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Banks see red, GM’s white-collar black eye
Regional banks, including First National and Washington Mutual, are hit hard by nationwide panic and misread reports. GM is cutting some salaried employees. And airport sleepovers, while uncomfortable, can be inspirational.
 

NEWS AT A GLANCE

Regional banks hit by national woes

The federal takeover of lender IndyMac, plus a weekend analyst report titled “Who Is Next?,” hit the shares of several regional banks yesterday, leading to unusual clarifications and assertions of good financial health. Banks including National City, Washington Mutual, and First Horizon issued statements to quell speculation, and Ladenburg Thalmann & Co. analyst Richard Bove said his report actually indicated that those and other banks he listed “are in better condition than is generally perceived.” (The Wall Street Journal) Early today, however, Oppenheimer analyst Meredith Whitney downgraded Wachovia to underperform, saying it faced the “greatest reckoning” of the major banks. (Fortune in CNNMoney.com)

GM readies white-collar job cuts

General Motors said it will cut white-collar jobs, sell assets, and suspend its cash dividend as the automaker tries to reassure investors about its solvency. It is GM’s second restructuring announcement in six weeks. (Bloomberg) The workers affected will include engineers assigned to design GM’s next round of SUVs and full-size pickups, which consumers have been shunning amid high gas prices. GM’s stock price, down 63 percent this year, rose about 5 percent in extended trading. (Reuters) GM has to show it can handle the situation, and “that means a reduction of fixed costs,” said economist Sean McAlinden at the Center for Automotive Research. “That’s the financial people, engineering people.” (Detroit Free Press)

Genentech profit rises on cancer drug

Genentech Inc., the largest U.S. cancer-drug maker and No. 2 biotechnology firm, after Amgen, reported a 4.7 percent rise in quarterly profit, to $782 million, on 15 percent grown sales of the cancer drug Avastin. (Los Angeles Times) Avastin, approved in 2004 for colon tumors, was green-lighted for breast cancer in the middle of the previous quarter. Genentech’s earnings just missed analysts estimates, but its shares rose after it raised its 2008 forecast. “The bottom line came in a little weak but no one cares because the most important thing, despite missing estimates by a few cents, is that they raised guidance for the year,” said Eric Schmidt at Cowen & Co. (Bloomberg)

Creativity in a time of discomfort

As airlines look for ways to cut expenses, they’ve become tighter with hotel vouchers for stranded passengers, and that means sleepovers in airports are becoming increasingly common. Business travel advisers suggest carrying the phone numbers for national hotel chains on all trips, just in case, and certainly sleeping on the floor is uncomfortable. But it has inspired at least one well-known novel, “Dear American Airlines,” and an entrepreneurial venture in portable lodging. Frank Giotto said he came up with the idea for his Mini Motel, a one-person tent for layovers, while stranded at a German airport. “People sleeping in chairs don’t seem to bother them,” Giotto said of airports. (The New York Times)

 

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