Evidence that the economy has been
ground to a fine powder continues to pile up, and today's brought another batch of bad news. Tales of woe abound, but looming largest is Sony, which announced its
2nd quarter earnings yesterday, then warned today that they expect to post a $1.7 billion loss this year (though we've seen other reports that are now putting the number at well over $2 billion). Additionally,
Samsung is expected to post a first-ever quarterly loss when it reports its earnings Friday, which are expected to run somewhere in the neighborhood of a $67.7 million net loss. Moving on, Seagate's also announced an unsuprising cut of about 6 percent of their workforce in Thailand. Finally, LG has reported a $487 million loss, while TomTom announced a "cost cutting program," meaning they're cutting about 7 percent of their global workforce. Seriously, does anyone have a light-hearted Dilbert strip or something to ease some of the pain? Sheesh.
Read - Sony, Warning of Annual Loss, Escalates Cost-Cutting plan
Read - Samsung may report first ever quarterly loss
Read - LG Electronics Posts $487 Million Loss
Read - TomTom Cost-cutting programme
Read - Seagate to lay off up to 800 local workers
posted Jan 22nd 2009 3:31PM
We need serious help to get out of this...i fear this is going to be a rough year for many many people :(
Try rough 5-10 years.
Come to Michigan where its been this way for the past 5-10 years already...
The first think we need is for the US government to quit borrowing money, handing it to financial institutions and sticking the citizens with the bill. It is apparent that the idiots in congress (all of them) haven't a fucking clue. They need to step back, get out of the way, and do what normal people do when finds are low. Stop spending do damn much money. It sucks yes, but borrowing and racking up a multi-trillion dollar deficit is only going to make problems worse down the road.
The best thing government could do is stop trying to fix the economy and let the economy heal itself. It will, but it's going to take a couple of years at least. Anything they do might create short term relief, but in the end will prolong the problem and make recovery harder, after all the 700B bailout was a raging success, right?
yeah...but then you have assholes like that punk rush limbaugh who says that he wants obama and his economic plans to fail. Essentially meaning he wants the US to fail. Sorry to bring politics in it, but could u be any more ANTI american. Hate that guy...
anyways, i follow news on a daily if not hourly basis. and all this news about many economist thinking we might lose more jobs tthis year than in 08 doesn't make me feel any better. I've been desperately trying to find work steady work (looking for PT work since i'm going to college FT doesn't make it any easier) for about a year now...and this doesn't make my outlook any rosier.
Sony bailout plan:
1. Sell your products cheaper.
2. Gimmie a 1.8 and 1.6 vaio P
Well this sucks balls. Good luck to me and my age group in finding jobs after college/university.
I did... its called being an intern
It's a good time to be IN school. Go to grad school.
We're the ones they want -- entry level, low paying. "Restructuring" at its best. Finding a job right out of school is the easy part.
well guess what you suck too haha=]
Why not to mention blowout quarter that Apple had? Who cares about Sony...
http://www.engadget.com/2009/01/21/apple-records-another-record-quarter-1-61b-profit/
You know, Apple can't save the world and some people still do care about other companies... it's called competition.
Hey, I am a pessimist myself, but why cast doom and gloom when the reality is mixed. IBM, HP and Apple had great quarters; Sony and Samsung sucked. So what?
HP had a "great quarter" because they laid me, and several hundred others like me, off.
Yeah, it was pretty great.
Doesn't HP lay people off every quarter? Not really, but it seems like they have layoffs way more than any other big company I can think of. I think they've never heard of those new-fangled "contractors".
Sony better start churning out some FF8 PS3s now!
Sounds like Sony's stalk is ... "blowing up"
Wow.. my keyboard farted.. STOCK, not stalk =p
yeah... and hurt themselves more..
so did your mouse!
Can we safely say no new psp or psp phone ? :) Dont think I own a single Sony product...
"Just got kicked out of $ony, would do anything for a job, male, single, great handyman-ship, just contact me: anyjob at jobless dot men"
You know I sometimes sit and think about these figures. How do they figure the loss really? Productivity or sales or stock? I mean if it was sales then these companies are monstrous. Sometimes you build so high and live off the fat of the land so long that this is inevitable.
