Business
Major companies to eliminate more than 16,000 jobs
01:00 AM EST on Friday, December 5, 2008
AT&T Inc., DuPont Co. and three other major U.S. companies announced plans yesterday to fire more than 16,000 people, buckling under the strain of a recession that may already have pushed the jobless rate to the highest level in 15 years.
AT&T, the biggest phone company, and DuPont, the chemical maker, will each eliminate about 4 percent of their work force, with AT&T slashing 12,000 jobs, and DuPont, 2,500. Viacom Inc. will dismiss 850, NBC Universal, 500, and Windstream Corp., 170.
Swiss bank Credit Suisse Group also announced 5,300 job cuts, although it’s unclear how many will be in the United States.
More than 1 million Americans have lost their jobs this year and the number collecting jobless benefits rose to a 26-year high in the most recent weekly information. The Labor Department’s report on the November unemployment rate, due out today, may show it jumped to 6.8 percent, the highest since 1993, according to the median forecast in a Bloomberg survey of economists.
“We’re probably in for some months ahead that are going to be some very tough sledding,” John Challenger, chief executive officer of Challenger, Gray & Christmas Inc., said in an interview from Chicago. “There used to be a taboo that companies did not lay off a lot between Thanksgiving and the new year. That’s all changed, and those have been very heavy over the last few years.”
The deepening economic crisis was spurred by a spate of bank failures that froze up credit. Financial-services firms have posted almost $1 trillion in credit losses and write-downs tied to the collapse of the subprime-mortgage market.
Dallas-based AT&T, which predicts $600 million in severance costs this quarter, is shifting its focus to a growing wireless business as customers get rid of their home-phone lines, favoring mobile devices. On the corporate side, companies have curbed spending on phones and service as they shed employees, said Christopher King, an analyst at Stifel Nicolaus & Co.
“These companies have never been as exposed to the enterprise segment as they are now,” said King, who is based in Baltimore. “Companies are simply going to be spending less.”
DuPont’s reductions will mostly affect units that serve the automotive and construction markets in the United States and Western Europe, according to the Wilmington, Del.-based company. It also said it no longer expected a profit in the fourth quarter, forecasting a loss of about 20 cents to 30 cents a share, after leaving out reorganization costs.
Viacom, which owns MTV Networks and Paramount Pictures, said it would spread its cuts — about 7 percent of the work force — across all divisions of the New York-based company. It also plans to write down the value of some assets in response to falling ad sales and viewership.
The 500 jobs at NBC Universal, General Electric Co.’s entertainment division, represent 3 percent of head count, and the 170 at Windstream, a phone company serving rural areas in 16 states, about 2 percent.
State Street Corp., the Boston-based world’s largest money manager for institutions, the mining company Freeport-McMoRan Copper & Gold Inc. and Adobe Systems Inc., the world’s largest maker of graphics and Web-design software, are among others that have announced job cuts this month.
A larger-than-anticipated 4.09 million Americans got jobless benefits in the week that ended Nov. 22, the most since 1982, the Labor Department said yesterday in Washington.
U.S. job cuts more than doubled in November from a year earlier, Challenger, Gray & Christmas said Wednesday in a report. While the 91,356 cuts among financial companies was the biggest number, the retail industry showed the second-worst performance, with 11,073, Challenger said.
“Retailers are being very cautious on hiring,” he said.
“As we move into December and January, the cuts are likely to be larger in those areas as more companies close stores or even file for bankruptcy.”
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