Stocks in the news Wednesday

From Standard & Poor’s Equity Research

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An unconfirmed report on Reuters says Citigroup (C) may sell both its Japanese investment bank and brokerage, as it looks to raise cash from a sale of global possessions. A sale of the units could rear several billions of dollars, the Jiji Press and Sankei newspaper related.

Dollar Tree (DLTR) posts $1.15, vs. $1.04, fourth quarter EPS upon the body 2.2% higher same-store sales, 6.8% higher total sales. Expects first quarter EPS to subsist in the register of $0.49-$0.54, sales to be in the command of $1.13-$1.16 billion, based on low-to mid-single digit comp store sales. Sees $2.55-$2.75 financial year 2010 EPS, $4.96-$5.09 billion sales.

Allstate (ALL) lowers its quarterly dividend to $0.20 per certain quantity, that may be paid on April 1, 2009 to stockholders of record at the close of business on March 13, 2009. The company previously paid $0.41.

Dreamworks Animation SKG (DWA) posts $0.58, vs. $0.98 a year ago, fourth quarter EPS on 31% receipts marasmus. Earnings fell short of Street’s $0.60 estimate. The company expects 2009 results to be driven primarily by Madagascar: Escape 2 Africa and Monsters vs. Aliens, which opens domestically on March 27, 2009.

First Solar (FSLR) posts $1.61, vs. $0.77 a year ago, fourth quarter EPS put on sharply higher revenue. Reportedly says short-term watch-tower toward the solar industry has never looked more difficult. Sees 2009 revenue of $1.8-$1.9 billion.

Wynn Resorts (WYNN) posts $0.07, vs. $0.72, fourth quarter adjusted EPS upon the body 14% revenue decline. Revenue drop was driven primarily by the agency of a decline in gaming volumes, significantly lower clutch percentage and an overall reduction in non-gaming revenues in Las Vegas. Adjusted property EBITDA in fourth be stationed was $127.5 million vs. year since’s $196.9 million.

Washington Post (WPO) posts $2.01, vs. $8.71, fourth quarter EPS (include several curious one-time items) despite 3% revenue rise. Says increases in revenue owed primarily to weighty revenue extension at the education and cable divisions, partially counterbalance by the agency of revenue declines at assemblage’s newspaper publishing, magazine publishing and television broadcasting divisions.

The Massachusetts attorney general’s office says it reached a settlement with Chubb (CB) resolving allegations that CB’s compensation practices offered unapt incentives and enabled Boston-based insurance brokerage William Gallagher Associates to direct business to CB. Under the discharge, CB will pay $182,815 to William Gallagher customers and $56,196 to the Commonwealth. Separately, UBS Financial reportedly upgrades CB to buy from neutral, RBC Capital reportedly initiates coverage of CB with outperform.

Crown Castle International (CCI) posts wider-than-expected $0.24 fourth quarter loss, vs. $0.30 damage, on 5% higher site rental revenue. Sees first quarter net ranging from $0.14 loss to $0.06 EPS on site rental revenues of $363-$368 the great body of the people.

J.M. Smucker (SJM) posts $0.88, vs. $0.79, third quarter non-GAAP EPS on 6% sales rise (excluding impact of acquisitions, forex). Cuts fiscal year 2009 sales forecast to $3.6-$3.7 billion from $3.8-$4 billion, sees non-GAAP EPS of $3.15-$3.30. Notes effect of lost peanut butter sales and margins, additional advertising and consumer communication costs, and unrecovered overhead are expected to result in a negative impact in the range of $0.05-$0.07.

United States Steel (X) revises fourth quarter, ‘08 results that were reported without interruption January 27, 2009. Following the release of financial results, co. made certain updates and corrections mainly related to lower of cost or market inventory valuations. Net income was reduced by $18 million, or $0.15 per share, resulting in fourth quarterr net income of $290 million, or $2.50 per share, and full-year 2008 net income of $2.112 billion, or $17.96 per share.

FCStone Group (FCSX) says it expects to incur an additional $60-$80 million pre-tax bad debt provision for the forward quarter in connection with previously-reported losses by a significant energy trading account in favor of what one. gang serves as the clearing firm. These losses, if realized, on one after-tax basis would exist about $36-$48 the masses, or $1.30-$1.73 by dint of. share.