But these figures are insane. And if all the unemployed united together with all the combined talent and job experience I can imagine a sweet ass company from all the jobless from microsoft sony seagate etc...... Maybe a mega company could form that would overthrow all others.
The "loss" is not lost sales or productivity, it means that it cost Sony $1.7b MORE to run it's company that what money they made. They theoretically could have had sales of more than $500b, but if it cost $501.7b to pay for the cost of making the products, salaries, etc, then they lost money.
You could also end up with less total sales than the year before, yet make more profit than the previous year.
As somebody in the trade show business I can tell you that this economy sucks... I'm making half of what I made before.
As someone who uses tradeshows to market/inform trade shows have very little return unless you are hawking gadgets or wares on the floor... Sorry, man. I feel for you.
I thought this was a gadget blog not a financial blog. If I wanted financial news I wouldn't come here for it.
Gadgets aren't made by fairies with pixie dust. Tech companies laying off workers posting billion dollar losses = no new gadgets. Everything's connected. It's the circle of life.
Jeez, the idiots are out in force today. I suppose a staffer from engadget was holding a gun to your head to make you read this post?
It's interesting to watch the death of world capitalism.
Onward and upward.
lol - how is this the death? This economy is what happens when you have artificial quotas to fulfill. It's not like socialism can flourish without capitalists to tax.
you're an idiot. There are no truly capitalist systems left in the world, just as there are no purly socialist systems. Capitalism can exist without socialism, but the have nots will drag down the successful with cries of inequity and you get current western civilization. THe US is far from a pure capitalist society, and hasn't been one since the 1920's. Socialism, on the other hand cannot exist for long without the innovation fostered by the profit motive of capitalism. Why should some one go out of their way to work harder and smarter when at the end of the day their reward is the same as a lazy asshole that does nothing? That, in a nutshell is a description of human nature and the reason why pure socialism will never be successful. Socialism sounds good on paper, but human nature will ensure that it is never successful.
Craig, you're cute when you're angry.
Exactly CraigJ. Idiots are out in droves today.
The U.S. is a capitalist system with government regulations. Also, if you have ever learned ANYTHING about history, you would know that capitalism goes through cycles of boom and bust. It has happened ever since the start of the U.S. There was the Panic of 1907, Panic of 1876..... the list goes on. It happens about every 20 years or so. Mostly, these things are caused by some sort of speculation failing. In this case, it's real estate and the end of the dot-com boom. There may also be falling interest from the Iraq war. The dot-com bubble popped a while ago, but we haven't really felt the problems until now. Overall, the problem can really be summed up with speculation, aka. credit.
Anyhoooo, the only reason I mention this is because of what happened in 1907. J.P. Morgan, one of the wealthiest men in America at the time, used his vast amount of personal wealth to re-invigorate the banks by investing his money in them. 1907's panic would have been much worse if he didn't do this, and by 1910, America was pretty much back to normal. I wonder: we have enough people with large amounts of personal wealth.....who wants to step up and help America and the world out a bit.
This is hardly the death of Capitalism. Go on back to your socialist country. America will weather the tough times. You can really make an allegory to natural selection and population growth and bust in nature.
Reading posts like this make me more depressed for our future than all the jobless reports combined.
Without capitalism, you have no freedom.
capitalism -
an economic system in which investment in and ownership of the means of production, distribution, and exchange of wealth is made and maintained chiefly by private individuals or corporations, esp. as contrasted to cooperatively or state-owned means of wealth.
Sounds like capitalism to me, no?
Which bubble is gonna save capitalism the next go around?
@za7ch84
It will always be something. Humans are too creative to not come up with anything new or revolutionary. Also, yes, it is capitalism, but not PURE capitalism. Pure capitalism was what we had before the 1920s or 10s. Then the government started taking more interest in the practices of businesses. You think that this recession is bad. The percentage loss is around the same. We are just that much richer (and inflated) to make it seem worse than it really is.
