The year is off to a somber start for many workers, with news of more job cuts coming amid tough times generally. Major companies announced massive layoffs this week, blaming the weak economy.
AOL Inc. chief executive Randy Falco sent an internal memo to employees today about plans to cut about 700 jobs, 10 percent of its workforce. AOL, a division of Time Warner Inc., serves as an Internet services and media company. But with the recession, many online marketers are tightening advertising budgets. Other cost-cutting measures include freezing salary increases.
Starbucks announced today plans to slash as many as 6,000 jobs and close 300 stores this year. The Seattle-based coffee giant reported a 69 percent drop in profit for the fiscal first quarter. Last summer, the company announced it would close 600 stores, laying off 1,000 employees.
In a statement to Reuters, the company cited the economy as the main reason for cutting jobs.
Stores have struggled financially because of poor retail sales in December and throughout the holidays. Other moves by the company include suspending senior salary increases, operating expenses and holding off on new store openings.
Besides general merchandise, the discounter also sells food and operates a co-branded credit card partnership with Visa. According to the company's October 2008 corporate report, Target maintains about 1,685 stores across 48 states. Soon after the company released its news statement, Target shares closed up 19 cents at $33.34 per share on the New York Stock Exchange today.
Several major U.S. and foreign companies announced thousands of new layoffs in the past few weeks as they work to adjust to new economic realities.
Sprint Nextel, the nation's third largest wireless carrier, was one of at least four large U.S.-based companies announcing large-scale job cuts. Pfizer, which is buying rival pharmaceutical giant Wyeth for $68 billion, is planning to cut 8,000 jobs by the end of March, about 13 percent of its work force.
"Labor reductions are always the most difficult action to take, but many companies are finding it necessary in this environment," Sprint Nextel CEO Dan Hesse said in a statement.
The closure of Home Depot's high-end EXPO stores, meanwhile, will affect 7,000 employees, or 2 percent of the company's work force. In addition, Home Depot today said it would also institute a salary freeze for company officers.
Construction equipment manufacturer Caterpillar said it would cut 20,000 jobs -- nearly 20 percent of its workforce -- after reporting that its profits fell 32 percent. The company said the job cuts were designed to help "deliver our 'trough' profit target" of $40 billion in sales and revenues.
President Obama said today in his speech on fuel-efficiency standards that layoffs at Caterpillar, Home Depot, Sprint Nextel and elsewhere "are not just numbers on a page."