.
'We are also expecting pressure on defense budgets in light of the economic recovery and financial rescue packages put forth by various governments.'
Boeing's job cuts expand plans announced earlier this month to eliminate 4,500 positions from its Seattle-based commercial jet business.
But Mr McNerney said on Wednesday an additional 5,500 positions would be slashed in other parts of the company, including its defense division, which accounts for roughly half Boeing's revenue.
Boeing reported a fourth-quarter loss of US$56 million (S$84.2 million), or 8 cents per share, compared with profit of US$1.03 billion, or US$1.36 per share, a year earlier. Results were dragged down by charges totalling US$1.79 per share, including the effects of an autumn labour strike and delayed deliveries of new 747 jets.
Looking ahead, Boeing expects per-share earnings of US$5.05 to US$5.35 for 2009, short of the US$5.68, on average, forecast by analysts polled by Thomson Reuters.
Revenue in the fourth quarter missed Wall Street expectations, sliding 27 per cent to US$12.68 billion. Deliveries of passenger and cargo jets fell by more than half in the period, as a two-month strike by production workers paralyzed the company's commercial aircraft factories around Seattle.
The strike, over wages and job security, ended with a new contract in early November.
The work stoppage by 27,000 Machinists union workers forced Boeing to shut down its factories and cost the company an estimated US$4.3 billion in revenue and US$1.2 billion in earnings during the quarter.
Boeing failed to deliver about 70 planes during the walkout, which began Sept 6. In the last three months of 2008, Boeing delivered just 50 commercial aircraft, down from 112 during the same period a year earlier.
Boeing delayed deliveries of new 747-8 cargo and passenger jets because of the strike, substantial design changes and limited engineering resources to perform the work. Mr McNerney said an assessment of the problems, which cut fourth-quarter earnings by US$685 million, was not completed until earlier this week.
Deliveries of 737s, 747s, 767s and 777s also faced delays in the quarter as Boeing replaced defective fasteners used to attach wiring and other components inside the planes' fuselages.
Analysts polled by Thomson Reuters, on average, expected earnings of 78 cents in the fourth quarter. Those estimates typically exclude one-time items.
JSA Research analyst Paul Nisbet said the results were 'surprisingly poor,' noting the unexpected charge for the 747-8 jets.
Last year, Boeing predicted it would earn US$6.80 and US$7.00 per share for 2009 and said it and was on track to deliver between 500 and 505 planes, including 25 of its long-delayed 787 jetliners. The initial test flight of the 787, built for fuel efficiency with lightweight carbon composite parts, is scheduled for the second quarter.
This year, Boeing said it expects to deliver 480 to 485 airplanes.
The company's 2009 revenue outlook of US$68 billion to US$69 billion was in line with expectations.
Shares of Boeing rose 2 cents to close at US$43.24 on Wednesday.
McNerney said Boeing had about 6 commercial plane order cancellations and about 110 deferrals in 2008. The deferrals, he said, represented about 3 percent of its commercial plane backlog, 'which is not out of the norm.'
'We do expect to see an increase in our deferrals in 2009,' Mr McNerney added. 'However, the size, diversity and quality of our backlog provides greater flexibility than we've had in the past to accommodate our customers.'
To date, Boeing said 58 customers had placed 895 orders for 787s, excluding a recent cancellation by one customer for 15 of the planes that had been scheduled for delivery late in the next decade.
The company, the world's No. 2 airplane maker after France's Airbus SA, reported 2008 net income of US$2.7 billion, or US$3.71 per share, down 34 per cent from 2007.
Still, Boeing's backlog grew 8 per cent in 2008 to a record US$352 billion.
'Despite this challenging environment, our backlog is holding,' Mr McNerney said. -- AP
Starbucks to axe 6,700
NEW YORK - STARBUCKS said on Wednesday it was slashing 6,700 jobs and closing 300 stores in a further belt-tightening by the coffee house giant to cope with a rapidly weakening global economy.