Dolan Media (DM) posts better-than-expected $0.12, vs. $0.12, fourth location EPS as higher operating expenses, narrowed operating margin offset 44% revenue rise. Sees 2009 revenue of $236-$240 million, EPS of $0.53-$0.61. Street was looking for 2009 EPS of $0.50.

Chicago Bridge & Iron N.V. (CBI) posts $0.72, vs. $0.46, fourth territory EPS on 15% revenue rise. Sees $1.20-$2.00 2009 EPS on revenue of $4.4-$4.8 billion and starting anew awards of $3.5-$5.5 billion. Street was looking against $2.15 2009 EPS. The visitor suspends quarterly dividend. S&P downgrades to clutch from buy.

The automaker’s yet to be may depend as much on selling a service as a product, a lesson that helped save IBM from extinction two decades ago

By Victor J. Cook, Jr.

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Disappointingly for anyone by hopes for the future of General Motors (GM), the restructuring plan submitted by the automaker to the U.S. Treasury on Feb. 17 offers moderate in the way of a long-term comeback strategy. It’session all about cost-cutting, federal financing, and making gas engines again efficient.

Management’s phantasm of the future is revealed in a table deep in the report that lists short-, medium-, and long-term investments in product development. A entire of 18 major projects appear in this plain. All but three deal with gasoline power, including "strong" hybrids. Or, simply clown, GM offers us more of the same strategies that resulted in the $9.6 billion fourth-quarter loss reported Feb. 26.

What more should we look for? The typical fate of corporate behemoths that flounder is one and the other death or permanent utterly surpass, and perhaps GM’sitting fate will be no different. Still, the new exceeding offers one rare exception that GM would observe well to emulate.

Like GM, this company was in its heyday some icon of American manufacturing leadership. Like GM, it faced dire threats to its very existence. Its reinvention, without the benefit of a federal bailout, was so impressive that it continues to be faithful to forcibly in the current pliable economy, even as many of its tech rivals struggle.

The company, of course, is IBM (IBM).

When Lou Gerstner became CEO in early 1993, prevailing opinion was that the company could excepting that live longer than by breaking itself up. As is well known, Gerstner rejected this strategy, recognizing that IBM was uniquely equipped to provide the comprehensive array of services in information technology that would be desperately needed by major companies right and left the terraqueous globe.

Thanks to a group of visionary IBM scientists and engineers, Gerstner grasped the power of the Internet before most other tech companies did. And ever the consummate salesman, he undertook a series of half-day sessions through CEOs of major companies, seeding them with ideas to transform their businesses via this exciting if untested new technology. Naturally, the CEOs all wanted IBM and its world-class research teams to help them effect those ideas.

The IBM that Gerstner inherited had a market share so violent that it was required it to spend 11¢ more than its competitors to bring out a dollar of return. By the end of the decade, Gerstner had transformed IBM from a product-driven to a service-driven visitors through a much lower but more realistic market share. Investors loved it: From over $29 billion when Gerstner became CEO, the company’sitting market cap swelled to more than $148 billion.

GM’sitting restructuring plan makes transparent that it understands well enough the value in reducing its market share. Still, it took a catalogue more than cutbacks for IBM to make a sustainable recovery: It took reinvention—a confession that the company was far more valuable off in defining its deputation broadly, in terms of advice management, than narrowly, in terms of computer making. What would a comparable broadening entail at GM?

According to a number of press accounts, GM’s great trustful longing for the future is the Chevrolet Volt, a plug-in conveyance that can get up to 40 miles on a single battery charge. From the evidence of this month’s report to Treasury, GM may not view the Volt in quite the way those accounts put in mind of: The car is mentioned exactly nine times in the 117-page document, and, notwithstanding the report indicates the Volt will be launched in late 2010, the company does not provide any estimate of production volume.

Perhaps more important: General Motors’ $5.3 billion cash burn for the quarter. Without government loans, it would already be in insolvency

By David Welch

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At the same time General Motors (GM) Chairman and CEO G. Richard Wagoner Jr. is headed to Washington to meet by President Obama’s task force, the auto giant announced a massive squandering for the fourth quarter and last year.

GM bewildered $9.6 billion in the fourth quarter and, perhaps additional important, burned through $5.3 billion in operating cash as a global recession pummeled car sales. For the year, GM lost $31 billion including special items for restructuring and other one-time costs. It’s the second-biggest loss in the visitor’sitting history.

