On 'Sesame Street', "L" is for "Layoffs"

The crisis on Wall Street is plaguing Sesame Street.

Sesame Workshop, the nonprofit producer of “Sesame Street” and other kids’ programs, is cutting about one-fifth of its work force because of the economic downturn.

The New York-based company said Wednesday that it’s eliminating 67 of 355 staff positions.

Declaring it is “not immune to the unprecedented challenges of today’s economic environment,” the company pronounced a need “to operate with fewer resources in order to achieve our strategic priorities.”

The statement reiterated the organization’s mission “of helping children reach their highest potential here and around the globe.”

Best known as the home of such Muppet characters as Big Bird and Elmo, Sesame Workshop was founded in 1968 as Children’s Television Workshop, then unveiled the groundbreaking “Sesame Street” as a literacy-building initiative a year later. That show, which remains a worldwide hit, was the first step toward a media empire that encompasses television, books, toys and online programing.

Among the company’s early TV efforts is “The Electric Company,” which aired during the 1970s and was revived with new episodes on PBS in January.

Sesame Workshop gets revenue from product licensing and the sale of its programs to PBS and syndication. The company is also funded by government agencies, foundations and corporations.
Total revenue were $145 million in 2008, with operating expenses totaling $141 million, according to the company’s Web site.

AMD to cut 1,100 workers and will further write down its ATI Technologies acquisition

Advanced Micro Devices Inc. plans to cut 1,100 jobs, write down the value of an ill-fated Canadian acquisition and slash the remaining employees' pay as the chip maker hopes its third round of layoffs in a year can help it get through a brutal market for computer sales.

The Sunnyvale, Calif.-based company said on Friday that 900 workers will have their positions cut. The rest of the reductions are coming from attrition and the previously announced sale of a business unit.

AMD also revealed in a regulatory filing that it plans further write downs on the value of ATI Technologies Inc., a Toronto-area graphics chip maker AMD acquired a few years ago for US$5.6 billion.

The U.S. technology company said it's reducing ATI's value by an additional US$684 million, which will appear in the quarterly results next week. AMD had previously slashed ATI's value by nearly $2.5 billion.
Taken together, the charges now mean AMD believes ATI is worth less than half what it paid for the Canadian company.

Friday's cuts at AMD affect nine per cent of the company's workforce.

The company has 15,000 workers currently, but it is spinning off its manufacturing operations, which have 3,000 employees who are not affected by Friday's announcement. So AMD's cut of 1,100 jobs amounts to nine per cent of the remaining 12,000 workers.

The firings represent AMD's third round of major layoffs in the last year. AMD cut 600 workers just last month, and earlier in 2008 jettisoned 1,600.

Pay for workers who survive the cuts will shrink. AMD's CEO Dirk Meyer and executive chairman Hector Ruiz, the former CEO, will see their salaries slashed by 20 per cent. Vice-presidents and other top management will have their pay cut 15 per cent, other salaried workers will lose 10 per cent of pay, and pay for hourly workers will fall five per cent.

AMD said the pay cuts are temporary. AMD was not specific about how pay would be cut in other countries.

AMD shares fell two cents, or 0.9 per cent, to US$2.24 in trading Friday on the New York Stock Exchange.

AMD is in the throes of a big restructuring that has seen it change CEOs, sell nearly a fifth of the company to an investment arm of the Persian Gulf state of Abu Dhabi, and agree to break off its factories in a moneysaving move.

AMD is the smaller rival of Intel Corp., the world's biggest semiconductor company, and has struggled with product delays, huge debt from its ATI Technologies takeover, and the inability to outspend Intel on developing new technologies.

AMD's announcement came a day after Intel reported fourth-quarter profits dropped 90 per cent and sales fell 23 per cent, a sign of the severity of the slowdown facing both companies, which provide nearly all the microprocessors for the world's PCs.

AMD, which reports its fourth-quarter results next Thursday, has already warned that its sales will come in 33 per cent lower than a year ago. Over the last eight quarters, AMD has lost $5.6 billion, and analysts aren't expecting relief any time soon.

