UBS Wields the Ax, Qwest Gets Unplugged
Swiss bank UBS cuts 5,500 jobs as it deals with huge mortgage-related losses. Qwest loses residential customers to the allure of cellphones. And the free-verus-paid Wi-Fi dispute seeks a third way.
NEWS AT A GLANCE
UBS to cut 5,500 jobs
Swiss bank UBS said it is cutting 5,500 jobs and quitting the municipal bond business as it grapples with a $10.97 billion quarterly loss. The loss, on $19 billion in credit-related writedowns, was in line with a warning UBS issued last month. (Bloomberg) The bank said it agreed to sell $15 billion worth of risky U.S. mortgage assets, with a nominal value of $22 billion, to U.S.-based BlackRock Inc. (MarketWatch) UBS is the European bank hardest hit by the subprime meltdown, writing down $37 billion in assets since last summer. “The worst is likely over” for UBS, said analysts at the bank Wegelin, but its “current outlook is anything but rosy.” (Reuters)
Qwest loses home phone lines to cellphones
Regional phone giant Qwest Communications reported a 35 percent drop in quarterly profits, to $157 million. (MarketWatch) Qwest lost 783,000 home land-line subscriptions last year as customers switched to service through cable providers and to mobile phones. “Since Qwest doesn’t own wireless spectrum, it makes it hard for Qwest to sell those customers anything,” said analyst Donna Jaegers at Janco Partners. (Bloomberg) Qwest has 800,000 wireless customers, and it said yesterday that it is switching to selling cellphone service through Verizon Wireless, from Sprint Nextel, delivering another blow to No. 3 U.S. carrier Sprint. (BusinessWeek.com)
Swiss Re misses target
Swiss Reinsurance, the world’s largest reinsurer, said its quarterly profits fell 53 percent, to $595 million. The earnings missed analysts’ expectations, and Swiss Re shares dropped 6 percent in Swiss trading. (MarketWatch) The drop in profits was due to $778 million in credit market writedowns and a 20 percent decline in income from premiums. Reinsurance rates have fallen for two years, after rising in the wake of Hurricane Katrina. Swiss Re also said it will book almost $200 million in new writedowns. “Credit losses are unexpectedly high,” said analyst Viktor Dammann at Bank Vontobel in Zurich. “But this stuff is on the books and you just can’t get rid of it.” (Bloomberg)
Free Wi-Fi versus paid, versus . . .
As business travelers and other consumers increasingly seek out free wireless Internet and businesses look for ways to recoup the costs of increasing bandwidth use, a compromise of sorts is emerging: offer both free and fee-based Wi-Fi. Starbucks is perhaps the most visible practitioner of dual pricing, but it isn’t the only one. Omni hotels offer free Wi-Fi in the lobby but paid service in rooms. Other businesses, notably airports, are switching to free wireless supported by ads or paid downloads. “Our position is, give the user a choice,” said David Blumenfeld at ad broker JiWire. (The New York Times)
THE WEEK'S AUDIOPHILE PODCASTS: LISTEN SMARTER
MOST POPULAR ON THE WEEK
- 43 TV shows to watch in 2014
- How to be the most productive person in your office — and still get home by 5:30 p.m.
- Ted Cruz is the new Sarah Palin
- How liberals are unwittingly paving the way for the legalization of adult incest
- How the Simpsons/Family Guy crossover revealed the worst of both shows
- Watch out, China — America is working on dogfighting drones
- 6 things the happiest families all have in common
- Libertarianism's terrible, horrible, no good, very bad idea
Subscribe to the Week