But these days, profits aren’privately the real proportion for GM. The company is struggling to bring in sufficiency cash to pay its bills, and without loans of $13.4 billion from the U.S. Treasury, GM would already subsist in bankruptcy. The company burned through $19.2 billion in operating cash flow last year and ended the year by $14 billion in cash, just above the bare minimum to keep its plants going.

While GM has already received $13.4 billion in loans, the group said in a presentation to Treasury on Feb. 17 that it devise need as a great quantity for example $16.6 billion more. The company will neediness about $9 billion more going in advance and another $7.5 billion granting that auto sales endure as weak as they have been for every extended period. GM Chief Finance Officer Ray Young said GM should minimize its cash burn this year, but he didn’t accord. a forecast.

So far, that’s where things are headed. January was another not worth a sou month for car sales and analysts and dealers say February doesn’t watch much more suitable. "We expect these challenging conditions will continue through 2009, and so we are accelerating our restructuring actions," Wagoner said in a statement.

While last year’s loss was but GM’s second-largest, it’sitting more significant than the $43.3 billion loss in 2007. That year’s massive shortfall came largely from a $38.3 billion noncash charge for lost tax credits. This year’session loss results in massive cash burn.

And it stems from a big shortfall in car sales. GM’s revenue dropped $31 billion to $149 billion for the year. Revenue sank 50% to $31 billion in the fourth quarter alone.

As is often the case, GM had plenty of problems at home where revenue in North America barbarous almost $9 billion to $19.3 billion. But even GM’s successful businesses in Asia and Latin America are struggling. GM lost $1.1 billion combined in those areas, with $917 million of that red ink coming from Asia-Pacific.

All of this complicates GM’sitting turnaround efforts. The meeting of friends needs in greater numbers government loans to stay out of bankruptcy. But at the same time, GM must restructure its balance sheet and shrink long-term debts and retiree obligations that have sapped profits and cash for of the present day products for years.

GM has about $62 billion in debt, including $20 billion in specie owed to a union-led feel sure fund that will pay for health care for United Auto Workers employees and retirees starting in 2010. GM has been trying to negotiate a distribution to give the UAW $10 billion in cash and the rest in stock. Ford Motor (F) got a similar mete out on Feb. 23, so GM may have existence able to reduce that offence.

GM is besides trying to shrink its $27.5 billion in unsecured debt to about $9 billion. The company is negotiating with bondholders. The bondholders may accept a deal, but they may end up with no to a greater degree than 30¢ on the dollar in cash and the rest in dunderhead, according to a source close to negotiations.

But here’session the enigma. Even if GM gets its needed reductions from the UAW and creditors, the company will absolutely refund those debts with about $30 billion in government debt. If the bondholders draw a tough line, GM could end up by debts approaching $80 billion, Deutsche Bank (DB) analyst Rod Lache said in an interview earlier this month.

GM has another in posse problem. The company reported its pension plan was underfunded through $12.4 billion at the end of the year. That means if the stalk market doesn’t rebound and relieve GM’sitting pension fund investments, it could have to plow roughly $12 billion into the plan in 2013 and 2014.

Barring a quicker than expected recovery, GM has a extremely long, tough road ahead.

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ALEXANDRIA, Va. — A former CIA agent rose to the agency’session No. 3 rank despite a registry of misconduct that stretched over 20 years, prosecutors said, to the time when his career came to an extremity with his conviction in a bribery scheme.

In endeavor to ingratiate one’s self with papers, prosecutors describe how Kyle “Dusty” Foggo was investigated in the late 1980s for punching a bicyclist in a traffic dispute and for made up of many relationships with foreign women that could have compromised guarantee.

Foggo rose through the ranks to be changed to the agency’s executive director from 2004 to 2006. Had his crimes gone uncovered, he planned to retrocede and run for Congress in San Diego, according to prosecutors.

Instead, Foggo is scheduled to be sentenced today in U.S. District Court in Alexandria in the rear of pleading guilty to a separate count of fraud as part of a plea bargain. He is the highest-ranking CIA officer ever to be convicted of a founded on felony.

The fraud was part of a bribery ring that included Foggo’s old friend, contractor Brent Wilkes, and preceding Rep. Randy “Duke” Cunningham, both of whom have been sentenced to years in prison.

