Dow Chemical Posts Steep Loss; Motorola Suspends Dividend, Lowers Forecast; Bank of Japan Buying Local Bank Shares; Automakers Suffer Through Worst Month Since 1982; AIG Shares Hit All-Time Low; Private Equity Firms Say Large LBO Market Dead; Brazil’s Economy in Recession
The Dow Chemical Co. (DOW) posted a $1.55 billion, or $1.68 a share, fourth-quarter loss – its first loss in six years. Sales dropped 23%, prompting the company to close factories and cut jobs. “It’s a very nasty set of results,” Hassan Ahmed, a New York-based analyst at HSBC Securities, told Bloomberg. “Everyone says January has been tracking December, so you can make a valid case that the first quarter could be far worse than the fourth quarter.”
Motorola Inc. (MOT) said on Tuesday that it is suspending its quarterly dividend and forecasted a deeper-than-expected first-quarter loss. The company is also looking for a new chief financial officer. “We have our work cut out for us in 2009 as we focus on the future success of Mobile Devices,” Co-Chief Executive Sanjay Jha said on a conference call, Reuters reported.
Japan’s central bank said yesterday (Tuesday) that it will buy $11.1 billion (1 trillion yen) worth of financial institutions’ shares. “This is a good move,” Jesper Koll, chief executive officer at Tokyo-based hedge fund adviser TRJ Tantallon Research Japan, told Bloomberg. “It frees the banks to focus on their main business, assessing credit risks rather than riding the fortunes of the stock market.”
General Motors Corp. (GM) and Ford Motor Co. (F) said U.S. sales plummeted over 40% in January, dragging the world’s biggest auto market toward the worst month since 1982, Bloomberg News reported. Foreign automakers also weren’t immune as Toyota Motor Corp. (ADR: TM) sales fell by almost a third, Honda Motor Co. (ADR: HMC) sales fell 28% and sales at Nissan Motor Co. (ADR: NSANY) dropped by 30%.
American International Group, Inc. (AIG) shares hit an all-time low yesterday (Tuesday) on investor concerns that the insurance giant could need more cash than the taxpayer bailout it received last year, Reuters reported. AIG’s Chief Executive Edward Liddy said he hoped the government’s $150 billion rescue package would be adequate, but did not rule out seeking more government money.
Private equity firms are being forced to dive into alternative investments or sit it out on the sidelines, as the credit crisis kills their ability to make large leveraged buyouts. “You have to accept the fact that transactions will be smaller and have far less leverage – that’s a fact,” Henry Kravis, co-founder of New York-based private equity giant Kohlberg Kravis Roberts & Co. told Reuters at SuperReturn, the industry’s main conference.
Record job losses, factory cutbacks and the biggest drop in exports since 1991, have brought Brazil’s economic growth to a standstill, Bloomberg News reported. The country may be in its first technical recession – two consecutive quarterly contractions of gross domestic product – since 2003, said Tony Volpon, chief strategist at CM Capital brokerage in Sao Paulo. A deteriorating economy will prompt policymakers to cut the benchmark rate by a full percentage point for a second straight time at their March 10-11 meeting, according to Bloomberg a survey.
