All fired up about cuts
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Happy holidays, you're fired.
The pace of layoffs around the country is clearly accelerating as we enter the final weeks of a terrible year. There is no good moment to lose your job, but the holiday season is a particularly bitter time to get a pink slip.
Just yesterday, AT&T Corp. and a handful of other companies announced plans to lay off a combined 16,000 employees.
In Boston,
Count on more news like that in the weeks ahead.
Why now? For one thing, the economic news continues to get worse, and companies are reacting to markets as they deteriorate. But there are other reasons why businesses may decide to eliminate jobs in the last weeks of a bad year.
One is budget planning. Companies all over the country have been ordering managers to redraw 2009 budgets, with specific plans to spend less in the new year.
This process has been taking place through the fall, as more realistic 2009 forecasts cut revenue expectations. But it naturally picks up steam and heads toward a conclusion in the last weeks of the year. Layoffs are a common strategy for getting to those new, smaller budget numbers.
Another reason revolves around accounting. Big layoffs eliminate salaries, but they also create large upfront expenses. The question of when companies absorb the one-time cost of those layoffs is an easy call.
Most companies would rather lump their layoff expenses into financial reports for 2008, a year already considered a drop-dead disaster. Business was bad, and company stocks took a beating. One more financial hit won't make much of a difference now.
State Street's stock actually rose in a bad market yesterday, the day after the company announced its plans to cut 6 percent of the workforce.
Prospects for the year ahead have already become the top priority in executive suites. Why suffer an expense in the first quarter of 2009 when it can be relegated to the lost cause known as 2008?
That's the way boards and executives think. Holiday cheer is not on the agenda.
Take my corporate jet. Please.
Once prized business status symbols, company jets are idle and unloved on the tarmac now. Detroit's auto chief executives managed to turn them into new symbols of obnoxious business excess with a single visit to Washington.
But the jets were already falling out of favor at companies newly focused on cutting expenses.
Now, even
TheDeal.com reports from a Lehman Brothers Holding Corp. bankruptcy hearing in New York this week that the failed investment bank was getting a rock-bottom price of $6.2 million for its Dassault Falcon 50 aircraft.
Lehman blamed a glut of other corporate jets on the market, a two-year supply at the current pace of sales.
Nathan McKelvey, chief executive of JETS.com in Quincy, knows that only too well. His company arranges private charter flights for clients by renting idle jets from corporate owners happy to make a little money on their unused aircraft. He says rental prices are plunging, but demand for charters is way down, too.
McKelvey sees more of the same in the market to buy and sell corporate jets.
"There are a lot more aircraft for sale, but there aren't a lot of buyers," he says. "There's no question aircraft prices are plummeting."
The Red Herring
Analysts who cover individual stocks are an optimistic crowd. Even in this market, it's hard to find many who recommend selling.
Among public companies in Massachusetts with significant followings, Thermo Fisher Scientific Inc. of Waltham appears to be most favored. All 13 analysts who cover the company recommend buying the stock, which is down 43 percent this year.
Steven Syre is a Globe columnist. He can be reached at syre@globe.com.