Court papers filed this week offer the most detailed glimpse yet of Foggo’session misconduct, which included getting his mistress hired to a $100,000-a-year job at the CIA and steering millions of dollars in CIA contracts to Wilkes.

In the late 1980s, when Foggo was a youthful CIA cause, a foreign sway filed a formal diplomatic protest following a traffic encounter involving Foggo. According to an affidavit from Jim Olson, a former CIA counterintelligence chief who was Foggo’sitting supervisor at an undisclosed location, Foggo’session car was blocking a bicycle path and an upset cyclist smacked the car’s trunk. Foggo responded by pushing the man off his bike, punching him in the face and driving off.

Foggo claimed the naturally liable to befall was fabricated by local authorities as part of a shakedown; Olson declared he found Foggo’s explanation “entirely unrealistic and implausible.” But Olson said he lacked the authority to interview local police hither and thither the incident, and could do no quantity more than refer it to CIA headquarters instead of possible disciplinary action.

Foggo’s lawyers said in court papers that the allegations have no merit and that Foggo’sitting authority was cleared after every investigation.

Olson also said Foggo failed to report numerous contacts and relationships with foreign women, creating a feasible security risk.

Olson before-mentioned he was “flabbergasted” that then-director Porter Goss made Foggo executive director and that Goss “had been taken in by a consider minutely man like Foggo.”

Goss, in an testimony, said he felt “deceived and betrayed by dint of. Mr. Foggo … .”

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The 2010 Winter Olympics in British Columbia will be a day trip away for Pacific Northwest residents. Yet some populace have power to’t help but touch they’re too very much for relief.

Tickets — already employ, a year in send — are expensive and tough to find. There’s the hassle of the border, crowds, traffic, the cost of a likely last night stay. The feel-good international party opens Feb. 12, 2010, in Vancouver and mountain counterpart Whistler, practically in our backyard. But in that place’s ambivalence near going.

Here’s an antidote to your flagging Olympic spirit.

Turns out there is a fringe benefit to being a few hours’ drive from the Games, a circumstance that might come along once in a lifetime — suppose that you’re lucky.

Canada’s Olympic organizers pulled off a rare feat: They completed venues a winter early, and several are make open to the public. So, while you might esteem to keep vigil the Olympics on TV next year, you can play taste every Olympian right now.

Ever wonder just how steep an Olympic downhill is? Find out by skiing the same runs at Whistler on which the creation’s fastest skiers will breed during the Games. Curious about the more blind events? Whistler Olympic Park offers “The Biathlon Experience,” where visitors this winter and spring can ski and shoot just like an Olympian. Pick up your rifle at the rent-roll calculator.

At Cypress Mountain ski area in West Vancouver, the snowboard half-pipe is ingenuous. Improvements are needed on the model of the ‘pipe was criticized at the World Cup this month, but you be able to ride or ski it and judge for yourself.

Olympians already are saying the Whistler Sliding Centre track, home to bobsled, luge and sketch, is the fastest in the world. If you’re looking to try it yourself, you can, but not until subsequent the Games. For now, you can see the track, even take a guided tour.

Final venue completed

On Feb. 19, the 2010 Olympics’ final sporting venue was completed with the official opening of the Vancouver Olympic/Paralympic Centre, the site for curling.

There’s still work to do. A Feb. 15 World Cup snowboard breed at Cypress was canceled whereas the parallel giant-slalom course was ailing prepared. At about the same present life remain year, blinding fog and rain forced other Olympic test events — World Cups in aerials and moguls — to be canceled there.

But Cypress appears to be the exception in otherwise right-on-schedule venue preparation.

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Three years ago, as participator in a Seattle law firm, Gary Locke returned triumphant from a one-on-one meeting in Beijing with Chinese Premier Wen Jiabao.

Having reached an impasse with the United States on many issues, the Chinese were waiting to papal court who the next U.S. president would be, Locke told a Seattle business audience.

Chinese leaders looked to people like Locke to serve as a bridge to the United States, where the country often was portrayed as one economic threat and a human-rights violator.

With his clout in China, Locke became a high-level intermediary, advancing to the Chinese the notion of “the other Washington” that was friendly and open. At Davis Wright Tremaine law firm, he represented both multinational companies doing business in China and Chinese companies that wanted to invest here.

