FOMC Meeting Offers No Solutions; First Wells Fargo Loss Since 2001; Total Buys Oil-Sands Explorer; AT&T Posts 4Q Decline; Boeing to Double Job Cuts; Time Warner Cuts 700 Jobs; UBS Reduces Bonuses; Ford’s Fourth-Quarter Loss
- The Federal Open Market Committee yesterday (Wednesday) left its benchmark Federal Funds rate at a range of 0% to 0.25%. “Industrial production, housing starts, and employment have continued to decline steeply, as consumers and businesses have cut back spending,” the FOMC said in statement. “Furthermore, global demand appears to be slowing significantly.” The Fed said that it continues to “purchase large quantities of agency debt and mortgage-backed securities,” and that it is also “prepared to purchase longer-term Treasury securities.”
- Wells Fargo & Co. (WFC) yesterday (Wednesday) posted its first quarterly loss since 2001, primarily a result of it taking on loan losses and writedowns from Wachovia Corp., which it bought in September. The bank maintained its dividend and said it does not need addition government money to soak up Wachovia’s existing debts, Reuters reported.
- Europe’s third-largest oil producer Total SA (ADR:TOT), offered $503 million to buy UTS Energy Corp., a Canadian oil-sands explorer. If UTS and its shareholders accept, it’d be Total’s third acquisition of unconventional assets since July, Bloomberg reported. UTS shares rose more than 95% on the Toronto exchange on the news.
- AT&T Inc. (T) reported a decline in fourth-quarter profit, hurt by falling landline subscribers and high subsides to support Apple’s iPhone, Reuters reported. Net profit fell to $2.4 billion, or 41 cents a share, compared to $3.1 billion, or 51 cents, in the fourth quarter last year.
- Boeing Co. (BA) plans to more than double job cuts to about 10,000 as the aerospace giant weighs the possibility of a modest production cut for the year. The giant airplane maker lowered its 2009 earnings outlook on Wednesday to reflect weakening economic conditions, MarketWatch reported. The Chicago manufacturer cited higher pension-related costs, lower interest income and the impact of last year's machinist strike as factors behind the softer outlook.
- Citing an internal memo circulated to employees, Reuters reported yesterday (Wednesday) that Time Warner Inc. (TWX) will cut about 700 jobs at its AOL unit, or 10% of its workforce. The company will also eliminate merit pay increases this year to help minimize layoffs, as the internet services and media company struggles with an advertising downturn and recession.
- UBS AG (USB), which has been under attack for offering bonus payments after it was forced to accept a $59.2 billion Swiss government aid package in October, cut its bonus pool for 2008 by more than 80%. The European bank with the highest losses from the credit crisis is also revamping its compensation model to allow it to claw back parts of pay from some employees in the years after the award, Bloomberg reported.
- Ford Motor Co. (F) is expected to post a fourth-quarter loss of more than $2.8 billion today (Thursday), Reuters reported. But investors likely will be taking a closer look at the automaker's cash burn rate and prospects for 2009. Ford burned through $7.7 billion of cash in the third quarter, a rate higher than General Motors Co. (GM) for that quarter. Ford has said its cash burn rate for the fourth quarter was lower than that, but still significant. Investors fear the company could fall below cash levels needed to maintain its automotive business.