Archive for March, 2009

Microsoft says swings jobs axe without visa bias (Reuters)

Tuesday, March 3rd, 2009 | Finance News

WASHINGTON (Reuters) –
Microsoft Corp will favor neither American nor foreign workers as it cuts thousands of jobs, the company said on Tuesday in response to a senator's call that the jobs of U.S. employees be preserved.

Microsoft said in January that it would eliminate up to 5,000 jobs, or about 5 percent of its workforce, surprising investors as it released quarterly results that missed Wall Street expectations.

The news also caught the eye of Republican Sen. Charles Grassley, who fired off a letter asking that Microsoft detail the cuts, while urging the world's biggest software company to preserve the jobs of Americans ahead of foreigners with visas.

Microsoft said it was too early to be precise, but the percentage of workers at the company who hold so-called H-1B visas would remain roughly the same.

"We do not expect to see a significant change in the proportion of H-1B employees in our workforce following the job reductions," General Counsel Bradford Smith said in a letter to Grassley.

The Senator said the response left him wanting more details. "I'm still left without much information about how Microsoft is ensuring American workers are being protected or specifics of its H-1B visa hiring practices," Grassley said in a statement.

H-1B employees have always amounted to less than 15 percent of Microsoft's U.S. workforce, Smith said in the letter dated March 3.

"The potential to tap into the world's best minds has long been essential to our success," he wrote.

Microsoft has been a champion of expanding the H-1B temporary visa program, which lets American companies and universities hire foreign workers in a category the government considers "specialty occupations."

The company also said that, including positions to be created, the net impact would be 2,000 to 3,000 fewer jobs.

Grassley, who is the ranking Republican member of the Senate Finance Committee, had asked Microsoft Chief Executive Steve Ballmer to provide a breakdown of the jobs to be eliminated, how many of those are staffed with individuals with H-1B visas and how many with Americans.

(Reporting by Kim Dixon; editing by Lisa Von Ahn and Tim Dobbyn)

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How the Dow Jones industrials fared Tuesday (AP)

Tuesday, March 3rd, 2009 | Finance News

Investors bruised by Wall Street's latest rout found little reason to pile back into the market Tuesday. Stocks extended their losses to a fifth straight day as investors wrestled with the reality that the economy is still far from a recovery. The pessimism that has dominated the markets for months stifled some tentative bargain hunting and in the process unraveled several attempts at a rally. The selling pushed the Standard & Poor's 500 index to its first close below 700 since Oct. 28, 1996.

The Dow Jones industrial average fell 37.27, or 0.6 percent, to 6,726.02.

The Standard & Poor's 500 index fell 4.49, or 0.6 percent, to 696.33.

The Nasdaq composite index fell 1.84, or 0.1 percent, to 1,321.01.

For the week:

The Dow is down 336.91, or 4.8 percent.

The S&P is down 38.76, or 5.3 percent.

The Nasdaq is down 56.83, or 4.1 percent.

For the year:

The Dow is down 2,050.37, or 23.4 percent.

The S&P is down 206.92, or 22.9 percent.

The Nasdaq is down 256.02, or 16.2 percent.

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Fed launches new $200B consumer credit program (AP)

Tuesday, March 3rd, 2009 | Finance News

WASHINGTON – The government launched a much-awaited program Tuesday to spur lending for autos, education, credit cards and other consumer loans by providing up to $200 billion in financing to investors to buy up the debt.

If the program succeeds, it should help bust through the credit clogs in place since last year and make it easier for Americans to finance large and small purchases at lower rates, Federal Reserve Chairman Ben Bernanke told Congress. That, in turn, would help revive the economy, he said.

Created by the Fed and the Treasury Department, the program has the potential to generate up to $1 trillion of lending for businesses and households, the government said. It will be expanded to include commercial real estate, though that won't be part of the initial rollout.

"There's a looming crisis in commercial real estate whereby owners of shopping malls, hotels, rental properties and many other types of buildings are unable to refinance or to pay for new construction because the (commercial) securitization market is completely shut down," Bernanke said during an appearance before the Senate Budget Committee.

The program will start off by providing $200 billion in loans to investors with the goal of jump-starting lending to consumers and small businesses. The program, dubbed the Term Asset-Backed Securities Loan Facility, was first announced late last year and originally was scheduled to start in February.

Participants — companies and investors that pledge eligible collateral to back the loan — must request the new government loans by March 17. The Fed will provide the three-year loans on March 25.

"We should see immediate benefits to students, to credit cards, to small businesses, to consumer loans," Bernanke told lawmakers.

Under the program, the Fed will buy securities backed by different types of debt, including credit card, auto, student and small business loans. The credit crunch — the worst since the 1930s — has made it much harder for people to obtain such financing , and those that do can be socked with high rates.

Before the financial crisis, banks relied on packaging such loans into securities and selling them to pay for additional lending. That process had financed about 25 percent of consumer loans in recent years until the credit markets ground to a halt in October, the government said.

Anil Kashyap, a professor at the University of Chicago's Booth School of Business, said the program should make it easier for consumers to get loans. But he cautioned that the Fed's involvement in this area could have unintended consequences elsewhere by making other debt securities not backed by the government less attractive to investors.

"We'd really rather the credit markets just work properly," Kashyap said.

The Fed plans to keep the program running through December, but said it could be extended.

The Fed and Treasury expect that securities backed by car-fleet leases as well as by certain equipment, including for heavy construction and for agriculture, will be eligible for Fed funding in its April operation. Participants in the second round of funding must request the government loans by April 7, which the Fed will disburse on April 14.

The program, the Fed said, will remain focused on securities that are best able to aid the economy and financial markets and that can be added at a low risk to the government.

Limits on executive compensation that apply to financial institutions receiving capital from the $700 billion rescue program won't apply to lenders and other participants benefiting from the program. That's because it wants "to encourage market participants to stimulate credit formation" and use the program, the Fed said.

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AP Economics Writer Christopher S. Rugaber contributed to this report.

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