Another Day, Another Few Big-Name Warnings (Updated)

What's bad for General Motors is still bad for America.

The world's largest car maker said Tuesday that it will can 16,000 workers worldwide, or 4 percent of its total workforce.

It also joined the other two of the big three-- Ford Motor and DaimlerChrysler--in warning that it would miss earnings estimates.

GM also said it will close an engine plant in Lansing, Mich. and a passenger car production plant in Luton, England.

It will also phase out Oldsmobile, its longest- survivingbrand, as part of a larger restructuring.

These announcements will have a ripple effect on the economy, impacting parts suppliers, dealers and companies that serve them.

Even the local sandwich shops and newstands are affected by these moves.

Meanwhile, over in computer land, Compaq Computer Corp. said it would miss quarterly earnings and revenue estimates. Thus, the world's No. 1 personal computer maker joins a rash of other computer makers, chip makers and printer makers who have warned about unexpected slowdowns.

Compaq blamed businesses as well as consumers for the shortfall. Most worrisome: It said it is experiencing a slowdown in demand for its low-end servers, especially the kinds sold to dot-coms.

However, it said major corporations are still rolling out spending plans.

Compaq also said it expects to take a non- cash, non-operating charge of ``somewhat more than'' $1 billion in the quarter to reflect the decreased value of chiefly Internet-related investments.

Other Earnings Disappointments

• Whirlpool Corp. said that fourth quarter sales would come in below expectations because of a decline in the appliance market, and that it would restructure its business and cut jobs in 2001, incurring charges of between $300 million and $350 million.

• Claire's Stores Inc. said fourth-quarter earnings would come in below expectations. It said earnings would amount to between $0.70 and $0.80 per diluted share in the fourth-quarter ending Feb. 3, much less than the consensus forecast of $1.12 per share.

• Delphi Automotive Systems cut its fourth- quarter and 2001 earnings forecasts and plans to sell some factories and warehouses, consolidate corporate functions and step-up cost cutting overall. It also said it will turn around or sell underperforming business units that account for between $4 billion and $5 billion.

• Ask Jeeves Inc. said it will cut 25 percent of its workforce and take a fourth quarter charge of $10 million to $12 million for a restructuring. It recently issued an earnings warning and its CEO resigned.

• Praxair Inc. said it will lay off about 750 people, or about 3 percent of its work force. It also said it will take a $150 million, pretax charge against its fourth-quarter earnings.

Workers Take Chairman Hostage
Hundreds of Korean bank workers held their chairman hostage Wednesday. The reason: They oppose a planned merger that they fear would lead to layoffs.

Kim Sang-hoon, head of Kookmin Bank, one of South Korea's largest and healthiest banks, was being detained in his seventh-floor office by 300 employees.

The standoff began late Tuesday evening after reports that Kookmin Bank was mulling a merger with Housing and Commercial Bank, which is also deemed to be a healthy bank.

The merger announcement was scheduled for Wednesday.

About 2,000 Kookmin union members barged into their bank's head office in central Seoul and kept their bank chairman in his office. All but 300 returned home early Wednesday.

Ford, GM Take Stakes in Commerce One
Ford Motor Co. and General Motors Corp. will invest a total of $1.26 billion in Commerce One.

The transaction, in effect, makes Commerce One, a business-to-business software company, a partner in the automakers' Covisint online exchange.

Commerce One will issue to GM and Ford 14.4 million shares apiece, with each stake valued at about $631.8 million. The combined number of shares represents a 14 percent interest in Commerce One.

Half the shares for each company will be held in escrow until 2002. They will be released to Ford and GM upon satisfaction of certain conditions. If conditions are not met, the shares will be released to the two automakers in mid-2004.

Commerce One said it will restructure into a holding company and get a 2 percent equity interest in Covisint, the Internet exchange started by Ford, GM and three other automakers.

Commerce One's stake in Covisint will be held in escrow until the completion of the restructuring, on which Commerce One shareholders are to vote next year.

Commerce One will be entitled to a share of the revenue generated by the Covisint exchange for an expected 10-year term, as well as be paid for consulting services it provides to Covisint.

Microsoft Signs Permanent Pact
Well, it looks like the legendary temporary Microsoft workers will finally be invited to the company Christmas party.

The software giant has settled an eight-year class-action lawsuit, which claimed that Microsoft improperly denied benefits to temporary employees.

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