Last time was the dot-com. Next will be perhaps some sort of space frontier. Everyone will do it, and then when some of them have built residences on the moon, and others will apply for credit to do the same, but there will be shady business practices, people won't pay for their credit, and it will all come crashing down again.
It's a cycle, people. Just like everything in this world, in this Universe. Just hang on.
This post just signifies that we need to use our iPhones and cameras to take contemporary joblessness photos.
Does Sony get help from us? they aren't a US company? Their Headquarter is in Japan, Shouldn't Japan bail them out? so many question not enough answers.
My Name is Caboose
Thank god my field hasn't been effected all that much by the recession, it's too bad I'm not all that happy sitting in a cube glued to a computer ALL DAY LONG.
The current market scares me though, was interested in buying a condo. Am starting to think now's not the time...
Same boat here; been hearing that my profession is weathering the storm OK, but man, not a good time to buy a house. And that perception on my part (and many other people) is actually hurting the economy by dragging down the mobility of the US workforce. Strange attractor.
Now, that is the problem with the economy. The banks are the ones who took the bailout money, and on top of that, they are getting a great interest rate from the feds at less than 1%. But here they are, scaring everyone into not spending money, and reselling you that loan that they got for 1% to you at 5%. They aren't helping the folks who are stuck with the 5% or more interest rates to lower their payments, so that they can have more disposable income to spend. Now that everyone has stopped spending, we're in this vicious cycle that just won't stop spirialling downwards.
So the banks have won. They put out a doom and gloom message, you stop or hold back on buying a new house, car, computer, gadget, etc, and next thing you know, more lay offs. The cycle goes on.
You just keep laying people off so that nobody has money to buy your products. Wonderful system you got going there.
Oh yes, a much better system is to keep them all on payroll until you run out of cash and cannot meet your debt, payroll, and other obligations and you go into liquidation and all of those people get laid off, plus everyone else at the company.
Yes, good plan there sport. Good thing we've got you advising us. We almost screwed things up for a minute.
lol @ Clark! great comment
Neither one works very well, do they Clark?
Since sony is selling its products about 200-900 (see sony's netbook..lmao) euro more expensive than the other competitors, it was expected to have a loss. When you are selling a notebook or a screen much much more expensive than other brand's equal products in times like this, why are you waiting a customer to buy something from you? "vaio" and "bravia" doesn't mean anything to most buyers imo.
Sony used to be a very different company; they made electronics that cost a little less than the competition and just worked (long before that phrase became associated with Apple). But those days are long gone.
And Sony's newest product in the recession...a $900 netbook.
What happened to the original picture that was posted with this article. You know the one with all the jews being rounded up?
Shiaaaat... I kinda thought that's what it looked like. After researching the beilski brothers (go see defiance) every black and white picture with people in lines makes me think of the holocaust. I even had to do a double take after seeing a pic here w/ a bunch of guys lined up for free soup.
Google's doin' big-g-great, looks like.
Very sad for all the employees and their family's, but sony have bought this on themselves.
Maybe in years gone bye they did, but today sony don't make products that are significantly better than the competition.
Maybe their name is worth a very small incremental amount but not the large premiums they charge, their own greed has bought this on themselves.
Couple that with the consumer contempt they so often proudly display and you have this scenario they find themselves in, it was inevitable, but they still don't see it !
STOP THE BAILOUTS and FIX THE BANKS
- Solve the loan problem.
- Solve the derivative problem.
- Reassemble whole loan mortgages.
The U.S. economy is shrinking fast, because businesses cannot get loans that they need to operate normally. Banks and lenders already own $ billions in bad loans, and they are afraid to make new loans. The government gave $ billions in bailout money for banks to start lending, but banks hoard the money to save themselves.
Our financial system became untrustworthy, because it mixed $ billions in bad loans in with the good loans. Now, banks do not trust any of the loans, and the entire credit market stopped working.
The U.S. economy will continue to shrink until we untangle the loans. Once the bad loans are isolated, they can be fixed one at a time. Then trust will be restored. Credit will flow, and the economy will grow.