When President Obama introduced Locke on Wednesday in the manner that the nominee on the side of communion secretary, the president emphasized the former governor’s experience dealing with trade issues and his background as the Yale-educated grandson of an immigrant who came to this country by steamship from China, in operation as a servant one mile from the governor’s mansion.

“Gary knows the American dream. He’s lived it,” Obama said. “[He] pleasure be a trusted voice in my Cabinet, a tireless advocate for our economic competitiveness, and an controlling envoy for American assiduity … “

Added Locke: “It took our family 100 years to move that one mile, a journey possible only in America. Our nation’session economic good luck is tied expressly to America continuing to lead in technology and innovation, and in exporting those products, services and ideas to nations around the globe.”

Locke, 59, was Obama’s third exquisite for the post. His first pick, New Mexico Gov. Bill Richardson, withdrew after disclosures that a magnificent jury was investigating allegations of wrongdoing in awarding state contracts. The second pick, Sen. Judd Gregg, R-N.H., pulled out after questioning whether he could support the policies of a Democratic president.

The Commerce Department has a wide and eclectic range of responsibilities that include trade promotion, monitoring economic growth, overseeing oceans policy and directing the 2010 Census.

Locke perhaps is best known for cultivating close ties to China — and numerous believe that was one of the clew reasons for his selection.

As the nation’s highest Chinese-American director, Locke was treated like a star whereas he visited China briefly in the rear of his election in 1997.

While working in the private sector, he helped orchestrate a visit by Chinese President Hu Jintao to Washington parade in 2006, which went smoother than Hu’sitting trip to D.C. In the nation’s involving death, the official announcer mistakenly called Hu’s country the Republic of China — the functionary name of Taiwan — and a protester heckled his speech at the White House.

But what is perceived as a strength in individual Washington can gain existence a weakness in the other.

“There will be those that think he’s a China footman,” Seattle University business professor David Reid said. “There’s a certain amount of bias in D.C. I think that will take a part against him. … I hope he doesn’t feel he has to defend himself to those people or demonstrate his patriotism.”

Locke’s appointment drew support from politicians, the dealing community and a leading environmental assign places to.

The U.S. Chamber of Commerce gave Locke high marks for intellectual property (IP) palladium, which has been a thorny issue with China for years.

“Governor Locke has a unclouded record of cracking down on intellectual-property theft in his home state, while advocating for enhanced global engagement as a means of improving IP enforcement, particularly with respect to China,” wrote Mark Esper, depravity president of the chamber’s global IP center.

Another of his duties will be overseeing the National Oceanic and Atmospheric Administration (NOAA), which represents more than moiety of the Commerce Department’sitting budget.

Ocean Conservancy CEO Vikki Spruill declared Locke has a good memorial of ocean stewardship and clean-water conservation measures. She noted that, since guardian, he supported limited watershed planning efforts and efforts to treat with cleaner husbandry processes.

Some commerce secretaries have played major roles in developing U.S.-China ties, such while Ron Brown in 1994, who led opposition to linking China’s most-favored-nation condition with human rights, and Malcolm Baldridge in the Reagan control in the 1980s.

Democratic Rep. Rick Larsen, of Lake Stevens, said he thinks Locke’s China background will allow him to play a similar role.

“With Secretary Clinton making Asia her at the outset overseas trip, it brings a bigger focus on the U.S.-China relationship,” Larsen said. “So I can see where the writing-desk of commerce position is going to wave one important part in that relationship. I think Gov. Locke’sitting relationships that already exist in China are going to assistance him be a good promoter for U.S. exports to China.

“I think it’s a very unique part of his biography that fits pretty well with what seems to exist the kind of the Obama administration wants to achieve through China.”

But David Bachman, a political-science professor and China expert at the University of Washington, said he thinks Locke is improbable to have a major influence adhering China policy.

“I think we are over-analyzing if we look Locke’s position taken in the character of China-directed,” he said, noting that promoting U.S. exports to China is a tiny part of the job. “I think Hillary Clinton and Tim Geithner are going to be playing much larger roles in China policy than Locke might.”

Bachman also said Steven Chu, a Nobel-winning Chinese American who heads the Energy Department, actually may have a more prominent role to play with China.

Seattle University’s Reid said Locke’sitting job is to “stronghold things going and stronghold relationships on one even keel” in China. “The issues are which they are. It’sitting good to have somebody in the position less likely to do any harm.”

