Financial thoughts

Hewlett-Packard Co. cut its full-year sales outlook and announced another round of job cuts Tuesday as it reported that weak PC sales contributed to a 17% drop in quarterly profit.

But the company also said it was starting to see some improvement in consumer sentiment.

"We see some encouraging signs, and we saw some slight improvements with the U.S. consumer. I’m just not ready to call it better," said Chief Executive Mark Hurd on a conference call with analysts.

HP has benefited from its belt-tightening efforts but Hurd said that "the vast majority of cost savings are ahead of us."

In that vain, the company’s finance chief, Cathie Lesjak, announced on the conference call that the company would eliminate 6,400 jobs, or 2% of its total workforce of 321,000. That comes on top of more than 24,000 jobs being cut as part of the integration of tech services firm EDS, which HP acquired for $14 billion last May.

Meanwhile, slumping sales continue to cut into HP’s revenue, with sales of desktops, notebooks and printers falling by double-digits in the company’s second quarter ended April 30. Total net revenue fell 3% to $27.4 billion, meeting Wall Street’s forecasts.

HP (HPQ, Fortune 500) said it now expects full-year revenue to fall between 4% and 5%, worse than its previous range of 2% to 5%. That sent its stock down almost 5% in after-hours trading.

Hurd said he believes economic pressures will continue throughout the rest of the year. He said PC sales will be flat to slightly higher for the remainder of 2008 and maintained it’s too soon to call a bottom in the computer market.

Still, some analysts believe that HP may be too modest in its outlook.

"HP tends to be conservative with its guidance," said Dave Cearley, an analyst at tech consultancy firm Gartner. "There are signs that things are starting to bottom out, and companies are starting to loosen some of their purse strings. IT spending is opening up."

Profit beats Street: The Palo Alto, Calif.-based company reported second-quarter net income of $1.7 billion, or 70 cents per share. Results included a charge of 16 cents per share related to its purchase EDS. They also included a 2 cents per share charge related to a patent dispute.

Without the charges, HP earned 88 cents per share. That beat the 86 cents per share forecast of analysts polled by Thomson Reuters, who typically exclude one-time items from their estimates.

The company said it expects a profit of 88 cents to 90 cents a share in the current quarter, in line with analysts’ expectations.

Weak PC, printer sales. HP, the world’s largest personal computer maker, reported desktop and laptop sales slumped 13% and 24%, respectively, during the second quarter business card. Still, shipments were flat, which comes as little surprise: During the first three months of 2009, HP’s PC shipments rose 3%, although industry sales slipped 7%, according to tech analysis firm IDC.

PC sales, of which HP maintains a 21% market share, account for more than a third of the company’s revenue.

HP makes about a quarter of its revenue from its imaging division, which sells printers and printer toner and cartridges. Consumer printer sales were down 31%. HP raised toner prices in the past quarter, so printer supplies sales were slightly better than printer sales, falling 14 % in the quarter.

The company’s solutions division also endured mixed results. HP’s server business took a 28% tumble in sales as businesses migrated to cheaper solutions like off-site cloud computing. But HP also offers many of those less expensive solutions as part of its services business, which got a 99% sales boost last quarter to $8.5 billion.

HP’s services unit was the company’s most profitable division in the past quarter. Some see the company’s shift towards business products and services as a welcome change that will position HP for greater success in the future.

"I like HP’s product mix now better than a year or two ago," said Cearley. "The company was very heavily weighted on consumer devices, but it has changed to a company that is a balance between services, software and hardware."

Cost-cutting boost. HP’s cost-cutting measures, including a 5% company-wide salary cut implemented early in its second quarter, helped it navigate throughout the economic storm and offset some of the declines the company suffered in the quarter.

HP is also trimming costs by its ongoing efforts to eliminate overlap with EDS. The company announced in September that it would slash 24,600 jobs, or 8% of its combined workforce, by the end of 2011 as a result of the acquisition. To-date, half of those jobs have been eliminated, Hurd said Tuesday.

"Our services business continued to deliver strong profitability with an increased deal pipeline and the EDS integration tracking ahead of schedule," said Hurd.

