AstraZeneca is cutting nearly a quarter of its U.S. sales force in a second wave of redundancies in as many months as it seeks to reduce costs.
Britain's second biggest drugmaker said on Wednesday it would cut about 1,150 sales representative and management jobs at a cost of between $50 million and $100 million, charged in the fourth quarter.
Rich Fante, president of AstraZeneca U.S., said it was a difficult decision to make the reductions, which represent 24 percent of the U.S. sales organization and come on top of 400 job U.S. losses announced in October.
"The changes we are making, however, will help us deliver better results for our business and, most importantly, continue delivering on our mission of patient health," he said.
Since restructuring costs are not included in the company's core earnings measure, the cost of the cuts will not have any impact on its guidance for core earnings per share for 2011.
Generic competition and pricing pressures are already weighing on AstraZeneca's sales in the world's biggest market and things are about to get tougher.
Over the next few years, analysts forecast a steady decline in sales at the London-based group because patents expire on big sellers like Nexium for heartburn and schizophrenia drug Seroquel.
What is more, it faces a major challenge to its biggest-selling medicine Crestor, following the arrival of cheap generic copies of Pfizer's market-leading cholesterol pill Lipitor, which hit the market at the end of November.
AstraZeneca has relatively few new drugs to replace such blockbusters, leaving its sales line exposed and its management under pressure to cut costs wherever possible.
The latest round of job cuts, which are expected to be finalized by early February 2012, are in addition to the wide-ranging program of 8,000 job cuts, designed to be implemented over several years, that AstraZeneca announced in January 2010.
The likes of Pfizer, Merck and Novartis have also announced major job cuts but the scale of the retrenchment has been particularly severe at AstraZeneca.
The impact of the latest U.S. changes will vary by geography and selling teams and a company spokeswoman said AstraZeneca was looking to make greater use of alternative methods for promoting its medicines, such as online tools.
Source : Reuters
[tags : recession bankrupt collapse retrenchment financial news collapse stagnation economic slowdown financial collapse world recession global recession layoff job cut]
Financial Collapse RSS
Dec 7, 2011
Nov 29, 2011
American Airlines files for bankruptcy
American Airlines filed for bankruptcy protection on Tuesday to cut labor costs in the face of high fuel prices and dampened travel demand, capping a prolonged descent for what was once the largest U.S. carrier.AMR Corp, the parent of American Airlines, also filed for bankruptcy and replaced its chief executive.
The company, which employs about 88,000, has been mired for years in fruitless union negotiations, complaining that it shoulders higher labor costs than rival domestic and foreign carriers that have already restructured in bankruptcy.
United Continental Holdings Inc's United Airlines and Delta Air Lines Inc, both of which used Chapter 11 to cut costs and later found merger partners, are now the largest U.S. carriers. American ranks third.
"The world changed around us," incoming Chief Executive Tom Horton told reporters on a conference call. "It became increasingly clear that the cost gap between us and our competitors was untenable."
AMR named Horton as chairman and chief executive, replacing Gerard Arpey, who retired.
American plans to operate normally while in bankruptcy, but the Chapter 11 filing could punch a hole in the pensions of roughly 130,000 workers and retirees.
AMR pension plans are $10 billion short of what the carrier owes, and any default could be the largest in U.S. history, government pension insurers estimated.
Ray Neidl, aerospace analyst at Maxim Group, said a lack of progress in contract talks with pilots tipped the carrier into Chapter 11, though it has enough cash to operate. The carrier's passenger planes average 3,000 daily U.S. departures.
"They were proactive," Neidl said. "They should have adequate cash reserves to get through this."
PROBLEMS TO ADDRESS
Bankruptcy gives AMR a chance to pare less profitable operations, and could result in the sale of flight routes. The process also gives AMR more flexibility, according to Jack Williams, a professor of law at Georgia State University.
"There are considerable tax benefits that they will be able to use in a bankruptcy case, and they will be able to more aggressively manage their liabilities," Williams said.
But analysts question whether the bankruptcy will address operational shortcomings that have eroded revenue.
"Bankruptcy is not necessarily the be-all, end-all," said Helane Becker, an analyst with Dahlman Rose & Co. "They've got more problems to address in addition to the cost problem."
Shares of AMR closed Tuesday down $1.36, or 84 percent, at 26 cents, down from a 52-week high of $8.89 on January 7. Stock typically is wiped out in bankruptcy.
Shares of rival airlines rallied on expectations that reduced competition could boost fares. AMR had kept a lid on industrywide fares in its effort to keep its airplanes full.
United Continental shares closed up 6.3 percent at $17.63, Delta rose 5 percent to $7.80 and US Airways Group Inc climbed 4.4 percent to $4.46.
AMR shares were halted 28 times on the NYSE on Tuesday for triggering a circuit breaker rule, activated when a stock moves up or down at least 10 percent within five minutes.
SLIMMED-DOWN AMR
In its bankruptcy petition filed in Manhattan, AMR reported assets of $24.72 billion and liabilities of $29.55 billion. The company has $4.1 billion in cash.
One bankruptcy rule is "don't wait too long," Harvey Miller, a partner at Weil, Gotshal & Manges representing AMR, said at a court hearing. "Don't wait until the course is irreversible. That is what American Airlines is doing today."
AMR's bankruptcy filing showed few details about how the company would proceed, said Stephen Selbst, a bankruptcy attorney with Herrick Feinstein in New York.
"It's possible they are still in negotiations and don't want to put something on paper that might prejudice those negotiations," he said.
Experts believe AMR stands to save billions by restructuring its obligations in bankruptcy.