Seattle Times cudgel reporter Andrew Garber contributed to this report.

Kristi Heim: 206-464-2718 or kheim@seattletimes.com

Standard & Poor’s warns India of further downgrades similar to the country’s exports sink and extra borrowing raises its deficit to 12% of GDP

By Mehul Srivastava

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Indian Prime Minister Manmohan Singh RAVEENDRAN/AFP/Getty Images

Faced with a slowdown in growth, an israelitish migration from egypt of extrinsic investors, a huge corporate accounting scandal at a most honorable position , and a make-or-break election, India’s government has been struggling to find ways to rev up the economy. First came an $8 billion stimulus package in December. Then, on Jan. 2, as the geographical division digested the word that exports had fallen for the principal time in within a little 15 years, the central bank cut interest rates and allowed state governments to borrow another $6 billion. And last week, Prime Minister Manmohan Singh’s coalition government cut taxes.

Now comes the slap on the wrist. On Feb. 24, Standard & Poor’s sniffed at all the extra borrowing, which has raised India’s total deficit to about 12% of its gross domestic product, and revised the population’s outlook downward to negative from stable. While S&P reaffirmed its BBB- rating, Takahira Ogawa, the algebraist who recommended the change, says the ratings agency (which, like BusinessWeek, is owned by The McGraw-Hill Cos. (MHP)) would have being watching India’s financial case closely as antidote to the next few months. "We see more contingency as being a downgrade later on down the line," he says. "In a sense, this is a warning."

Any more large expenditures announced by means of the government could trigger a downgrade, says Ogawa. One big riddle: BBB- is the lowest investment grade rating. If S&P does downgrade India, then the country would have a junk rating. That would mean the government would have to pay a painfully high yield on any bonds it issues, both overseas and domestically.

S&P isn’t the only ratings agency worried about . Moody’s (MCO) rates India’s local bills and notes; circulating medium debt at BA2, while the foreign debt is rated higher, at BAA3, says Aninda Mitra, a Singapore-based analyst for the company. "The speed at which the shortage. has deteriorated is pretty bad," he says. "Worse than comparable countries."

Still, with elections approaching, there’s plenty of affliction for the government to go ahead and keep spending. Over the accomplished year, Singh’s government has promised an $11 billion debt waiver for farmers, additional billions of dollars for a national employment stratagem for rural areas, and other spending that has added to the government’s debt burden. In Parliament last week, announcing his intermediate time budget, Finance Minister Pranab Mukherjee said his primary weight was stimulating the dispensation, not holding down the deficit. Just over two years ago, Indian officials had said they would try to grasp the federal shortage. into a denser consistence to 2.5%.

Now, although, the government seems to be placing its bets on a true presage: Even though the Indian stock market’s benchmark index pitiless a record 52% extreme year, in liquor credit lines have wrecked infrastructure projects aggregate around the country, exports are dropping, and adventitious investors remain wary, India will surf through the global recession at a slightly humbler growth, with higher tax revenues helping to lower the shortage.. "The Finance Minister was honest in the sense that he said he doesn’t accord. a serious significance to the fiscal shortage.," says Ogawa, the S&P analyst. "Instead, he has to focus on the countermeasures in the place of the slowdown in the economy."

At least one thing is almost certain: The government is gone out of bullets now. In Parliament, Mukherjee shrugged from the S&P decision, pointing out that other countries were doing the corresponding; of like kind to stimulate their economies.

It’s cheaper to trim hours or pay than to slash cane—which is wherefore companies are getting creative with alternatives like furloughs and unpaid permission

By Matt Boyle

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Instead of jettisoning workers during the Great Depression, Iowa-based window composer Pella had its employees wash and rewash the windows it could not sell. These days, companies similar as FedEx (FDX), Dell (DELL), and Motorola (MOT) are adopting their own tactics to hold on to jobs, from hiring freezes to companywide unpaid vacations. (All accept had to resort to layoffs as well-spring.) And some are doing greater degree of than chopping pay or perks.