So far, our government is spending $ trillions on bailouts and pork projects, out of ignorance and political ideology. The real solution is much less expensive than that.
The USA has fixed this problem before, and it is not hard to fix again.
A) Start with the Resolution Trust Corporation (RTC), which our government setup to solve a Savings and Loan problem in the 1980s.
B) RTC buys up components and derivatives to reassemble whole mortgages.
1. Total securitized mortgage market is estimated at $1.3 Trillion by a Professor of Economics at Ohio State University. (Also see the graph from Deutsche Bank at “The Death of Securitized Mortgages” http://www.nakedcapitalism.com/2008/06/death-of-securitized-mortgages.html )
2. Government buys components and derivatives at the lowest market price set via a reverse auction. (Google on “reverse auction”.)
3. Squatters, who sit on their derivatives in order to extort big $ from the rest of the system, can be forced to sell. (Law is analogous to eminent domain, or sales forced on cybersquatters that registered the domain names of well-established companies.)
4. Government pays derivative squatters at market price set by previous reverse auctions, perhaps with a penalty to the squatters.
5. Sellers give up all rights. No new law there.
6. Banks, investors, and insurers now have cash instead of questionable loans and derivatives, so the banking system is healthy with cash to lend.
7. Credit will flow, and the economy will grow.
C) Government reassembles whole loans from securitized mortgage components and derivatives.
D) Government sorts the newly reassemble whole loans (mortgages) into groups according to risk/quality.
1. Government uses traditional mortgage experts and guidelines to sort the home loans into quality groups, for example, a high quality group would include homeowners with 20% (or more) equity in their house at today’s market price; and house payments that are 25% (or less) of homeowners monthly income.
E) Government (RTC) sells groups of reassemble mortgages to traditional mortgage banks.
1. This solves the problem of renegotiating home loans with homeowners. Read on.
2. Law must be changed so that reassembled whole loan mortgages cannot be securitized into derivatives, again.
3. An important purpose is to reconnect each homeowner with his lender, and vice versa.
4. It eliminates incentive for mortgage lenders to make predatory and junk loans. If the loan fails, the lender is stuck with a bad loan.
5. Government recovers much of the $1.3 Trillion purchase cost, because government sells off the reassembled mortgages.
6. Groups of lower quality mortgage would fetch a lower price at auction.
7. Mortgage companies that buy the risky groups of mortgages did so at a lower price, and they have room to negotiate with the homeowners.
8. Some homeowner negotiations will not succeed. Those homeowners will move into affordable rentals. (The government does not owe everyone a free house.)
9. Other renters would like to buy those empty homes at reduced market prices.
10. If the government gets stuck with some homes, the government could profit by selling those homes when the housing market recovers.
F) Insurers like AIG may be reorganized through bankruptcy.
1. Securitized mortgage pools never made business sense, unless they were protected by various insurance schemes.
2. Those insurance schemes always were a scam.
3. Insurance only works when most of the insured assets are never hit with a disaster. That is why flood insurance does not work in the private market. A major flood ruins all the buildings in a large area, all at the same time. That is the fallacy of securitized mortgage insurance. In an economic downturn, the “disaster” hits all the houses, all at the same time.
4. Companies that ran the huge insurance scam will go through bankruptcy.
5. Never ending government bailouts for insurers like AIG are just throwing good money after bad.
This plan is inexpensive, tried and true. It leaves the banks healthy, with cash to lend. It restores trust in the credit markets, so loans will be made. It reassembles mortgage derivatives into whole loans, and restarts traditional mortgage lending. People can get loans to buy homes. Credit will flow, and the economy will grow. *
----------------------------------------------------
*(footnote) The economy will grow if President Obama’s massive tax, borrow, and spending plans can be stopped, before he creates another Great Depression. Presidents Hoover and Roosevelt already tried to tax, borrow and spend their way out of a recession in the 1930s. Instead, they created the Great Depression, which lasted 12 years. Straight as he goes, President Obama is doing it, again. Nevertheless, cleaning up the securitized mortgage mess is a great first step.