"AMR will no longer have its defined benefit pension plan, helping absorb nearly $7 billion in debt," Morningstar equity analyst Basili Alukos said.
"I imagine the company can save between $1.2 billion to $1.5 billion in labor costs, in addition to savings on repair and maintenance and better fuel burn," he said.
MERGER IN THE OFFING?
AMR said the bankruptcy has no direct legal impact on non-U.S. operations. It also said it was not considering debtor-in-possession financing.
But it could susceptible to unsolicited takeover bids from rival carriers. AMR has long said it could thrive on its own.
Robert Herbst, an analyst with AirlineFinancials.com and a former American pilot, said there was a "95 percent" chance American would join up with another carrier within two years.
"US Airways is probably toward the top of the list but it wouldn't be the only (potential merger partner)," he said.
A US Airways representative did not immediately return a phone call seeking comment.
Most large U.S. carriers are the products of mergers.
United Continental combined the former United Airlines and Continental Airlines, while Delta bought the former Northwest Airlines. US Airways was formed from a 2005 merger with America West Airlines.
US Airways and United Airlines filed for bankruptcy protection in 2002, and Delta and Northwest in 2005. US Airways had tried to buy Delta out of bankruptcy.
Japan Airlines Co, one of American Airlines' alliance partners, filed for bankruptcy last year.
American Airlines said it would remain an active member of the oneworld global airline alliance.
LABOR PAIN
American struggled with labor costs despite massive concessions from unionized workers in 2003, which enabled it to avoid Chapter 11 at the time.
"That deal wasn't good enough," former American chief Robert Crandall told Reuters. "The other airlines that went bankrupt cut their costs much deeper than American.
"If you look at all of the elements of the problem, they all stem back to costs," he said. "It hasn't cut capacity effectively given the constraints" that labor placed.
Contract talks with pilots hit a wall in recent weeks over wages, benefits and work rules. Talks with unionized flight attendants have also flagged.
"While today's news was not entirely unexpected, it is nevertheless disappointing that we find ourselves working for an airline that has lost its way," David Bates, president of the Allied Pilots Association, said in a statement.
A wave of pilot retirements this year prompted speculation of a Chapter 11 filing, given that the retirements could preserve pensions that might be at risk of being terminated.
"The 18-month timeline allotted for restructuring will almost certainly involve significant changes to the airline's business plan and to our contract," Bates said.
The case is In re: AMR Corp, U.S. Bankruptcy Court, Southern District Of New York, No. 11-15463.
Source : Reuters
[tags : recession bankrupt collapse retrenchment financial news collapse stagnation economic slowdown financial collapse world recession global recession layoff job cut]
Nov 14, 2011
Mizuho net falls 25 percent, plans 3,000 job cuts
Mizuho Financial Group maintained its full-year net profit forecast on Monday after reporting that first-half profit fell 25.4 percent, weighed down by the absence of hefty bond trading gains that lifted its profits the previous year.
Japan's top three banks are announcing their first-half results on Monday, and Mizuho, the second-largest by assets, had been expected to lag rivals.
Results of the other two, Mitsubishi UFJ Financial Group and Sumitomo Mitsui Financial Group, are expected to show they are on track to beat their full-year forecasts.
Unlike their Western rivals, Japanese banks largely escaped the brunt of Europe's debt crisis due to limited exposure to the region, while bad-loan costs remained low at home as the number of bankruptcies in Japan continued to decline.
Mizuho said net profit was 254.67 billion yen ($3.3 billion) for April-September, down from 341.76 billion yen in the same period last year. Second-quarter profit fell to 158.31 billion yen from 191.91 billion yen in the year-ago period, according to Reuters calculations from first-half and first-quarter figures.
For the full year to next March, the bank kept its net profit forecast at 460 billion yen, above an estimate of a 433.9 billion yen by Thomson Reuters Starmine's SmartEstimate.
The bank also said on Monday that it plans to cut 3,000 jobs, or about 5 percent of its work force, by March 2016 through the merger of its corporate and retail banking units.
Shares of Mizuho have fallen 33 percent so far this year, compared with a 16 percent drop in the benchmark Nikkei average.
Source : Reuters
[tags : recession bankrupt collapse retrenchment financial news collapse stagnation economic slowdown financial collapse world recession global recession layoff job cut]
Japan's top three banks are announcing their first-half results on Monday, and Mizuho, the second-largest by assets, had been expected to lag rivals.
Results of the other two, Mitsubishi UFJ Financial Group and Sumitomo Mitsui Financial Group, are expected to show they are on track to beat their full-year forecasts.
Unlike their Western rivals, Japanese banks largely escaped the brunt of Europe's debt crisis due to limited exposure to the region, while bad-loan costs remained low at home as the number of bankruptcies in Japan continued to decline.
Mizuho said net profit was 254.67 billion yen ($3.3 billion) for April-September, down from 341.76 billion yen in the same period last year. Second-quarter profit fell to 158.31 billion yen from 191.91 billion yen in the year-ago period, according to Reuters calculations from first-half and first-quarter figures.
For the full year to next March, the bank kept its net profit forecast at 460 billion yen, above an estimate of a 433.9 billion yen by Thomson Reuters Starmine's SmartEstimate.
The bank also said on Monday that it plans to cut 3,000 jobs, or about 5 percent of its work force, by March 2016 through the merger of its corporate and retail banking units.
Shares of Mizuho have fallen 33 percent so far this year, compared with a 16 percent drop in the benchmark Nikkei average.
Source : Reuters
[tags : recession bankrupt collapse retrenchment financial news collapse stagnation economic slowdown financial collapse world recession global recession layoff job cut]
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