(Bloomberg) -- Toshio Taniguchi is one of about 10,000 workers at Tokyo-based Renesas Technology Corp. who accepted a pay cut last month to keep the company alive.
“It was tough to swallow,” said Taniguchi, a 62 year-old worker at the company, Japan’s biggest unlisted chipmaker. “But most people are just thankful they still have jobs.”
Japan, the country with the most flexible wage system in the developed world, is slashing pay rather than sacking people, easing the pain of what may be the country’s worst recession since World War II. A longstanding tradition of lifetime employment gives companies such as Toyota Motor Corp. and Renesas little choice, even if millions of workers like Taniguchi have to make do with less.
“Many people are spared a tragic outcome, even if there’s a downside for everybody,” said Robert Feldman, head of Japan economic research at Morgan Stanley in Tokyo. “It helps remove the fear factor.”
Not all Japan’s workers are equally protected. In addition to paring wages for full-timers, companies are cutting temporary staff, a group that makes up more than a third of the country’s 56 million-person workforce. Before the economic bubble burst in the early 1990s, only 20 percent of workers were temporary.
Still, record declines in factory production have yet to trigger job losses of the scale seen in the U.S., where the unemployment rate jumped to 8.5 percent in March from 6.6 percent in October. Japan’s jobless rate is 4.4 percent. About 460,000 Japanese workers have lost their jobs since October, compared with 3.3 million in the U.S.
Half-Capacity
Companies are keeping people even as the volume of work falls. Production lines at the Renesas wafer-processing plants in Gunma and Shikoku are running at less than half-capacity.
“People spend a lot of time cleaning these days,” said Taniguchi, laughing at the lengths people go to in order to stay busy. “We’re cleaning the undersides of desks. We’re cleaning behind the books on shelves. These are huge factories, so there’s no end to the stuff you can find to clean.”
Renesas forecasts a record loss of 206 billion yen ($2.1 billion) in the year ended March 31 and, according to an April 16 Nikkei report, may be married off to NEC Electronics Corp. by parents Hitachi Ltd. and Mitsubishi Electric Corp. Rank-and-file employees will see wage cuts of 10 percent this year; executive pay will drop by 30 percent.
“The company’s survival is at stake,” said Hirotaka Ohno, a spokesman at the chipmaker. “There are no jobs unless you keep the company alive,” he said, adding that no one has been fired, though 600 employees have taken early retirement.
Falling Pay
What makes Japan different is the flexibility of its wage system, according to Randall Jones, head of the Japan desk at the Organization for Economic Cooperation and Development in Paris. With the exception of Japan, average nominal pay in 25 advanced economies has risen virtually every year for almost two decades -- even during recessions, OECD data show. By contrast, Japanese salaries have fallen in seven of the last 10 years.
“Rather than cut workers, they cut wages. In a sense, it’s healthy,” Jones said. “Keeping people on the job is better for the economy than having lots of people go onto unemployment or welfare. There’s a lower burden on society.”
Full-time workers typically get about a quarter of their yearly wages in two lump payments set at the start of each business year. The so-called bonuses give companies room to adjust labor costs when profits fall.
Read more here
Monday, April 20, 2009
Thursday, April 16, 2009
Google beats estimates, acknowledges uncertainty
(MarketWatch) -- Google Inc. on Thursday posted a first-quarter profit that beat analysts' estimates thanks to continued spending by search advertisers and a clampdown on costs, helping bolster the impression that the company is weathering the economic downturn relatively well.
But while Google's shares rose immediately after the earnings announcement, they turned lower in late trading as investors absorbed news of the company's first-ever sequential decline in net revenue since it went public, and heard Chief Executive Eric Schmidt acknowledge that he sees no end in sight for the recession.
Mountain View, Calif.-based Google said its first-quarter net income rose to $1.4 billion, or $4.49 a share, from $1.3 billion or $4.12 a share in the same period a year earlier. The company said net revenue for the period ended in March came in at $4.07 billion. Excluding special items, Google said earnings for the quarter were $5.16 a share.
Analysts on average had expected Google to post earnings excluding special items of $4.93 a share and $4.08 billion in net revenue, according to data from Thomson Reuters.
The size of the difference between Google's actual profit and Wall Street estimates was a surprise, according to Signal Hill Capital Group analyst Todd Greenwald. "It was definitely better than expected on the bottom line," he said.
Schmidt, during a conference call, said that "Google had a good quarter," though he allowed that it's nonetheless "absolutely feeling the impact" of the down economy. The chief executive added "we don't know exactly when" the economy will turn around, while his finance chief, Patrick Pichette, cautioned the company won't necessarily be able to hold costs so low in future quarters.