HP is often compared to rival IBM (IBM, Fortune 500) because both are large players in a number of different tech businesses. Shares of HP have been flat since January, compared with IBM’s 25% rise and Dell’s (DELL, Fortune 500) 11% jump. But HP’s stock is up 41% since the stock market bottomed out on March 9, even with Dell’s 41% jump and better than IBM’s 26% rise. 

Source

ever!” border=”0″ class=”show” />

No layoffs — ever!

The global financial crisis has led many companies to slice payrolls, but these employers are staying loyal. Meet 9 of this year’s Best Companies that, as of mid-January, have never had a layoff.

View photos

How are you responding to the recent spike in gasoline prices?

• Driving less

• Considering a more fuel-efficient vehicle

• Taking mass transit

• Not doing anything

View results

jobs by

Find a Job

 

Find Jobs in

• Accounting
• Engineering
• Finance

• Management
• Marketing
• Sales

.220×200 –>

NEW YORK (CNNMoney.com) — American Express said Monday it will cut 4,000 jobs, or 6% of its global workforce, as part of an $800 million restructuring plan.

Under the plan, the financial services company will also cut investment spending and operating costs.

The 4,000 cuts are on top of the 7,000 positions the company said in October it would eliminate, according to American Express spokeswoman Joanna Lambert.

American Express’ (AXP, Fortune 500) first-quarter earnings call in April had indicated further job cuts were imminent, Lambert said. The reductions will occur across business units, markets and staff groups.

"Cuts were largely expected, but it’s a sizable amount," said Jason Arnold, analyst at RBC Capital Markets.

While the company "has remained solidly profitable," it continues "to be very cautious about the economic outlook and are therefore moving forward with additional reengineering efforts to help further reduce our operating costs," chief executive Kenneth Chenault said in a prepared statement.

Severance and other costs related to the job cuts will result in a $180 million to $250 million pre-tax restructuring charge.

Cuts in marketing and business development are expected to save $500 million, while operating cost reductions should save $125 million, the company said.

The cuts are in addition to the $1.8 billion cost benefit announced in October, and the tone of Monday’s release was "a little more guarded" than that of previous announcements, Arnold noted.

Credit crunch

"Our concern is that the credit issues in this country are substantial," Arnold said. "AmEx especially gets a lot of its revenue from spending, which is obviously under severe pressure."

Especially troubling, Arnold said, is the company’s percentage of charge-offs - when a creditor writes off an account balance as a "bad debt" instead of an asset, usually after six months of non-payment.

AmEx’s charge-offs are in the upper range compared with its competitor group, at 9.9% Arnold said.

JPMorgan Chase (JPM, Fortune 500) and Discover (DFM) have charge-offs of around 8%. Still, Bank of America (BAC, Fortune 500) and Citigroup (C, Fortune 500)’s rates exceed 10%, Arnold said.

"None of these charge-off rates are good numbers," Arnold said. "Unfortunately, with unemployment and the economic climate being what they are, it’s a tough time for spending." 

Source

Oil fell more than 3% to below $57 a barrel Friday as dealers became increasingly pessimistic about the outlook for global energy demand, hard hit by the economic slump.

Losses on equities markets and moderate gains in the U.S. dollar against other currencies also encouraged selling in the commodities markets.

U.S. crude for June delivery fell $2.28 to settle at $56.34 a barrel, down from a six-month high of more than $60 hit earlier this week.

The losses came after three top global energy forecasters - the International Energy Agency, the Energy Information Administration, and OPEC - downgraded in recent days their forecasts for global energy demand in 2009.

World energy use has been shrinking under the weight of the global economic recession for the first time in a quarter century, and the IEA said the decline in oil consumption in 2009 would be the steepest since 1981.

Oil’s losses were encouraged by weakness on Wall Street Friday as bank shares tumbled.

Oil prices have been tracking equities markets in recent months as traders look to stocks for signs of economic health that could affect world fuel demand no fax pay day loans.

The greenback was also up slightly against a basket of major currencies, having risen earlier following weak German economic data. A stronger dollar can limit investor demand for oil and other commodities.

