News is circulating the web of two companies hit hard by the falling economy. First off is Motorola, who I’m surprised is still in business at this point. I mean honestly, have they put out a single product that people got stoked about in the past 2 years? I guess right now they’re trying to market a clear topped flip phone… fucking brilliant idea.
Motorola will further reduce its workforce in 2009 by approximately 4,000 positions. This reduction will include approximately 3,000 positions associated with the Mobile Devices business and approximately 1,000 positions associated with corporate functions and other business units. The workforce reductions announced today are expected to begin immediately and are incremental to the 3,000 workforce reduction actions previously announced during the fourth quarter of 2008.
Today’s workforce reductions, plus other incremental cost-reduction initiatives, including those announced on December 17, 2008, are expected to result in additional annual cost savings of approximately $700 million in 2009. The savings from these actions, together with the $800 million of savings from other actions announced during the fourth quarter of 2008, are expected to result in aggregate cost savings of $1.5 billion for the Company in 2009.
The second of the two situations at hand is a little more severe. We heard in late 2008 that Circuit City was doing poorly and had to close a number of it’s stores to stay above water. Things apparently took a turn for the worst, as the bankrupt company has officially thrown in the towel and will be liquidating all of their assets. The blame for their fall after being in business for over 60 years is being placed both on the economy and big-box stores like Best Buy and Wal-Mart.
Circuit City Stores Inc., the bankrupt consumer-electronics retailer, will shut down all of its 567 U.S. stores after failing to find a buyer that would keep the chain in operation.
Great American Group WF LLC; Hudson Capital Partners LLC; SB Capital Group LLC; and Tiger Capital Group LLC won the right to liquidate the company’s assets in a court-sanctioned auction. Circuit City creditors are guaranteed to get the first 70.5 percent of the value of the $1.2 billion to $1.3 billion in inventory. Stockholders will probably get nothing, Circuit City said today in a statement.
Sales declined at Circuit City, once the biggest U.S. electronics retailer, as it lost market share to Best Buy Co., Wal-Mart Stores Inc. and online retailers. On Nov. 10, it filed for bankruptcy in Richmond, Virginia, after suppliers cut off credit and demanded cash up front for shipments. At the time, Circuit City, which employs more than 30,000 people in the U.S., planned to exit court protection as a going concern.
â€œYou can’t ignore the economic backdrop,â€ said David Schick, a retail analyst at Stifel Nicolaus & Co. in Baltimore. â€œHad Circuit run into all these problems and had to go Chapter 11 in any other year, they wouldn’t have had this outcome.â€
What’s worrying me is that I’m still not seeing signs of this slump stopping anytime soon. Maybe the markets are all just waiting until Tuesday when Obama get’s into office in order to start going up… either that or we’re all pretty much screwed.