Hertz to eliminate more than 4,000 positions

Rental car company Hertz Global Holdings Inc. is slashing its work force by an additional 4,000 jobs worldwide as it further cuts costs to contend with deteriorating demand and vehicle values.

Hertz expects to save $150 million to $170 million this year and take a related fourth-quarter charge of $20 million to $25 million, the company said Friday.

This is only the latest round of job cuts for the rental car company, which eliminated 1,400 employees this fall. The new reductions will bring staffing to 32 per cent below its levels in August 2006, Hertz said.

According to CapitalIQ, the company currently has about 29,350 workers in total, who operate about 8,100 locations in 144 countries.

The company said this round of cuts, which will take place in its fiscal 2008 fourth quarter and first quarter of 2009, will come in its car and equipment rental operations as well as corporate and support areas. The reductions will occur across all regions.

"Volume, pricing and residual values continued to decline during the most recently completed quarter, and we cannot predict when our markets will improve," said chairman and chief executive Mark P. Frissora in a statement.

He said Hertz is still committed to its global airport and off-airport car rental and equipment rental businesses and will add the "necessary resources" when operating conditions get better.

The rental car industry has a faced a perfect storm of challenges in the past year as airlines have reduced flights, consumers and businesses have cut back on travel spending and vehicle values have dropped.

In November Hertz suspended its financial guidance and said it no longer expects to meet annual earnings targets set in August.

At the time, Hertz projected 2008 adjusted earnings between $340 million and $375 million, or $1.05 to $1.15 per share. It anticipated revenue between $8.7 billion and $8.8 billion.

Analysts surveyed by Thomson Reuters now expect 2008 earnings of 63 cents per share on $8.81 billion in revenue.

Rivals Avis Budget Group Inc. and Dollar Thrifty Automotive also are struggling. Avis has announced a management salary freeze and cut more than 2,200 jobs as part of a drive to reduce annual costs. In October, Dollar Thrifty said it had cut its work force by 6 per cent, or 400 jobs.

Hertz's finances have been considered more stable than its rivals, due to the company's large equipment rental division, which accounts for roughly half its earnings and provides it with more cash flow than pure rental car companies.

Hertz's liquidity was about $4.9 billion as of Dec. 31, 2008. Frissora said Hertz estimates fourth-quarter total net cash flow of about $1.75 billion.

Shares of Hertz fell 12 cents, or 2.2 per cent, to close at $5.27 on Friday. During the past 52 weeks, the stock has fallen from a high of $15.32 last February to bottom at $1.55 in November.

Hertz don' it?

Google to cut 100 jobs, close engineering offices

Layoffs precipitated by state of economy: VP

Google Inc. is closing three engineering offices and cutting 100 recruiters from its workforce as the recession dampens hiring at the internet search company.

"Given the state of the economy, we recognized that we needed fewer people focused on hiring," Laszlo Bock, a Google vice-president, wrote in a blog posting late Wednesday announcing the layoffs.

The cuts are a rare move for Google. It made its first ever significant round of layoffs last April, when it cut some 300 jobs from the American operations of DoubleClick, which Google acquired in March 2008.
The newest cuts account for around a quarter of Google's recruiting staff, but are modest relative to the company's full-time workforce, which numbers roughly 20,000.

The moves follow news last week of a government filing from Google showing a significant cutback in temporary employees aimed at trimming costs. The company acknowledged in November that it would be looking to reduce contract workers while retaining full-time employees.

In a separate posting Wednesday, Google said it would close its engineering offices in Austin, Texas, Trondheim, Norway, and Lulea, Sweden, a step the company said would affect 70 workers.

"Our strong desire is to keep as many of these 70 engineering employees at Google as possible," wrote Google's vice-president for engineering and research, Alan Eustace.

"Our long-term goal is not to trim the number of people we have working on engineering projects or reduce our global presence, but create a smaller number of more effective engineering sites, which will ensure that innovation and speed remain at our core," he wrote.

