In a stark acknowledgment of the tough times ahead, US credit card issuer American Express Co and mobile phone manufacturer Motorola Inc announced plans to cut their work force by 10 percent and 4.5 percent respectively.
New York-based American Express (Amex) said on Thursday it planned to cut 7,000 jobs, or about 10 percent of its worldwide work force, in an effort to slash costs by US$1.8 billion next year.
The credit card issuer — which has reported four straight quarters of profit declines as an increasing number of consumers struggle to pay off debt — said it was also suspending management-level salary increases next year and instituting a hiring freeze.
The job cuts will be across various business units, but will primarily focus on management positions, the company said.
The company also plans to scale back investments in technology and marketing and business development, streamline costs associated with some rewards programs and cut expenses for consulting and other professional services, travel and entertainment and general overhead.
RESTRUCTURING
As a result, Amex plans to take a restructuring charge of between US$240 million and US$290 million in the fourth quarter.
The company has been gearing up for a big restructuring for some time, first announcing in July that it planned to reduce overall costs and staffing levels, and take a related charge during the second half of the year.
“We’ve been engaged for the past few months in an intensive, companywide review of priorities and staffing levels,” Amex chairman and CEO Kenneth Chenault said in a statement.
“The reengineering program we announced today will help us to manage through one of the most challenging economic environments we’ve seen in many decades. It will also put us in position to ramp up investment spending as economic conditions improve so that we can take advantage of the substantial opportunities that will be available to us over the medium to long term.”
Motorola, based in Schaumburg, Illinois, also announced on Thursday it was cutting its global work force by 4.5 percent, or some 3,000 employees, and delaying the spinoff of its troubled cellphone unit.
HANDSET LAYOFFS
The US’ largest mobile phone manufacturer announced the job cuts just hours after reporting a quarterly net loss of nearly US$400 million and said more than two-thirds of the layoffs would be in the handset division.
The company said it suffered a net loss of US$397 million in the third quarter of the year after reporting a net profit of US$60 million for the same period last year.
Motorola lowered its forecast for the remainder of the year but said its cost-cutting moves would result in annual savings of some US$800 million next year.
The ailing company had 66,000 employees worldwide at the end of last year and the latest job cuts bring the total number of layoffs since January last year to 13,000.
It said separation of the struggling mobile phone unit from the rest of the company was now “targeted beyond 2009.”
“While our strategic intent to separate the company remains intact, we are no longer targeting the third quarter of 2009,” Sanjay Jha, Motorola co-chief executive and head of its mobile devices division, said in a statement.
Jha, who took over the mobile devices unit in August, attributed the delay to “the macroeconomic environment, stresses in the financial markets and the changes underway in Mobile Devices.
Jha said the company would undertake significant actions to accelerate consolidation of its product platforms, resulting in a “leaner organization with a more competitive and cost-effective product portfolio.
‘UPHOLDING PEACE’: Taiwan’s foreign minister thanked the US Congress for using a ‘creative and effective way’ to deter Chinese military aggression toward the nation The US House of Representatives on Monday passed the Taiwan Conflict Deterrence Act, aimed at deterring Chinese aggression toward Taiwan by threatening to publish information about Chinese Communist Party (CCP) officials’ “illicit” financial assets if Beijing were to attack. The act would also “restrict financial services for certain immediate family of such officials,” the text of the legislation says. The bill was introduced in January last year by US representatives French Hill and Brad Sherman. After remarks from several members, it passed unanimously. “If China chooses to attack the free people of Taiwan, [the bill] requires the Treasury secretary to publish the illicit
NO HUMAN ERROR: After the incident, the Coast Guard Administration said it would obtain uncrewed aerial vehicles and vessels to boost its detection capacity Authorities would improve border control to prevent unlawful entry into Taiwan’s waters and safeguard national security, the Mainland Affairs Council (MAC) said yesterday after a Chinese man reached the nation’s coast on an inflatable boat, saying he “defected to freedom.” The man was found on a rubber boat when he was about to set foot on Taiwan at the estuary of Houkeng River (後坑溪) near Taiping Borough (太平) in New Taipei City’s Linkou District (林口), authorities said. The Coast Guard Administration’s (CGA) northern branch said it received a report at 6:30am yesterday morning from the New Taipei City Fire Department about a
A senior US military official yesterday warned his Chinese counterpart against Beijing’s “dangerous” moves in the South China Sea during the first talks of their kind between the commanders. Washington and Beijing remain at odds on issues from trade to the status of Taiwan and China’s increasingly assertive approach in disputed maritime regions, but they have sought to re-establish regular military-to-military talks in a bid to prevent flashpoint disputes from spinning out of control. Samuel Paparo, commander of the US Indo-Pacific Command, and Wu Yanan (吳亞男), head of the People’s Liberation Army (PLA) Southern Theater Command, talked via videoconference. Paparo “underscored the importance
IN BEIJING’S FAVOR: A China Coast Guard spokesperson said that the Chinese maritime police would continue to carry out law enforcement activities in waters it claims The Philippines withdrew its coast guard vessel from a South China Sea shoal that has recently been at the center of tensions with Beijing. BRP Teresa Magbanua “was compelled to return to port” from Sabina Shoal (Xianbin Shoal, 仙濱暗沙) due to bad weather, depleted supplies and the need to evacuate personnel requiring medical care, the Philippine Coast Guard (PCG) spokesman Jay Tarriela said yesterday in a post on X. The Philippine vessel “will be in tiptop shape to resume her mission” after it has been resupplied and repaired, Philippine Executive Secretary Lucas Bersamin, who heads the nation’s maritime council, said
RSS