OPEC, which has agreed to cut 4.2 million barrels per day of output since September, will meet later this month to revisit production policy. Iraq’s oil minister said Thursday the group would likely leave output unchanged if prices remain relatively strong.

Renewed unrest in Nigeria, Africa’s biggest oil producer, offered some support for prices.

Nigerian militants have hijacked two cargo ships in the Niger Delta and given oil companies until Saturday to evacuate staff, warning they would attack helicopters and planes after the deadline, after heavy clashes with the military. 

Source

Here’s something you probably haven’t heard a lot these days: Despite an industrywide credit clampdown, many banks have sustained their lending to small businesses, and some are even making more loans now than they ever did before.

They aren’t household names and they don’t often show up on high-volume lender lists, but community banks and specialty lending companies have kept their coffers open even as the vault doors at bigger banks swing shut.

"Those that are doing SBA loans on the sidelines are more willing to walk away. In top commercial banks, SBA lending is not a big part of their business," says Bob Judge, Partner at Government Loan Solutions, a firm that analyzes activity on loans backed by the Small Business Administration. "But for others it’s a major part of their business and if they pull out, their whole business would come undone."

The number of loans made through the Small Business Administration’s flagship program is down 57% in the first three months of the year, with participating banks lending $1.59 billion, almost half as much as they did in the same quarter last year.

The biggest pullback has come from some of the largest lenders: Bank of America (BAC, Fortune 500) and Capital One (COF, Fortune 500) have essentially stopped making new SBA loans, and nine of last year’s ten biggest lenders have sharply cut their loan volume.

The cuts have come for a variety of reasons, including the reduced creditworthiness of small businesses struggling against a recession. But small business owners still need loans and credit lines, and for many, the best place to find them right now are smaller lenders with specific geographic or industry expertise.

"Community banks may not look at the underwriting criteria the way a big business does," Judge says. "It’s now about getting back to basics - the community bank has an invested interest in making sure the community succeeds."

That’s been the case at Seattle-based Fortune Bank, which lends in Washington, Oregon and Idaho. In the SBA’s 2008 fiscal year, the bank made 20 loans totaling $8.5 million, which was quickly topped by the $10.3 million in loans the bank made within the first five months of the 2009 fiscal year.

Fortune recently funded an expansion loan for the Perio Institute, a dental surgery training business in Snoqualmie, Wash., that borrowed from Fortune to buy two companies. Those acquisitions will help Perio expand its offerings and boost sales. (For more stories from business owners who have gotten loans from banks that have increased their lending this year, see "Startup stories: ‘How we got the cash.’")

"This shakeup is changing banking back to what it was traditionally - relationships," says Scott Harvey, executive vice president of Fortune Bank. "A lot of lenders have expanded into areas where they see dollar signs, but they don’t know what they’re doing. The real future is having a bank actually work with customers."

Live Oak Bank in Wilmington, N.C., knows its customers’ business models thoroughly because it lends to clients of just one kind: veterinarians.

"We asked the SBA, ‘Who pays the best?’ Vets," says Live Oak chief founder Chip Mahan. "Vets are diligent. We were comfortable with that subsegment."

Since receiving its banking charter in May 2008, Live Oak has originated 125 loans totaling just under $150 million.

The secondary market meltdown

Live Oak originally planned to fund its operations by reselling bundles of its loans to investors. That’s a common way for banks to raise capital to issue the next round of loans: 45% of the guaranteed portion of SBA loans issued last year was resold on the secondary market, according to a recent Government Accountability Office audit of SBA data.

But after Lehman Brothers’ failure, that market quickly fell apart. Banks were stuck holding loans they couldn’t profitably sell, and several major lenders stopped making new loans.

Live Oak decided to find other funding sources and maintain its lending volume. "We didn’t want to tell customers no because the secondary market is frozen," Mahan says. "We just had to deal with it and raise more capital."

For banks that don’t rely on the secondary market, its collapse left them in a stronger position than their competitors. Huntington National Bank (HBAN), a large regional lender that keeps all the loans it originates, is likely to be one of the few large banks to increase its SBA lending volume this year paydayloans. Executives there say their tight geographic focus is key to the bank’s success: Huntington, based in Columbus, Ohio, only originates loans in areas of the Midwest where it has a local office.