Google's capital expenditures in the first quarter were $263 million, a significantly smaller portion of its sales than in prior periods. But Pichette called the quarter "the perfect illustration of the lumpiness of our [capital expenditures]," warning analysts against expecting the company to report such modest costs in coming periods.
While Google's net revenue rose compared with the period a year earlier, it also declined from the $4.2 billion reported in the prior period -- marking the first sequential decline since the company went public in 2004. That indicates that while it's held up during the recession better than many peers, Google is also seeing its business affected.
Shares of Google fell slightly to $388 in after-hours trading.
'Very, very conservative'
Google said its paid clicks, or the number of times users clicked on an advertisement and generated revenue for the company, grew 17% in the quarter compared with the period last year.
That beat many analysts' estimates, though Signal Hill's Greenwald noted a growing discrepancy between high paid-click growth and slowing revenue growth, indicating that the prices advertisers are paying per keyword on Google's search service are declining.
While advertisers may want to spend less, Google also indicated that it remains committed to austerity amid the downturn.
Schmidt noted that while Google finished the quarter with nearly $18 billion in cash and equivalents on its books, it is in no hurry to spend it. "Our view at the moment is to remain very, very conservative, and I don't think that will change any time soon," he said.
Pichette, however, emphasized that Google will continue to invest heavily in its core businesses -- and likely more heavily, in some respects, than it did in the first quarter. A project building a new data center in Finland, for example, was only temporarily halted during the quarter by the cold weather in that country, the finance chief said.
Read more here
But while Google's shares rose immediately after the earnings announcement, they turned lower in late trading as investors absorbed news of the company's first-ever sequential decline in net revenue since it went public, and heard Chief Executive Eric Schmidt acknowledge that he sees no end in sight for the recession.
Mountain View, Calif.-based Google said its first-quarter net income rose to $1.4 billion, or $4.49 a share, from $1.3 billion or $4.12 a share in the same period a year earlier. The company said net revenue for the period ended in March came in at $4.07 billion. Excluding special items, Google said earnings for the quarter were $5.16 a share.
Analysts on average had expected Google to post earnings excluding special items of $4.93 a share and $4.08 billion in net revenue, according to data from Thomson Reuters.
The size of the difference between Google's actual profit and Wall Street estimates was a surprise, according to Signal Hill Capital Group analyst Todd Greenwald. "It was definitely better than expected on the bottom line," he said.
Schmidt, during a conference call, said that "Google had a good quarter," though he allowed that it's nonetheless "absolutely feeling the impact" of the down economy. The chief executive added "we don't know exactly when" the economy will turn around, while his finance chief, Patrick Pichette, cautioned the company won't necessarily be able to hold costs so low in future quarters.
Google's capital expenditures in the first quarter were $263 million, a significantly smaller portion of its sales than in prior periods. But Pichette called the quarter "the perfect illustration of the lumpiness of our [capital expenditures]," warning analysts against expecting the company to report such modest costs in coming periods.
While Google's net revenue rose compared with the period a year earlier, it also declined from the $4.2 billion reported in the prior period -- marking the first sequential decline since the company went public in 2004. That indicates that while it's held up during the recession better than many peers, Google is also seeing its business affected.
Shares of Google fell slightly to $388 in after-hours trading.
'Very, very conservative'
Google said its paid clicks, or the number of times users clicked on an advertisement and generated revenue for the company, grew 17% in the quarter compared with the period last year.
That beat many analysts' estimates, though Signal Hill's Greenwald noted a growing discrepancy between high paid-click growth and slowing revenue growth, indicating that the prices advertisers are paying per keyword on Google's search service are declining.
While advertisers may want to spend less, Google also indicated that it remains committed to austerity amid the downturn.
Schmidt noted that while Google finished the quarter with nearly $18 billion in cash and equivalents on its books, it is in no hurry to spend it. "Our view at the moment is to remain very, very conservative, and I don't think that will change any time soon," he said.
Pichette, however, emphasized that Google will continue to invest heavily in its core businesses -- and likely more heavily, in some respects, than it did in the first quarter. A project building a new data center in Finland, for example, was only temporarily halted during the quarter by the cold weather in that country, the finance chief said.
Read more here
Toshiba Posts Smaller-Than-Forecast Operating Loss
(Bloomberg) -- Toshiba Corp., the world’s second- largest maker of flash memory chips, posted a smaller operating loss than the company had forecast after production cuts helped ease a glut and drive up prices of the semiconductors.