Google's revenue from online ads, the company's core business, is still growing, but the economic downturn has put a crimp in the pace as consumers shop less online and advertising budgets shrink.

The company has given no sign that it will cut back on research and development or acquisitions, but has taken steps recently to reduce discretionary spending, closing its free cafeteria for employees and offering workers more modest holiday gifts.

Motorola to cut 4,000 more jobs in 2009

Motorola Inc. said this week that it would cut another 4,000 jobs in 2009, This in addition to 3,000 planned cuts it disclosed in October of last year.

The Schaumburg, Ill.-based company said about three-quarters of these cuts would come from its struggling mobile phone unit. The move is expected save about $700 million US a year starting in 2009, and total $1.5 billion in annual savings when combined with the previous cut, the company said in a statement.

Motorola said its handset sales fell to 19 million in the fourth quarter of 2008, less than half the amount from the fourth quarter a year ago, when the company sold close to 41 million mobile phones.

It said it expects to report a loss per share in the range of seven to eight cents on revenue of $7 billion US to $7.2 billion US.

Motorola had already dropped to fourth place in the global handset market in the third quarter, behind Nokia Corp., Samsung Electronics Co. and Sony Ericsson.

Motorola had discussed spinning off its mobile phone unit in the third quarter of 2009, but delayed those plans following its third quarter results. The company also decided then to delay the launch of a new mobile phone based on Google Inc.'s Android software until late in 2009.

The company is expected to announce its fourth quarter results on Feb. 3.

Nortel files for bankruptcy protection, plans to streamline but stay in business

Telecommunications equipment manufacturer Nortel Networks Corp. filed for bankruptcy protection from creditors yesterday, vowing to stay alive as a smaller company as it sells non-core businesses and restructures to deal with a plunge in business caused by the North American recession.

The move by the former kingpin of Canada's technology sector, Means that Nortel will shed more jobs from its global workforce of 30,000 employees and likely pin its future hopes on wireless technology, the fastest growing part of the telecom sector.

The bankruptcy filing will affect the company's debts and other operations, including sponsorships, but Nortel says it remains committed to sponsoring the 2010 Winter Olympic Games in Vancouver. The company is also a major sponsor of the 2012 Summer Olympics in London.

Long-suffering Nortel has been trying to restructure for more than three years and becomes the first major North American technology company to be forced into bankruptcy protection by the the global downturn and credit market crunch.
"Nortel must be put on a sound financial footing once and for all," president and CEO Mike Zafirovski said in a news release announcing the bankruptcy filings.

Nortel stock, which had been halted, lost two thirds of its value, dropping 25.5 cents to 13 cents on the Toronto Stock Exchange, in massive trading of more than 58 million shares..

North America's biggest maker of telecom gear has faced a variety of troubles since the telecom bubble burst eight years ago - including accounting problems that devastated its stock and led to criminal charges against some former executives.
Most recently, the slumping economy squeezed orders from its phone company customers and ate into its revenues, helping to produce mounting losses.

The company directly and through joint ventures employs about 30,000 people around the world, including 5,800 at Canadian operations in Ottawa and Toronto.

It plans to continue business as usual while it restructures, but job cuts are likely as it tries to lower costs and deal with a huge debt to remain competitive.

Moreover, Nortel will come under pressure to assure customers it can stay alive and be able to supply their future technology and equipment needs.

"These actions are imperative so that Nortel can build on its core strengths and become the highly focused and financially sound leader in the communications industry that its people, technology and customer relationships show it ought to be," Zafirovski said.

In Ottawa, federal Industry Minister Tony Clement said Ottawa is willing to provide some financing through the Export Development Canada Crown corporation to help Nortel restructure and emerge from bankruptcy protection as a viable company.

"EDC has agreed to provide up to $30 million in short-term financing through its existing bonding facility and is open to discussing with Nortel post-filing financing in conjunction with other financial institutions," Clement said.