"It’s critical to see where the business has been and where it’s going," Jeff Rosen, Huntington’s business banking director, says of his bank’s emphasis on getting close to the business owners it lends to. "Our bankers are local. Our SBA specialists are local."

Other lenders have developed expertise not in a geographic or industry niche, but in a specific type of loan. Mercantile Commercial Capital specializes in the SBA’s 504 lending program, which backs loans for commercial property purchases.

For Mercantile, other banks’ lending pullback is an opportunity to grab market share. CEO Christopher Hurn says he’s raising additional capital, increasing his marketing, and hiring some of the SBA loan officers laid off by other financial institutions. Mercantile won’t reveal how many small business loans it has made this year, but as of April, Hurn says the total is up 31% compared to last year, with a 22% increase in the dollar volume lent.

He’s also able to be pickier about the loans he funds. "We’re seeing a lot of physicians and lawyers buying property right now," he says. "They’re coming to me, a specialist firm, because there’s no credit elsewhere."

Credit squeeze

Specialist lenders across the board say they’re seeing increased demand as customers that once got loans from national banks get turned down and go searching for other options. Superior Financial, based in Walnut Creek, Calif. specializes in SBA express loans, which are capped at $25,000. Its loan volume is down about 20% from last year, but it’s still a robust lender: The company issued 560 loans in the first three months of 2009.

"From established businesses, we’re seeing a lot of businesses that have equity lines that have been canceled or reduced. These borrowers have good credit, but the bank has shut down [their credit line] because equity has evaporated," Superior CEO Tim Jochner says. "We doubled the applications we’ve received over the past year."

It’s a change community banks welcome. In recent years, with credit flowing freely, critics say that big banks cherry-picked their borrowers, making loans to the most attractive candidates and forcing local banks that rely on small business lending to hunt for riskier deals. Now, those banks can choose more carefully from among a broader applicant pool.

That’s a tough reality for entrepreneurs seeking financing, but it’s a transformation those in the industry hope will strengthen the nation’s banking system. The lending standards community bankers embrace are better for businesses and better for the nation’s economy, proponents say. "We do not have a past-due loan in the bank today," boasts Live Oak founder Chip Mahan.

"Big banks intruded into areas they had never been before," says Keith Ward, CEO of United Central Bank in Garland, Texas, a 20-year-old bank that specializes in serving Asian business owners. "Liquidity is tighter than ever, and the competitive playing field is so uneven. Small banks are paying for the mistakes of larger banks."

In the first quarter of 2008, United Central originated 57 SBA-backed loans, totaling $33.4 million. But in this year’s first quarter, its volume dropped to just eight loans, worth $3.2 million, a plunge Ward attributes entirely to the secondary-market freeze.

Unable to sell its existing loans, United Central began looking elsewhere for the funds to keep making new ones. In late February, the bank collected a $22.5 million investment from the Treasury’s bailout program, which it plans to use to increase its small business lending.

This crisis may give small banks an opportunity to level the playing field and finally compete with the large national lenders, Ward says - an shift that he believes can help prevent the current economic crisis from recurring. He is looking forward to recapturing some of the customers his bank has lost to larger rivals.

"I’ve been in banking many years now, but right now is very unique. We have strengthened our standards. We’re receiving applications from people who [have good collateral] and can make extraordinary purchases," he says. "Interest rate is not an issue. They just want a bank." 

Source

Wal-Mart Stores, the world’s largest retailer, reported fiscal first-quarter earnings Thursday that met analyst expectations, although sales declined from a year earlier.

Wal-Mart (WMT, Fortune 500) logged a profit of 77 cents a share in the quarter ended April 30, up from 76 cents a year earlier, matching analysts’ forecasts, according to Thomson Reuters.

But the retailer blamed fluctuations in currency rates for hurting net sales for its international operations. Citing an 11% drop in net international sales, Wal-Mart said total company sales totaled $93.5 billion for the quarter, a slight decrease of 0.6% from $94 billion a year ago.

