- The Washington Times - Thursday, January 22, 2009

UPDATED:

Wall Street tumbled in a volatile session Thursday following more bleak jobless and housing data and a surprise Microsoft Corp. report showing lower-than-expected earnings that will force the software giant to cut 5,000 jobs over the next 18 months.

At the close, the Dow Jones Industrial Average sank 105.30 points, or 1.28 percent, to 8122.80. The tech-heavy Nasdaq plunged 41.58, or 2.76 percent, to 1465.49. The broader Standard & Poor’s 500 fell 12.75, or 1.52 percent, to 827.49.

The markets seesawed in negative territory throughout the day but came off their lows in later trading, the Dow having dropped as much as 271 points.

The good news came after the market closed when Google, perhaps Microsoft’s biggest rival, announced that its profits for the final quarter of 2008 rose to $5.10 a share, beating expectations of $4.95. Shares of the search- engine giant soared nearly 5 percent in aftermarket trading.

Google’s net income was $382.4 million, or $1.21 a share, compared with $1.21 billion, or $3.79 a share, a year earlier, the company, based in Mountain View, Calif., said in a Business Wire statement.

“It’s a media company, and it’s the only one in the game today,” Porter Bibb, the managing partner of corporate finance at Mediatech Capital Partners, a private merchant bank in New York, said on CNBC. “It’s the place where advertisers want to be.”

In the troubled banking sector, Bank of America Corp. announced the resignation of John Thain as CEO of Merrill Lynch & Co., the bank’s brokerage arm.

The Labor Department reported that the number of people applying for jobless claims for the first time jumped by 62,000 to 589,000 for the week ended Saturday, the highest level since November 1982, when the country was emerging from recession.

The number was far more than the 540,000 than analysts had expected from a revised figure of 517,000 a week earlier and possibly forecast worse to come. The unemployment rate stands at 7.2 percent.

Another 4.6 million people are continuing to receive benefits in a recession that seems to be without end.

“With the host of recent layoff announcements in recent weeks, it looks likely that initial claims will continue to rise,” PNC Financial Services Group said in a memo made available to The Washington Times.

At the same time, the Commerce Department reported that the construction of new homes dropped 15.5 percent in December to an annual rate of 550,000 houses and apartments, the worst year on record since 1959. Analysts had expected a showing of 610,000, the Associated Press quoted Thomson Reuters as saying.

In another record, the number of units started by builders plunged 33.3 percent to 904,000 for all of last year compared with the 1.355 million for which ground was broken in 2007.

“The trend in housing in the near-term will remain weak,” the PNC memo said.

Microsoft, which had not been expected to release its report until after the markets closed, said its second quarter profit fell 11 percent to $4.17 billion, or 47 cents per share, from earnings a year ago of $4.71 billion, or 50 cents a share. Analysts had expected earnings of 49 cents a share.

The software company said its 5,000 job cuts, including 1,400 on Thursday, were expected to reduce operating costs by $1.5 billion because it anticipates lower revenue and earnings for the second half of the year. The company’s earnings forecasts are a result of the deepening recession.

Microsoft stock fell more than 6 percent. Its losses contrasted sharply with a 2 percent first-quarter earnings increase for Apple Inc., which was reported Wednesday.

Ebay, the nation’s online garage-sale warehouse, reported its first year-over-year quarterly loss in its history, CNBC said, sending its stock plummeting nearly 13 percent.

In Japan, electronics and entertainment giant Sony Corp. predicted its first annual net loss in 14 years — $1.7 billion through March — because of declining sales and a strong yen that hurt exports.

The company already has said it will cut 8,000 of its 185,000 jobs worldwide, close six of its 57 factories and reduce its temporary workforce by 8,000. It said Thursday that it plans to cut another 1,000 temporary workers and close one of two Japanese TV factories.

Copyright © 2018 The Washington Times, LLC. Click here for reprint permission.

The Washington Times Comment Policy

The Washington Times is switching its third-party commenting system from Disqus to Spot.IM. You will need to either create an account with Spot.im or if you wish to use your Disqus account look under the Conversation for the link "Have a Disqus Account?". Please read our Comment Policy before commenting.

 

Click to Read More

Click to Hide