EWS AT A GLANCE
Treasury teaches credit management
As Wall Street sinks under a credit-based crisis, the Treasury Department is starting a long-planned program today to teach young people about managing credit and other financial matters. The $750,000 campaign, called “Don’t let your credit put you in a bad place,” includes a Web site and TV and radio ads. “The events unfolding in the last few months can be seen as a national teachable moment,” said Treasury education official Dan Iannicola. (Los Angeles Times) Facing another day of financial drubbing, central banks in Europe, Japan, and Britain injected more than $150 billion to add liquidity to the market. (MarketWatch) Markets in China and Japan closed down between 4.5 percent and 5.5 percent today. (AP in Yahoo! Finance)
HP to cut 24,600 jobs in EDS integration
Hewlett Packard said it is cutting 24,600 jobs, or almost 8 percent of its workforce, over three years as it works to integrate Electronic Data Systems. HP bought EDS in August for $13.9 billion. The cut was much larger than expected. (AP in Yahoo! Finance) About the half the job cuts will be in the U.S. HP said they will save about $1.8 billion a year, and will incur a record $1.7 billion charge for the fourth quarter. (The New York Times) “This is inevitable for any integration of this size,” said analyst Ashok Kumar at Collins Stewart. “It’s the right step in the right direction for HP.” The deal should help HP take on IBM by strengthening its consulting and other service offerings. (Los Angeles Times)
AIG fights to remain solvent
American International Group, the top U.S. insurance company, was hit by a series of credit rating downgrades late yesterday. The downgrades will complicate AIG’s efforts to secure financing to stave off bankruptcy or a lesser crisis. Officials at the Federal Reserve are working with Goldman Sachs to put together a $75 billion financing package for AIG. (The New York Times) AIG was thrown a stop-gap lifeline by New York State, which allowed the insurer to borrow $20 billion from its own assets. (Reuters) The credit downgrades may trigger $13 billion in collateral calls from debt investors. “There’s a systemic risk if AIG isn’t saved,” said analyst Benoit de Broissia at Richelieu Finance in Paris. (Bloomberg)
Apple’s iTunes gets some company
The music industry, suffering from increasingly gloomy CD sales, is getting behind a new music-streaming Web site in partnership with News Corp’s MySpace. The site, MySpace Music, will allow members to listen to a huge catalog of music free of charge. Designed to compete with Apple’s iTunes, the site will earn money through advertising and paid downloads via Amazon. A music business based on advertising “could well dwarf today’s $30 billion global recorded music industry,” said Greg Scholl of digital music distributor the Orchard. (The New York Times) Also targeting iTunes, Best Buy agreed to buy online music pioneer Napster for $121 million. (Los Angeles Times)
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