Without the negative impact of currency exchange rates, the company said its net sales for the quarter would have increased 4.5% to about $98.3 billion in the period.

The retailer also issued an upbeat forecast for its second quarter, saying it expects to log a profit of between 83 to 88 cents a share. Analysts currently expect the company to earn 85 cents a share.

However, company executives cautioned that Wal-Mart’s U.S. business in the second quarter will be up against the sales gains posted last year from the economic stimulus checks that were sent out to households in the second quarter.

Recession’s impact: Unlike most of its peers, Wal-Mart has benefitted from the recession as consumers across all income levels trade down on prices and shop at the discounter for everyday goods.

In April, the company reported a same-store sales increase of 5%. Same-store sales are a key gauge of a retailer’s performance and measure sales at stores open at least a year.

Wal-Mart’s same-store sales gain in the month trounced that of rivals Costco (COST, Fortune 500) and Target (TGT, Fortune 500), indicating that Wal-Mart is also growing its market share amid the economic downturn.

For the quarter, the retailer logged a same-store sales increase of 3.7%, excluding gasoline purchases.

Wal-Mart announced last week that it will no longer offer same-store sales reports on a monthly basis, putting them out quarterly instead instant personal loans guaranteed.

For the second quarter, the company expects to see same-store sales flat to up 3% from a year ago.

At least one analyst said Wal-Mart’s same-store sales gains in the first quarter, coupled with its second-quarter sales guidance, could indicate that the weakness in consumer spending may have bottomed.

Retail economists often look to Wal-Mart as a barometer of the economy and the health of the consumer given that more than 200 consumers shop at Wal-Mart’s discount stores every week.

"In hindsight, it may be clear that the turning point began in the first quarter," said Deutsche Bank North America analyst Bill Dreher, who has a "buy" rating on Wal-Mart with a $64 price target on the stock.

"We were very worried that Wal-Mart would issue a negative [same-store] sales guidance for the second quarter. It’s very encouraging that they didn’t," Dreher said.

Beyond groceries: Dreher said one of Wal-Mart’s goals is to get its customers to shop not just for low-priced groceries but across discretionary merchandise, including home. clothing and electronics.

"With the demise of Linens ‘N Things, there’s opportunity for Wal-Mart to grab some of the market share in the home good area," he said. "We’re looking forward to following their progress on that front.

In a pre-recorded call to discuss the results, Wal-Mart CEO Mike Duke said he was confident that the recent sales increases won’t slow down if the recession ends

"This isn’t a short-term phenomenon," Duke said in the call. "We believe customers’ behavior and mindset has changed. When economic conditions improve, we believe customers who shop Wal-Mart today will stay with us."

– The analyst quoted in this story does not personally own shares of Wal-Mart but Deutsche Bank does have an investment banking relationship with Wal-Mart. 

Source

Intel Corp.’s orders and billing patterns so far in the second quarter have been slightly better than expected, Chief Executive Paul Otellini said Tuesday.

He told investors that second-quarter sales depend on how they fare in June but "so far, so good" - in remarks that sent shares of the world’s biggest chip maker up as much as 4% in extended trading.

"We are halfway through Q2," Otellini said. "In terms of our order pattern and our billing pattern, it’s a little better than expected."

Last month, Otellini said the worst was over for the battered tech sector as Intel reported its first-quarter earnings, but its shares slid as executives said economic uncertainty prevented them from giving a detailed outlook.

Intel (INTC, Fortune 500), which controls 80% of the microprocessor market, is seen as a bellwether for the personal computer and technology industry. But it has struggled in the economic downturn, shutting plants and trimming 1,400 jobs since the fourth quarter.

Otellini said Tuesday that Intel should end the year with around 78,000 employees, down about 25% from a peak of 103,000 in 2006.

Intel has said it was planning for second-quarter revenue to be flat with the $7 affordable car insurance.1 billion reported in the first quarter. But some analysts said the guidance was conservative, and Reuters Estimates showed analysts expecting a slight increase in each quarter for a year-end total of $30.3 billion.