The operating loss, or sales minus the cost of goods sold and administrative expenses, was 250 billion yen ($2.5 billion) in the year ended March 31, or 11 percent smaller than the company’s previous 280 billion yen loss projection, Tokyo-based Toshiba said today in a preliminary earnings statement.
The results stoked speculation that production cuts are helping reduce the excess supply that’s driven memory chipmakers to record losses. Prices of flash memory chips, which store songs and data in portable musical players and digital cameras, have surged 75 percent since Jan. 29, when Toshiba last made its earnings projections.
“Flash-memory chip prices can sustain these levels for the time being as long as chipmakers continue to scale back production,” Yuichi Ishida, an analyst at Mizuho Financial Group Inc., said by phone today. “Demand for the chips themselves isn’t likely to rise soon because demand for mobile phones and digital cameras is still weak.”
Toshiba rose 3.8 percent to 330 yen at 12:57 p.m. on the Tokyo Stock Exchange. The preliminary results are in line with figures reported by the Nikkei English News earlier today. The company will have a press briefing at 3 p.m. Tokyo time.
Read more here
The operating loss, or sales minus the cost of goods sold and administrative expenses, was 250 billion yen ($2.5 billion) in the year ended March 31, or 11 percent smaller than the company’s previous 280 billion yen loss projection, Tokyo-based Toshiba said today in a preliminary earnings statement.
The results stoked speculation that production cuts are helping reduce the excess supply that’s driven memory chipmakers to record losses. Prices of flash memory chips, which store songs and data in portable musical players and digital cameras, have surged 75 percent since Jan. 29, when Toshiba last made its earnings projections.
“Flash-memory chip prices can sustain these levels for the time being as long as chipmakers continue to scale back production,” Yuichi Ishida, an analyst at Mizuho Financial Group Inc., said by phone today. “Demand for the chips themselves isn’t likely to rise soon because demand for mobile phones and digital cameras is still weak.”
Toshiba rose 3.8 percent to 330 yen at 12:57 p.m. on the Tokyo Stock Exchange. The preliminary results are in line with figures reported by the Nikkei English News earlier today. The company will have a press briefing at 3 p.m. Tokyo time.
Read more here
Wednesday, April 15, 2009
Japanese Stocks Climb on Chipmaker Merger Talks, Fed Report
(Bloomberg) -- Japanese stocks jumped to a three- month high on speculation consolidation will boost profitability in the computer chip industry and after a U.S. Federal Reserve survey showed economic contraction eased in some regions.
Mitsubishi Electric Corp. jumped 4 percent after its Renesas Technology Corp. affiliate was said to be in merger talks with NEC Electronics Corp., Japan’s third-biggest chipmaker. Nissan Motor Co., the nation’s No. 3 carmaker, rose 3.7 percent as almost half of the regions surveyed in the Fed’s Beige Book said there’s been a “moderation” in economic decline. Steelmakers and shipping lines gained ahead of reports from China on gross domestic product, production and inflation.
The Nikkei 225 Stock Average rose 253.43, or 2.9 percent, to 8,996.39 at the 11 a.m. break in Tokyo, the highest since Jan. 7 and snapping a three-day slide. The broader Topix index gained 16.67, or 2 percent, to 851.92.
“It’s natural when the economy turns south to see these kinds of mergers as a strategy for survival. Making money in semiconductors is difficult in any business climate,” said Kiyoshi Ishigane, a senior strategist at Mitsubishi UFJ Asset Management Co., which oversees about $61 billion. “We aren’t on the path to a legitimate recovery, but we are seeing signs that sentiment is improving.”
The Nikkei has rallied by more than a quarter from a 26- year low on March 10. Shares in the gauge trade at an average of 183 times estimated net income for this year, up from 14 times a year ago, according to index compiler Nikkei Inc.
Read more at Bloomberg
Mitsubishi Electric Corp. jumped 4 percent after its Renesas Technology Corp. affiliate was said to be in merger talks with NEC Electronics Corp., Japan’s third-biggest chipmaker. Nissan Motor Co., the nation’s No. 3 carmaker, rose 3.7 percent as almost half of the regions surveyed in the Fed’s Beige Book said there’s been a “moderation” in economic decline. Steelmakers and shipping lines gained ahead of reports from China on gross domestic product, production and inflation.
The Nikkei 225 Stock Average rose 253.43, or 2.9 percent, to 8,996.39 at the 11 a.m. break in Tokyo, the highest since Jan. 7 and snapping a three-day slide. The broader Topix index gained 16.67, or 2 percent, to 851.92.
