American Express to cut 7,000 jobs....naturally its stock price rises.

[marmar]

.....no more of those pesky employees and their damn livelihoods to worry about.



from MarketWatch:



American Express to cut 10% of work force
Reductions amount to about 7,000 jobs
By Greg Morcroft, MarketWatch


NEW YORK (MarketWatch) -- Highlighting that even some of the most creditworthy and wealthiest Americans are having trouble paying their bills, American Express Co. said Thursday that it's cutting 10% of its staff, or about 7,000 people, in an effort to save money.

Also, American Express will suspend management salary increases in 2009, and institute a hiring freeze on open positions.

The Dow Jones Industrial Average component said it would take a pre-tax restructuring charge of up to $440 million against fourth-quarter results to cover job-cut expenses.

Shares of American Express traded 2% higher in morning action.

The job cuts will be made across the company's business units, American Express said.

The move comes amid what CEO Ken Chenault called "one of the most challenging economic environments we've seen in many decades."

The credit crunch has made it harder for financial-services companies to package up and sell on, or securitize, the loans they make. That's an important source of funding for American Express, which isn't connected to a large bank, like rival credit-card issuers Capital One Financial and Bank of America. .........(more)

The complete piece is at: http://www.marketwatch.com/news/story/American-Express-cut-10-work/story.aspx?guid=%7BAF32DE3C%2D5513%2D475D%2DB8F5%2D838F3CD757FA%7D

[angstlessk]

1. this is quite confusing....seems when each company lays off large numbers of people

their stock numbers go up..but when the employment numbers come out and unemployment is up...the stock market goes down????

[TwilightZone]

2. It makes sense, actually.

Payroll is one of the largest expenditures of most companies, so cutting payroll directly impacts the bottom line. It's also one of the easiest ways to do so.

[marmar]

3. It's the insanity of the way the markets work......

There's the initial, "Whew, they cut the payroll" ..... followed by the, "Oh shit, nobody has any jobs to keep buying this crap!"

They can't see the forest through the trees.