The coffee-shop chain, which already announced a massive restructuring in July as wary consumers cut back on lattes and other specialty coffee drinks, reported revenue in the first quarter of its business year fell 6.0 per cent from a year ago.
Net profit in the quarter ended Dec 28 plunged 69 per cent to US$64.3 million (S$96.4 million), from US$208.1 million in same period in 2007.
'In the midst of the weakening global consumer environment, Starbucks is following a well-developed plan to strengthen our business through more efficient operations and by preserving the fundamental strengths and values of our brand,' Howard Schultz, Starbucks chairman, president and chief executive, said in a letter posted on the company's website.
By the end of the 2009 business year in September, the company intends to close about 300 stores worldwide, including 200 in the United States.
The latest actions came on top of the closure of 600 US stores and the elimination of about 11,000 jobs, announced in July 2008, the Seattle, Washington-based retailer said. -- AFP
Toshiba to axe 4,500 in March
TOKYO - JAPAN'S Toshiba Corp said on Thursday it will cut 4,500 jobs by the end of March after projecting it would go into the red this year due to the global slowdown.
The company said it expected to fall deep into the red for the year to March as the global economic slowdown hits demand for semiconductors and flat-screen televisions.
The electronics and engineering giant said it now expected a net loss of 280 billion yen (S$4.68 billion) for the year, compared with a previous forecast of a net profit of 70 billion yen.
The company had booked 127.4 billion yen in net profit the previous year.
Toshiba said in a statement that the worldwide economic slowdown 'caused rapid price erosion and demand declines in semiconductors and liquid-crystal display' televisions. -- AFP
PITTSBURGH - FACING falling air traffic and pressure on military budgets, Boeing Co announced plans to cut 10,000 jobs after reporting a surprise fourth-quarter loss on Wednesday.
The Chicago-based company, which makes passenger and military jets, became the latest blue chip company to mirror a slowdown in the world economy, as air travel wanes, airlines cut costs, and the government shifts focus to construction spending.
Boeing, whose orders plunged in 2008 following three years of very strong bookings, also announced lower-than-expected earnings for this year.
'The global economy continues to weaken and is adversely affecting air traffic growth and financing,' Jim McNerney, Boeing's chairman, president and chief executive, said in a conference call.
'We are also expecting pressure on defense budgets in light of the economic recovery and financial rescue packages put forth by various governments.'
Boeing's job cuts expand plans announced earlier this month to eliminate 4,500 positions from its Seattle-based commercial jet business.
But Mr McNerney said on Wednesday an additional 5,500 positions would be slashed in other parts of the company, including its defense division, which accounts for roughly half Boeing's revenue.
Boeing reported a fourth-quarter loss of US$56 million (S$84.2 million), or 8 cents per share, compared with profit of US$1.03 billion, or US$1.36 per share, a year earlier. Results were dragged down by charges totalling US$1.79 per share, including the effects of an autumn labour strike and delayed deliveries of new 747 jets.
Looking ahead, Boeing expects per-share earnings of US$5.05 to US$5.35 for 2009, short of the US$5.68, on average, forecast by analysts polled by Thomson Reuters.
Revenue in the fourth quarter missed Wall Street expectations, sliding 27 per cent to US$12.68 billion. Deliveries of passenger and cargo jets fell by more than half in the period, as a two-month strike by production workers paralyzed the company's commercial aircraft factories around Seattle.
The strike, over wages and job security, ended with a new contract in early November.
The work stoppage by 27,000 Machinists union workers forced Boeing to shut down its factories and cost the company an estimated US$4.3 billion in revenue and US$1.2 billion in earnings during the quarter.
Boeing failed to deliver about 70 planes during the walkout, which began Sept 6. In the last three months of 2008, Boeing delivered just 50 commercial aircraft, down from 112 during the same period a year earlier.
