The economy: Job losses accelerate
The U.S. unemployment rate in March jumped to its highest level in 26 years, and “hundreds of thousands more Americans are likely to lose their jobs in the months ahead,” said Mike Dorning in the Los Angeles Times. The economy shed jobs at a pace “unprecedented in modern America,” with 663,000 jobs being eliminated in March, following 651,000 in February. More than 5 million jobs have vanished since the recession began, in December 2007. The losses pushed the national unemployment rate to 8.5 percent, the highest since 1983.
Employment is now caught in a vicious cycle, said Bob Willis and
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Rich Miller in Bloomberg.com. As the “hemorrhaging” of jobs continues “in the face of depressed demand,” consumers curtail their spending, further shrinking demand and triggering more job cuts. Employers ranging from manufacturers such as Johnson Controls and Dana Holding Corp. to service providers such as IBM and the U.S. Postal Service have warned of additional layoffs. “We are not out of the woods yet,” said Federal Reserve Vice Chairman Donald Kohn.
Computers: Sun, IBM at loggerheads
Negotiations over IBM’s planned acquisition of Sun Microsystems have foundered, after Sun’s board rejected IBM’s $7 billion offer, said William Bulkeley and Don Clark in The Wall Street Journal. IBM has now officially withdrawn its offer, although “advisors to the parties were still in touch by telephone.” Sun’s board has split over the deal, “with a faction led by Sun’s chairman and co-founder, Scott McNealy, opposing the transaction and a group led by Chief Executive Jonathan Schwartz in favor.”
Bankruptcies: Polaroid finds a buyer
Polaroid, the instant-photography pioneer that has twice declared bankruptcy since 2001, was sold at auction to private-equity firm Patriarch Partners for $59.1 million, said Erik Larson in Bloomberg.com. Patriarch, which also holds stakes in Arizona Iced Tea and mapmaker Rand-McNally, “invests in distressed companies.” Polaroid first filed for bankruptcy in 2001, after digital photography wiped out its film business. It emerged from bankruptcy in 2005 after being acquired by Petters Group Worldwide, but filed again in 2008, after company owner Thomas Petters was accused of using fraudulent documents to borrow money for Polaroid.
Scandals: Madoff associate sued
New York Attorney General Andrew Cuomo has sued a prominent New York financier who steered investors to confessed Ponzi schemer Bernard Madoff, said Diana Henriques in The New York Times. The suit accuses Ezra Merkin of fraud for claiming that he actively managed his clients’ funds, when in fact he simply funneled them to Madoff. Merkin collected at least $470 million in management fees from his clients—“fees which dwarfed Mr. Merkin’s personal losses in the Madoff fund, according to the complaint.”
Earnings: BlackBerry sales boost RIM
Research in Motion, the maker of BlackBerry communications devices, surprised investors with a 26 percent quarterly earnings rise on strong sales of its new smartphones, said Chris Sorenson in The Toronto Star. Co-CEO Jim Balsillie attributed the $518 million profit on sales of $3.46 billion to “consumer interest in new models such as the touch screen Storm.” RIM has lost some corporate customers to layoffs, but sales of the company’s new line of consumer-oriented smartphones have more than made up for the loss.
