Here and there may be the operative phrase. Heavy equipment giant Caterpillar cut its forecast for the year, but United Technologies Corp. said its orders decline had slowed and even stabilized. "We still expect a better back half," Chief Executive Officer Louis Chenevert said, The Wall Street Journal reported.
The chiefs at rival chip producers Advanced Micro Devices Inc. and Intel Corp. demonstrated the skittish corporate mood. AMD Chief Executive Officer Dirk Meyer said he didn't see "how anybody can say that we've hit the bottom." At Intel, CEO Paul Otellini, said last week "the worst is now behind us," even as Intel said its revenue would flatten out in the second quarter.
After the first flush of optimism in the financial sector, a sobering report from Bank of America Corp. this week put the economic morass into perspective. While reporting a profit of $4.2 billion in the quarter, investors were quick to note weak fundamentals. With rising unemployment, the bank's customer base would likely continue to default on loans, including mortgages and credit card debt. Capital One Corp., putting it bluntly, said charge-offs on credit cards were expected to rise above 10 percent, up from an already staggering 8.4 percent in the first quarter.
In the automotive sector, the worst may be yet to come. Chrysler LLC creditors flatly rejected the government's proposal to have them write off all but $1 billion of their $6.9 billion in secured debt and questioned the benefits of having Italian automaker Fiat jump into the fray, The New York Times reported Wednesday.
The government has proposed Chrysler form a partnership with Fiat and negotiate concessions from union workers. Both appear ready to make a deal with Chrysler, the Times said, although Fiat cannot move forward without union and creditor agreements in place.
But, the creditor group said Fiat would be a negative influence for at least three years as the company retooled Chrysler plants to suit its needs. The government, meanwhile, rejected the creditor's counter offer of a debt reduction to $4.5 billion plus a 40 percent stake in the restructured company and a seat on Chrysler's board.
At stake is the future of the country's third largest automaker, which has until April 30 to come up with a solution or risk losing government support. General Motors Corp. has until the end of May to convince the government it can restructure itself without filing for bankruptcy.
What are the odds? Chrysler has nine days to pull a rabbit out of its hat. Last week, GM's new CEO Fritz Henderson said a bankruptcy filing was "probable."
Copyright 2009 by United Press International.
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