Boeing delayed deliveries of new 747-8 cargo and passenger jets because of the strike, substantial design changes and limited engineering resources to perform the work. Mr McNerney said an assessment of the problems, which cut fourth-quarter earnings by US$685 million, was not completed until earlier this week.
Deliveries of 737s, 747s, 767s and 777s also faced delays in the quarter as Boeing replaced defective fasteners used to attach wiring and other components inside the planes' fuselages.
Analysts polled by Thomson Reuters, on average, expected earnings of 78 cents in the fourth quarter. Those estimates typically exclude one-time items.
JSA Research analyst Paul Nisbet said the results were 'surprisingly poor,' noting the unexpected charge for the 747-8 jets.
Last year, Boeing predicted it would earn US$6.80 and US$7.00 per share for 2009 and said it and was on track to deliver between 500 and 505 planes, including 25 of its long-delayed 787 jetliners. The initial test flight of the 787, built for fuel efficiency with lightweight carbon composite parts, is scheduled for the second quarter.
This year, Boeing said it expects to deliver 480 to 485 airplanes.
The company's 2009 revenue outlook of US$68 billion to US$69 billion was in line with expectations.
Shares of Boeing rose 2 cents to close at US$43.24 on Wednesday.
McNerney said Boeing had about 6 commercial plane order cancellations and about 110 deferrals in 2008. The deferrals, he said, represented about 3 percent of its commercial plane backlog, 'which is not out of the norm.'
'We do expect to see an increase in our deferrals in 2009,' Mr McNerney added. 'However, the size, diversity and quality of our backlog provides greater flexibility than we've had in the past to accommodate our customers.'
To date, Boeing said 58 customers had placed 895 orders for 787s, excluding a recent cancellation by one customer for 15 of the planes that had been scheduled for delivery late in the next decade.
The company, the world's No. 2 airplane maker after France's Airbus SA, reported 2008 net income of US$2.7 billion, or US$3.71 per share, down 34 per cent from 2007.
Still, Boeing's backlog grew 8 per cent in 2008 to a record US$352 billion.
'Despite this challenging environment, our backlog is holding,' Mr McNerney said. -- AP
Starbucks to axe 6,700
NEW YORK - STARBUCKS said on Wednesday it was slashing 6,700 jobs and closing 300 stores in a further belt-tightening by the coffee house giant to cope with a rapidly weakening global economy.
The coffee-shop chain, which already announced a massive restructuring in July as wary consumers cut back on lattes and other specialty coffee drinks, reported revenue in the first quarter of its business year fell 6.0 per cent from a year ago.
Net profit in the quarter ended Dec 28 plunged 69 per cent to US$64.3 million (S$96.4 million), from US$208.1 million in same period in 2007.
'In the midst of the weakening global consumer environment, Starbucks is following a well-developed plan to strengthen our business through more efficient operations and by preserving the fundamental strengths and values of our brand,' Howard Schultz, Starbucks chairman, president and chief executive, said in a letter posted on the company's website.
By the end of the 2009 business year in September, the company intends to close about 300 stores worldwide, including 200 in the United States.
The latest actions came on top of the closure of 600 US stores and the elimination of about 11,000 jobs, announced in July 2008, the Seattle, Washington-based retailer said. -- AFP
Toshiba to axe 4,500 in March
TOKYO - JAPAN'S Toshiba Corp said on Thursday it will cut 4,500 jobs by the end of March after projecting it would go into the red this year due to the global slowdown.
The company said it expected to fall deep into the red for the year to March as the global economic slowdown hits demand for semiconductors and flat-screen televisions.
The electronics and engineering giant said it now expected a net loss of 280 billion yen (S$4.68 billion) for the year, compared with a previous forecast of a net profit of 70 billion yen.
The company had booked 127.4 billion yen in net profit the previous year.
Toshiba said in a statement that the worldwide economic slowdown 'caused rapid price erosion and demand declines in semiconductors and liquid-crystal display' televisions. -- AFP
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