Few Bright Spots amid Losses and Job Cuts

02/05/2009 12:41 pm EST

Focus: GLOBAL

Nancy Zambell

Editor, Wall Street's Best Investments and Wall Street's Best Dividend Stocks

Companies around the globe continued posting mostly dismal financial results this past week. Walt Disney (NYSE: DIS) reported profits fell by 32%. General Motors (NYSE: GM) saw a 49% drop in sales. And things are so bad at Motorola (NYSE: MOT) that the company suspended its dividend. And that’s just in the US!

Oil giant BP (NYSE: BP), although recording a 39% increase in 2008 profits, took a fourth-quarter loss, its first in seven years, because of falling oil prices. The company also said it would have to cut more than the 5,000 jobs it had previously announced.

Japanese technology behemoth Hitachi (NYSE: HIT) reported a loss of $4 billion for the first nine months of 2008 and announced that it is cutting up to 7,000 jobs.

Worldwide, January sales results from the automakers were bleak, culminating in 15 straight months of declines. Ford (NYSE: F) saw a 40% drop, the worst in the US.  Daimler’s (NYSE: DAI) Mercedes-Benz sales in the US plummeted 43%, Toyota’s (NYSE: TM) sales fell 34%, Nissan’s (NASDAQ: NSANY) sales were down 30%, and Volkswagen’s (XETRA: VOW.DE) dropped 12%.

But some rare good news about real estate brought smiles to global exchanges Tuesday. The National Association of Realtors’ pending home sales index sparked rebounds around the world when it reported its first increase since August, soaring 6.3%.

While that news is most welcome, we are from being “out of the woods” just yet. The Ponzi schemes, frauds, and downright mismanagement in the financial sector continue. At last, Sir Tom McKillop, chairman of Royal Bank of Scotland (NYSE: RBS), stepped down—earlier than expected—after helping run that institution’s shares from 550 pence down to 10.3 pence earlier in the year.

Barclays’ (NYSE: BCS) shares are in the doldrums, following credit ratings agency Moody’s warnings of possibly another £17 billion in write-offs to come.

And after begging for $45 billion from the Troubled Asset Relief Program (TARP), Citigroup (NYSE: C) has finally (through much prodding) decided to actually help the taxpayers who bailed it out—by allocating $36.5 billion for consumer and mortgage loans.

At the same time, the bank is feeling pressure to drop its $400-million marketing deal with the New York Mets, which includes putting Citi’s name on the new stadium. That may be easier said than done, but again, what are these guys thinking?

In London, the Times Online reported that Bernard Madoff’s alleged $50-billion (£34.8 billion) fraud may turn out to be more expensive and may affect three million folks around the world before it’s ultimately played out.

Unfortunately, the economic crisis continues to spread. According to the Telegraph, Spain reported its worst-ever one-month surge in unemployment—a loss of 200,000 jobs in January—which increased its unemployment rate to 14.4%. Spain’s labor secretary reported that three million folks are unemployed and that the number could rise to four million by year’s end. That country just lost its AAA Standard & Poor’s credit rating, too.

Central banks are still trying to pump liquidity into the markets. In the US, the Federal Reserve Bank has extended currency swaps with 13 central banks for six months, through October 30. The Bank of Japan announced a plan to ease credit by spending up to one trillion yen in buying shares held by commercial banks. Sweden is ready to throw $6 billion at its banks, and Australia debuted its own $26-billion rescue strategy.

Ireland has a new government and workers in France are striking again.

President Obama is trying to bring Republicans and Democrats into bipartisan agreement on what looks like $900-billion stimulus plan. But some seemingly protectionist elements in that package are coming under fire from global leaders.

Meanwhile, the Global Investing advisors in MoneyShow.com are trying to make sense of it all. This week, Lawrence Roulston, editor of Resource Opportunities, gave us an overview of the metals markets for 2009. Allan Nichols, editor of Morningstar InternationalInvestor, recommended a generic drug maker, while Tom Lydon, editor of ETF Trends, provided his take on the Japanese markets.

I’m at The World Money Show in Orlando, where I will be interviewing some of the world’s most knowledgeable advisors. More on that next week.

Nancy Zambell edits Global Investing for MoneyShow.com. Her opinions are her own and not necessarily the views of InterShow or MoneyShow.com.

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