VideoIn other financing news, Moody's downgraded Walt Disney's senior unsecured debt to A3 from A2, and lowered its short-term rating to P-2 from P-1. "The outlook is stable, although that outlook may be revised to negative if Disney does not take steps to de-leverage its balance sheet near-term," the rating agency stated in its report.
The downgrade results from the cumulative effects of the significant leverage increase resulting from Disney's pending $5.3 billion Fox Family Worldwide acquisition, a substantial amount of stock repurchase activity recently, and the expectation that Disney's parks, networks, and consumer products divisions will face significant pressure on performance over at least the next 12 to 18 months, Moody's adds.
The Jobs News Worsens
The job market has been going from bad to worse since the September 11 terrorist attacks.
In the past week, the aviation industry has lopped off more than 100,000 people from their payrolls. Other companies have also announced layoffs en masse in the past two weeks. No surprise, then, that last week new claims for unemployment benefits soared to a nine-year high.
Worse, an index that measures the number of jobs being offered across the U.S. fell in August to its lowest level since February 1983. And it's hard to believe this index will improve for September.
Meanwhile, the steady drumbeat of layoffs continues. The latest announcements:
- Milacron Inc. said Thursday it will eliminate nearly 800 more jobs by year's end, doubling the number of cuts previously announced.
- Exelon Corp., the electricity giant created by last October's merger of Philadelphia-based PECO Energy and Commonwealth Edison parent Unicom, said it will cut 450 jobs after announcing that it is reducing its third-quarter and full-year earnings outlook.
- About.com said it has cut about 60 jobs, or 20 percent of its workforce.
- The Motley Fool is cutting its staff by at least 50 percent this week, from 140 to 70, sources close to the company said on Thursday, according to Reuters. Motley Fool had 400 employees at its peak.
- Marriott International Inc. is preparing contingency plans for layoffs and reduced work schedules that could affect up to 20 percent of its headquarters staff, according to The Washington Post.
- NEC Corp. said it will cut another 300 jobs at a chip plant in California. It already cut 700 jobs at the facility earlier in the year.
Marsh to Create New Insurance Unit
Worried that insurance rates are going to rise in the aftermath of the terrorist attacks?
Here's some proof that these fears are well-founded. Marsh & McLennan Cos. said Friday that it has created a new Bermuda-based insurer, Axis Specialty Ltd. This is typically what happens in the insurance industry when capacity is disappearing and the climate for higher rates is improving.
Axis will begin underwriting policies in the fourth quarter and plans to offer insurance and reinsurance in a number of areas that are experiencing among the biggest rate hikes, such as property, aviation, war risk, and political risk, according to The Wall Street Journal.
Marsh said it will capitalize the new entity at $1 billion.
John Charman, the former president of Ace International, a subsidiary of Ace Ltd., will be chief executive of Axis Specialty, according to the published report.
"MMC is sponsoring the formation of Axis Specialty in response to demand for reinsurance and insurance capacity at a time when it is most needed in the marketplace," said MMC chief executive J.W. Greenberg in a statement.
In Brief
- The Congressional Budget Office said that with just two days left in the current fiscal year, tax receipts appeared to have declined this year for the first time since 1983. The budget surplus for the year that began last October 1 is estimated to be $121 billion, the fourth straight annual surplus but well below what economists had been forecasting just months ago, and less than half the previous year's total.
- Nasdaq on Thursday suspended until January 2 its rule that stocks be delisted if the price falls below $1 for an extended period.
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