Ontario Premier Dalton McGuinty said that Nortel had not applied for provincial aid, but a government spokeswoman later corrected his statement, saying the company has in fact been "in discussions" with Economic Development Minister Michael Bryant's office about funding.

"We'll see how things shake out in the end and what it means specifically for jobs in Ontario," McGuinty said in Mississauga, Ont., just west of Toronto.

"I remain hopeful that Nortel will experience ultimately a renaissance of some kind and that will be of benefit to the Ontario economy and to Ontario workers."

Nortel's predecessors have been in business since 1882, and the company, once known as Northern Electric, grew rapidly making telephones for its former Bell Canada parent. It later got heavily into network technology through aggressive - but ill-fated acquisitions - in the United States.

At one point in 2000 the company accounted for one-third of the market value on the entire Toronto Stock Exchange and was Canada's most widely held and touted stock, known to investors around the world.

Wednesday's filings came a day before Nortel was due to repay a $107-million interest debt on its bonds. The transaction would deplete Nortel's North American cash reserves by about 10 per cent.

Creditor protection would give the company more opportunities to explore restructuring options or sell some of its assets, but it would also make the company more vulnerable to a quick sale.

A spokesman for Nortel says that while there are no layoffs currently planned as part of the restructuring announcement, the company might have to cut its workforce in the future.

"Let's be clear, this is a restructuring and we will have to make the tough but necessary decisions to ensure that our costs come down, and we do expect that to impact employees," said Mohammed Nakhooda.

He declined to comment on whether any other companies have expressed interest in acquiring any unit of Nortel.

"We're not in any position to announce anything with respect to strategy," he said.

The latest round of problems at Nortel began in November when the company said it would cut another 1,300 jobs and freeze salaries after a US$3.41 billion quarterly loss and lower sales amid "worsening economic conditions."

Nortel once had more 95,000 employees and a stock market value of C$366 billion on the Toronto Stock Exchange, making it Canada's most valuable company. On Wednesday, the company was worth just over $64 million.

Since the telecom bubble burst, Nortel has grappled with a variety of financial problems, and shrank to less than one-third its peak size, but failed to re-establish itself as a leading player in its industry even though it sits on about $2.4 billion in cash.

Nortel could still persevere and make it through their latest round of trouble, suggests Peter Chapman of Bankruptcy Creditors' Service Inc. in Pennsylvania.

"The Chapter 11 and CCAA proceedings will provide Nortel with the ability to sell useless assets, walk away from every bad business deal, improve its operations and operating margins, and knock its $11-billion debt load down to a reasonable level," he said in an e-mail to The Canadian Press.

Chapman said he expects shareholders will likely be wiped out as owners, and the company will be transferred into the hands of its creditors.

Rick Franklin, an analyst at Edward Jones brokerage, says a series of bad decisions led to Nortel's current predicament.

"They put too much debt on the company when times were good, and times didn't stay good forever," he said.

"Their position in the market changed dramatically and they never recovered from that."

Dominion Bond Rating Services downgraded the ratings of Nortel's stock from CCC to D.

Shares in Nortel are pending a delisting review by the exchange to ensure that the company is meeting the requirements of continued listing.

At their peak, and before consolidation, Nortel shares hit $124.50 on the TSX in July, 2000.

Here are some facts about Nortel Networks Corp. (TSX:NT), which has sought court protection from its creditors:

History: Originally a manufacturing subsidiary of Bell Telephone, which later became Bell Canada and then BCE Inc. (TSX:BCE). Nortel was spun off as an independent, publicly traded company in the late 1990s and became for a time Canada's most valuable company.

Stock: All-time high of $124.50 on July 26, 2000, which would be the equivalent of $1,245 in today's terms following a stock consolidation. Shares were worth just 13 cents each on Wednesday.

Employees: Nortel and joint ventures employ about 30,000 people around the world, including 5,800 at Canadian operations in Ottawa and Toronto.

Quote: "Nortel must be put on a sound financial footing once and for all." - Mike Zafirovski, Nortel's president and chief executive since November 2005.