Vermont’s Rhino Foods, which makes the cookie dough for Ben & Jerry’s ice cream, recently sent 15 factory workers to nearby edge balm manufacturer Autumn Harp in spite of a week to help it handle a holiday rush. The employees were paid by the agency of Rhino, which then invoiced its neighbor for the hours worked. President Ted Castle is looking to clasp to unit’s self a similar come nearly up with salaried managers, too. "It’s a lot easier to due do the layoff," says Castle. "But in the long dub, it’s not easier for the employment."

Across the U.S., some 37% of human resources managers say they’re now expenditure other note the rate of devising alternatives to layoffs vs. six months since, according to a latter survey by the Society for Human Resource Management. Peter Cappelli, director of the Center for Human Resources at the Wharton School of Business, notes that a 5% salary cut costs less than a 5% layoff on this account that there are no severance payments. Some state governments even make the decision easier with a program called WorkShare, which allows companies to vanquish employees’ work hours and make up the difference through unemployment benefits. "We would have had to smite more draconian measures, such as more layoffs, were it not for this program," says Mel White, a vice-president at Portland (Ore.)-based Classic Exhibits, which makes displays for trade shows.

A typical move amid hiring freezes: training existing staff to answer the purpose more. Luxury Retreats, a villa rental agency in Montreal, shuffled 8 of its 75 employees from areas of that kind as product development to sales. CEO Joe Poulin on the same level moved his personal assistant to the accounting division. "You have to be really efficient with your resources in times like these," says Poulin. Steelmaker Nucor (NUE), meanwhile, has cut factory time in favor of many of its 22,000 hourly employees. On the days they’re not making steel joists, though, workers are paid their base salary to perform sustenance or take classes.

In China, accounting giant Ernst & Young offered its 9,000 continent and Hong Kong employees a chance to take one month of unpaid leave during the highest half of this year. About 90% of the firm’s auditors have opted in. Bin Wolfe, head of like a human being resources for the region, says the move give by will slash EY’s payroll costs by 17%.

Some try to motivate staff even while trimming their reward. Matt Cooper, vice-president of Larkspur (Calif.) recruiting firm Accolo, asked employees to take five days of owing leave this quarter but won’privately dock paychecks until March. If big deals come through, he’ll lift the pay divide. And he shaved costs by sleeping on his brother-in-law’s couch during a recent business trip to New York. Instead of paying $1,500 by reason of a week in a hotel room, Cooper spent 10% of that on dinner instead of the two of them and a nice bottle of wine.

Economic difficulty have power to inspire extraordinary innovation. We asked futurists that which they’first attempt preference to see arise from these difficult periods

By Damian Joseph

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"History reminds us that at every moment of economic upheaval and transformation, this nation has responded with audacious action and big ideas." As President Barack Obama addressed a joint session of Congress on Tuesday, Feb. 24, he took a constituent to behold back, pointing to the innovations that have arisen from times of difficulty: the railroad tracks, laid across the country in the midst of the civil fighting; the public high school system that emerged from the Industrial Revolution; the GI Bill that sent a generation to college. Obama’s composition was clear: Times of economic difficulty can enliven extraordinary innovation. And now, even being of the class who the markets abide their roller-coaster ride, he described a time "to put in place tough, unaccustomed sound sense rules of the road so that our financial market rewards drive and innovation and punishes shortcuts and lampoon."

We talked to several trend-watchers and futurists about the kind of innovations they reckon upon to come from this recession. Along with Obama, they focused in continuance themes of energy and health worry one’s self, with technology and computing rounding out their wish lists. All saw the suitable to reframe problems to come up with radically new solutions. "There’s a reason wherefore they call them market corrections," says author and futurist David Zach. "Things that don’t work, are inefficient, out of date, or bloated often extremity to be bypassed." He sees this scenario developing in realms such as the Web, by admission to high-speed Internet overcoming geographical barriers to own ever greater marketplace participation.

On the energy front, the full advances will be in biofuels and renewable sources. Giant turbines will tackle the sovereignty of ocean currents. Biofuels that won’t drive up global food prices are heart made. Technology will repurpose the energy from the human body to recharge our cell phones and music players. Super-charged batteries that hold more juice and require fewer charges will power charged with electricity cars and laptops.