“It’s natural when the economy turns south to see these kinds of mergers as a strategy for survival. Making money in semiconductors is difficult in any business climate,” said Kiyoshi Ishigane, a senior strategist at Mitsubishi UFJ Asset Management Co., which oversees about $61 billion. “We aren’t on the path to a legitimate recovery, but we are seeing signs that sentiment is improving.”
The Nikkei has rallied by more than a quarter from a 26- year low on March 10. Shares in the gauge trade at an average of 183 times estimated net income for this year, up from 14 times a year ago, according to index compiler Nikkei Inc.
Read more at Bloomberg
Shock fall in retail sales
SA's retail sales fell a shocking 4.5% in real terms in February from the same month a year ago, fuelling fears that SA is already in a recession and cementing the case for a further 100 basis points in interest rate cuts at the end of April.
The sharp decline in February followed an increase of 1.2% in January and a marginal decline in December. The performance in December and January had raised hopes that a bottom had been seen in retail sales.
But the latest numbers show that consumer confidence returned to the doldrums, despite a 100 basis-point cut in interest rates in February.
Stanlib economist Kevin Lings said the two main reasons for the retail sales decline were that consumers' incomes were falling in real terms, and that they were experiencing job losses.
He said credit card debt was a reliable indicator of consumer spending, and in February consumers had actually reduced their credit card debt.
"That's a rare event indeed, and is more indicative of the mood among consumers than the retail sales figures in December and January."
Lings said the better performance in December and January had been an anomaly. Consumers had probably felt buoyed by the fact that petrol prices had dropped sharply and the first interest rate cut had taken place. But this had been followed by job losses in 2009.
"Coming after very weak manufacturing figures, the February retail sales figures point to negative growth in gross domestic product in the first quarter.
"This supports the argument for another 100 basis-point cut in interest rates at the end of this month," Lings said.
Read more at Fin24
The sharp decline in February followed an increase of 1.2% in January and a marginal decline in December. The performance in December and January had raised hopes that a bottom had been seen in retail sales.
But the latest numbers show that consumer confidence returned to the doldrums, despite a 100 basis-point cut in interest rates in February.
Stanlib economist Kevin Lings said the two main reasons for the retail sales decline were that consumers' incomes were falling in real terms, and that they were experiencing job losses.
He said credit card debt was a reliable indicator of consumer spending, and in February consumers had actually reduced their credit card debt.
"That's a rare event indeed, and is more indicative of the mood among consumers than the retail sales figures in December and January."
Lings said the better performance in December and January had been an anomaly. Consumers had probably felt buoyed by the fact that petrol prices had dropped sharply and the first interest rate cut had taken place. But this had been followed by job losses in 2009.
"Coming after very weak manufacturing figures, the February retail sales figures point to negative growth in gross domestic product in the first quarter.
"This supports the argument for another 100 basis-point cut in interest rates at the end of this month," Lings said.
Read more at Fin24
Tuesday, April 14, 2009
Fed Considering More Disclosure on Emergency Lending Programs
(Bloomberg) -- Federal Reserve officials are considering steps to provide the public with more information about emergency programs aimed at reviving credit and ending the U.S. recession.
The central bank will probably increase disclosure on the collateral it holds against loans to financial firms, while also weighing a full range of options, including possible press conferences, according to people familiar with the matter.
Chairman Ben S. Bernanke has asked an internal committee headed by Vice Chairman Donald Kohn to review ways the central bank can boost transparency after it extended its lender-of-last resort role far beyond banks and doubled its balance sheet to more than $2 trillion to stem the credit crisis.
Read more at Bloomberg
The central bank will probably increase disclosure on the collateral it holds against loans to financial firms, while also weighing a full range of options, including possible press conferences, according to people familiar with the matter.
Chairman Ben S. Bernanke has asked an internal committee headed by Vice Chairman Donald Kohn to review ways the central bank can boost transparency after it extended its lender-of-last resort role far beyond banks and doubled its balance sheet to more than $2 trillion to stem the credit crisis.
Read more at Bloomberg
Thursday, March 27, 2008
SE Asian Stocks-Higher on gains in financials and oil plays
... SINGAPORE, March 27 (Reuters) - Southeast Asian stock markets ended higher on Thursday, with further gains ... it said it was still negotiating with Chinas ICBC (1398.HK: ) about the sale of ... steep. In Vietnam, the Ho Chi Minh Stock Exchange rose on the first day of a ...
Subscribe to:
Posts (Atom)