But that would still be more than $7 billion less than last year’s revenue, with earnings per share seen falling more than 40% to 53 cents a share, according to Reuters Estimates.

Analysts say Intel’s biggest concern is filling its factories. The company posted a first-quarter gross margin of 45.6%, down from 53.1% in the fourth quarter. About 6 percentage points of that decline came from factory under-utilization charges, Intel has said.

But research from iSuppli last week show demand for portable phones and computers may cause factories to run closer to capacity. Chip plants, which ran at less than half their capacity in the first quarter of 2009, should operate at three-quarter capacity by the fourth quarter, iSuppli said.

Shares in the Santa Clara, Calif.-based Intel were quoted at $15.73 in extended trading, up 3.4% from their Nasdaq close of $15.21. 

Source

Key Senate negotiators have reached a deal on legislation targeting credit card rates and fees, the lead Democratic senator on the issue said Monday.

The development could spur the bill to a Senate vote as soon as this week, but more fights remain in fully reconciling the Senate bill with an earlier version that passed the House.

A congressional crack down on credit card companies has grown increasingly popular. President Obama and top White House advisers got involved in negotiations a few weeks ago. Obama said Saturday he’d like to have the bill on his desk by Memorial Day.

The office of Sen. Chris Dodd, D-Conn., chairman of the Senate Banking Committee, released a summary of legislation Monday.

According to copies of the legislation distributed by lobbyists, the Senate’s new bill is tougher than a similar bill passed in the House by 357 to 70 vote last month. The Senate bill still faces possible amendments and could change further.

Among other things, the Senate bill would:

• Go into effect nine months after passage, which is sooner than the House bill.
• Ban gift card issuers from charging "dormancy fees" on cards redeemed too late; the House bill doesn’t address gift cards.
• Prevent those under 21 from getting a credit card unless they can prove they have an income stream to pay off debt or have their parent’s signature; the House bill places less onerous restrictions on those under 18.
• Allow credit card issuers to raise fees if a consumer is 60 days late on a payment; the House bill and Federal Reserve rules allow fee hikes after payment is 30 days late.

The House bill, which won 105 Republican votes, cements into law many changes to credit-card practices that the Federal Reserve passed last year faxless payday loan guaranteed. Among them: preventing credit-card issuers from hiking interest rates based on nonpayment of unrelated bills.

However, the Fed changes don’t go into effect until July 2010 and could be more easily undone than any consumer protections passed by Congress, proponents of the bill say.

Dodd has been working for weeks on a compromise with the top Republican on the Banking Committee, Sen. Richard Shelby, R-Ala. Dodd has also been working with the House to try to get the bills more aligned with one another.

Credit card industry advocates caution that the Senate bill won’t be the final word on the issue, and they plan to fight some of the provisions.

"We have serious concerns with the Senate bill, and we oppose any amendments to the bill," Scott Talbott, a lobbyist for the Financial Services Roundtable, an industry group.

One issue that was pending was how to treat cardholders who roll over debt from older cards to take advantage of low interest rates on new ones. Such consumers sometimes face two different rates on the new card because companies credit payments against the lowest interest rates first.

The Senate bill now reflects the House bill in forcing any payment to be entirely deducted from the balance at the highest interest rates.

New Fed guidelines that take effect next July would ensure that balance repayments are credited proportionally, giving consumers a chance to whittle down debt accrued at the highest interest rates. 

Source

American International Group Inc (AIG) and the U.S. government expect a multi-year restructuring of the insurer, the Wall Street Journal said, citing an internal AIG memo.

The April 23 memo described an initiative code-named ‘Project Destiny’, which involved a 45-day review of AIG’s businesses that is supposed to lead to the multi-year restructuring plan, the paper said.

A large part of the memo, sent to employees by email, consisted of an update on the project by AIG Chief Restructuring Officer Paula Reynolds, according to the paper.

The project may be discussed at a Congressional hearing about AIG, scheduled for Wednesday, the paper said online cash advance.

An AIG spokeswoman could not be immediately reached for comment by Reuters.

The U.S. government has stepped forward three times to help AIG stay afloat, committing some $180 billion in its efforts to rescue the insurer from huge mortgage-related losses. In exchange, the government has an 80 percent stake in AIG.

