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Strategies & Market Trends : Mish's Global Economic Trend Analysis -- Ignore unavailable to you. Want to Upgrade?

To: Knighty Tin who wrote (22618)	2/1/2005 5:47:44 PM
From: mishedlo	Read Replies (1) \| Respond to of 116555

NEW YORK (Dow Jones)--SBC Communications Inc. (SBC) and AT&T Corp. (T) aim to eliminate about 13,000 jobs as part of their merger announced Monday. SBC Chief Financial Officer Rick Lindner gave that job cut estimate during a meeting with analysts in New York Tuesday. ================================================================= Well I am now going to up my estimate and suggest 13,000 jobs is just the down payment Mish

To: Knighty Tin who wrote (22618)	2/1/2005 5:51:28 PM
From: mishedlo	Respond to of 116555

US Agencies: Spreads Widen Again, 10-Year Hardest Hit NEW YORK -(Dow Jones)- Risk premiums on agency debt were mostly wider Tuesday amid ongoing concerns about legislation that would overhaul regulation of housing finance companies Fannie Mae and Freddie Mac. Longer maturities were the hardest hit as foreign investors sold 10-year paper overnight. But shorter maturities also came under pressure as end-of-the-month buying that provided support in the past few sessions evaporated. While stricter regulation is generally positive for bondholders, legislation introduced by three Republican senators last week includes a provision giving a new regulator power to unwind Fannie's or Freddie's operations if either became insolvent. This provision, called receivership, could have negative implications for the housing finance companies' triple-A credit ratings. Last year Standard & Poors said giving receivership powers to a regulator would undermine the market's confidence that the federal government would make good on Fannie and Freddie's senior debt. Moody's Investor Services and Fitch Ratings have stated that they wouldn't downgrade based on receivership alone. Andy Brenner, head of fixed income at Investec, said Asian accounts, who are the biggest holders of 10-year paper, are particularly skittish about the threat of a possible downgrade. He noted that the spread on Fannie Mae's 4.624% note due October 2014 has moved out as wide as 39 basis points this week from 34 basis points at the beginning of last week. "We're seeing a slow liquidation," Brenner said. But he said the impact of Asian selling was magnified because yield spreads on agency debt over Treasurys were at or near historic lows before the bill was introduced. "To put it in focus, agencies are going wider, but at this time of year, and at this point in the cycle, they're going wider anyway. This is just going to accelerate it." Treasurys, meanwhile, posted modest gains ahead of the Federal Open Market Committee meeting Wednesday, giving up the bulk of a short-lived rally on the back of soft economic reports. Agency investors aren't looking for any surprises from the Fed's meeting. "The five preceeding FOMC decisions in the current tightening cycle have pretty much come and gone with all of the surprise of another Patriots playoff win, and tomorrow will probably be more of the same," said Jim Rhodes, agency strategist at ABN AMRO. "The expectatons for another 25-basis point hike and another statement that maintains the 'measured' language seems pretty universal." money.iwon.com

To: Knighty Tin who wrote (22618)	2/1/2005 6:19:04 PM
From: mishedlo	Read Replies (3) \| Respond to of 116555

SBC to Cut 13,000 Jobs After Buying AT&T Tuesday February 1, 4:36 PM EST NEW YORK, Feb 01, 2005 (AP Online via COMTEX) -- SBC Communications Inc. said Tuesday it expects to eliminate about 13,000 jobs after its $16 billion acquisition of AT&T Corp. closes, but the telephone company emphasized that many of those positions can be cut through attrition rather than layoffs. The projection came during an occasionally heated meeting with investors a day after SBC announced plans to acquire AT&T, its former corporate parent, a deal that would create one of the world's biggest telecommunications companies on numerous fronts. The cuts would come in addition to existing plans at the two companies to eliminate at least 12,000 jobs before the merger is finalized at least a year from now. [Am I reading this correctly? Is that 25,000 jobs to be eliminated? Mish] San Antonio-based SBC had recently indicated it would cut about 7,000 positions from its work force of 163,000 during 2005, primarily through attrition, which executives said typically total about 1,000 a month. [Amazing. Working conditions are such that 12,000 people a year leave that place. Mish] AT&T, based in Bedminster, N.J., had already planned to eliminate at least 5,000 of its 47,000 jobs this year, though those cuts likely will involve layoffs in the customer call centers which the company plans to close as it retreats from the traditional consumer phone business. SBC said the divisions which would have excess staffing following the merger included about 5,100 from management of the long-distance and local networks. Another 5,100 would be cut from sales, order provisioning, billing inquiry, and other forms of customer support. About 2,600 additional positions would be eliminated in administrative areas such as human resources and the two companies' sizable regulatory and lobbying operations, which have fought countless legal battles against one another over the past 20 years. Overall, work force reductions will generate nearly 60 percent of the cost savings that the merger is expected to generate, SBC executives said in the presentation. Those savings are expected to accelerate from between $200 million and $600 million in 2006, depending on when the deal close to between $1.1 billion and $1.6 billion in 2007. Annual savings could exceed $2.4 billion in 2009, the executives said. The meeting included some pointed questions from analysts and money managers who suggested AT&T had sold itself too cheaply despite its rapidly deteriorating business. Shares of SBC advanced for a second day after the takeover announcement, rising 16 cents to close at $23.92 in Tuesday's trading on the New York Stock Exchange. That would increase the value of AT&T's stock in the takeover to almost exactly $20 a share, including 0.78 of an SBC share and $1.30 in cash. However, AT&T's shares slipped in Tuesday's NYSE trading, falling 5 cents to $19.14. money.iwon.com [Well it appears a minimum of 25,000 jobs are going up in smoke. Supposedly half of them by "attrrition". Even IF one accepts that "attrition" story, that will still pressure the labor market by an extra 12,000-13,000 jobs. We have quickly gone from 5,000 jobs reported yesterday to 25,000 jobs reported today if one counts already planned reductions. Somehow I suspect that is still not the end of it and I have to bump up my estimate to 40,000 jobs over the next two years, with 18,000 or so slated for this year. Happy job hunting. Mish]