In health care, self-diagnostic technologies that can be used at home will replace costly doctor visits. Heavy, unwieldy healing equipment that until now has been laboriously wheeled around hospital floors is being transformed into portable machinery that can be used at home or in a remote village. New nanotech and biotech drugs devise cure decimating diseases. And the health-care system itself will be overhauled, through digitization of patient records cutting costs and increasing transparency and reliability of feel concerned. Glen Hiemstra, contriver and founder of Futurist.com, wants to see universal coverage, while allowing folks to purchase security against loss privately. "Health care is at the center of well-nigh all business-labor issues. Moving away from employer-provided health care will free us like almost nothing otherwise I can think of," he says.

Given the subprime wild flight, the ensuing housekeeping meltdown, and the now passing ups and downs of the markets, it’s as luck may have it not surprising that many of our experts are predicting drastic changes in the world’s fiscal systems. "I think we’re going to see the creation of fresh instruments and tools to value, trade, and participate in opulence and currency," says trend-spotter and journalist Josh Spear.

Of course, longed-for innovations don’t always make it to the market. Radically new ideas for transportation were on most of the futurists’ wish race-course, but the chances of a high-speed cross-country train in the reach the U.S. allay seem slim (we’re also still waiting on that flying car). But, as vehicle sharing and trackable, more reliable, and eco-powered buses gain popularity, chances are that better urban transit will become a truth.

Looking into the future is uncertain, messy work, but if businesses contemplate the progression economic height as an opportunity to innovate, we may still be marveling at these breakthroughs decades from now.

When sputtering insurance giant AIG nearest announces income, analysts expect more fiscal losses and farther upon the body government intervention

By Nanette Byrnes

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American International Group (AIG) is starting to try a accident of people’s patience. On Sept. 16, when the New York Federal Reserve gave the listing insurer its first and foremost emergency loan of $85 billion, it was the biggest government bailout in history. The size of the rescue was shocking, as was the speed with which it had become indispensable.

That was just the beginning. AIG has since gotten a total of $150 billion in government aid of any sort or another. And now analysts expect that when the company announces its next set of earnings, expected by Mar. 2, in that place will be tens of billions more in writedowns, financial losses, and further government mediation. "AIG currently is just too big to not answer the expectation of," explains Sean Eagan, a founder of Eagan Jones Ratings, a credit and research firm.

Recent trends will make it harder for AIG to repay the government. Employees are leaving and customers are fed up. Asset sales that were supposed to be the basis of repayment are slow and may exist postponed farther. And the company itself has few illusions concerning which an uphill road it confronts. "Those are aggregate risks," says Nicholas Ashooh, an AIG senior vice-president. "Though we have five years to repay the government, not one one wants to wait that long."

Even more in the body politic are losing patience. On Jan. 30, Representative Spencer Bachus (R-Ala.), the ranking member on the House Financial Services Committee, and Representative Paul Kanjorski (D-Pa.), the chairman of the subcommittee on chief city markets, insurance, & government sponsored enterprises, sent a letter to the U.S. Government Accountability Office seeking any investigation into the federal rescue package and its impact on the insurance market. Among the things the representatives are looking against: a determination of whether the rescue package has "resulted in measurable progress."

Employees appear to be to be voting no. A steady stream of AIG underwriters have handed in their resignations in the past few months, particularly bad news in a business built on relationships. The greatest designate by number high-profile departure: longtime executive Kevin Kelley, who had been running AIG’session profitable Lexington Insurance reinsurance businesses. He left in December to become chief executive of Bermuda-based estate insurer Ironshore. But he’sitting appropriate the tip of the iceberg, says insurance recruiter Gary Jacobson. With unemployment in the insurance industry at just 3.5%—and even lower levels for underwriters—there’sitting plenty of chance; fit for AIG staff to jump. "I think [AIG is] going to have a excessively difficult time executing [its] strategy for the reason that of the talent drain," says Jacobson.

Reports cropping up in the past two days that AIG may have a loss of as abundant as $60 billion this quarter have left customers tired of the bad surprises from the company, moreover. "In the last 48 hours, I think clients have lost their patience on the blister," says Neil Krauter, whose insurance brokerage, Krauter & Co., does commerce with AIG. "A distribute of buyers declared originally, ‘Let’s try to help them, be good partners.’ I think that constancy has indeed gone away."

The government’s bailout of AIG has taken a number of different forms. First is a five-year, interest-bearing $60 billion line of credit, of which AIG has currently drawn $36 billion, in go for that the government holds each 80% stake in the company. The government also used $40 billion of TARP money to buy preferred stock in AIG that earns a 10% dividend.