(Reporting by Ajay Kamalakaran in Bangalore; Editing by Muralikumar Anantharaman)

Read more

President Obama on Thursday offered a more detailed look at his 2010 budget proposal, which includes recommendations to cut funding for 121 federal programs and save $17 billion in 2010.

"There is a lot of money being spent inefficiently, ineffectively, and — in some cases — in ways that are actually pretty stunning," Obama said.

The $17 billion in savings amounts to roughly 0.5% of the more than $3.5 trillion in spending approved for next year, or 1.2% of the projected $1.4 trillion deficit next year if the president’s overall budget is adopted.

Obama said it nevertheless is real money — even by Washington standards.

"To put this in perspective, this is more than enough savings to pay for a $2,500 tuition tax credit for millions of students as well as a larger Pell Grant — with enough money left over to pay for everything we do to protect the National Parks," he said.

But it’s not necessarily money that would represent an actual reduction in spending. Rather, it’s money that is more likely to be reallocated to other endeavors - from a program the administration assesses is not working to a similar program that is.

"The spirit is to eliminate duplication and measure what works and what doesn’t and put additional resources into things that are working," said White House budget director Peter Orszag in a call with reporters.

Roughly $11.5 billion of the savings would come from the discretionary side of the fiscal 2010 budget — that is, for programs whose funding is not automatic. And roughly half of the savings would come from non-defense programs.

The biggest proposed cuts and reductions in the president’s budget are defense-related:

• Recruiting and retention adjustments: $6.24 billion
• Future combat systems of manned ground vehicles: $2.98 billion
• F-22 raptor fighter aircraft: $2.9 billion
• Transformational satellite: $768 million
• Joint strike fighter alternate engine: $465 million

In any given year, defense spending typically accounts for more than 20% of the total budget.

Among the smaller programs on the president’s chopping block are a long-range navigation system made obsolete by the GPS (cost: $35 million); an early education program called Even Start, the performance of which had been poor (cost: $66 million); and a Department of Education attach

The pace of U.S. job losses may be slowing, according to two private reports released Wednesday.

Automatic Data Processing, a payroll-processing firm, said private-sector employment decreased by 491,000 in April, a 31% improvement from the revised 708,000 drop in March.

Economists surveyed by Briefing.com had expected a loss of 643,000 jobs last month.

The report, which is based on payroll data from 500,000 U.S. businesses, showed the number of job cuts declined across all sectors in the survey.

"There’s a sense here of a turn, which is good news" said Joel Prakken, an ADP spokesman and chairman of Macroeconomic Advisers, LLC. But the job market "is likely to decline for at least several more months, although perhaps not as rapidly as during the last six months."

Separately, outplacement firm Challenger, Gray & Christmas Inc. reported that the number of layoffs announced in April fell for the third straight month.

Job cut announcements by U.S. employers totaled 132,590 in April, an improvement of 12% from March’s 150,411 cuts. It was the lowest total since last October, according to Challenger, but the April figure was still 47% higher than job cuts announced in the same month a year ago.

The government/non-profit sector was hit the hardest for the second month in a row, Challenger said, with 27,624 announced job cuts in April free credit report. The automotive industry had the second highest tally of planned cuts, thanks in part to further cuts announced at General Motors.

"Job cuts are still at recession levels, but the fact that they are falling is certainly promising and may suggest that employers are starting to feel a little more confident about future business conditions. Hopefully, the next few months will bring further relief, as we tend to see downsizing activity slow during the summer months," John Challenger, chief executive officer of Challenger, Gray & Christmas, said in a statement.

Employers have announced 711,100 job cuts so far this year. That is 145% percent higher than the 290,671 job cuts announced in the first quarter of 2008, Challenger said.

The reports set the tone for the government’s monthly jobs report due Friday. The Labor Department report is expected to show that the economy shed 620,000 jobs in April, less than the 663,000 reported for March, according to a consensus estimate of economists complied by Briefing.com. The unemployment rate is predicted to rise to 8.9% from 8.5%. 

Source