Louis Proyect lnp3 at
Tue Dec 19 07:29:45 MST 2000

>From today's (Dec. 19) NY Times:

Aetna to Shed Customers and Jobs in Effort to Cut Health Care Costs


Aetna Inc., the nation's largest health insurance company, said yesterday
that it would shed two million of its 19 million customers over the next
year as it raises premium charges and struggles to make its troubled
managed care business more profitable.

The company also announced plans to eliminate 5,000 jobs, about 13 percent
of its work force. The cuts, more than half from attrition, will include
some reductions among its 2,300 employees in New Jersey.

About 1.5 million of the departing customers will be employees of companies
that drop Prudential Health Care rather than pay steep premium increases,
Aetna said. The company expects them to end their Prudential coverage by
the end of next year. Aetna bought the unit in 1998.

Aetna also plans to close unprofitable H.M.O.'s that insure 340,000
Medicare beneficiaries and sell or close health maintenance organizations
that cover 300,000 to 350,000 employees of private companies...


Market Place: Time Warner Scales Back Its Forecast


Time Warner scaled back its financial
forecast yesterday, sending its shares and those of its merger partner,
America Online, plummeting by more than 13 percent.

The announcement, coming only a few days after Time Warner won approval
from the Federal Trade Commission for its merger with AOL, stirred
investors' concern about the growth prospects for the combined company.

Time Warner's shares fell $9.47 a share, to $63.25. AOL dropped $6.72, to

"This is not a striking surprise," Bruce Greenwald, a professor of finance
and economics at Columbia Business School said of Time Warner's news. "When
companies seek to create shareholder value with far- fetched strategic
mergers, it almost always masks shortcomings in their underlying businesses."

Some analysts had already been wary of Time Warner's financial reporting,
based on disputes over figures for previous quarters. For such analysts,
Time Warner's revision yesterday raised some questions about the company's

Instead of the cash-flow growth of 13 percent or more for this year that
Time Warner had been predicting for months, the company said yesterday that
the figure would be only about 11 percent...


Gillette Plans to Reduce Work Force by 2,700


Gillette said yesterday that it would shut down 8 factories and 13
distribution centers and lay off 2,700 employees, about 8 percent of its
work force.

The company will wait until January to announce which plants will be shut
down, which means employees will go through the holidays without knowing
whether they will have jobs in the new year.

Gillette, which does a third of its business in Europe, has suffered over
the last two years because of the weak euro. In addition, sales of the
company's Duracell batteries have fallen about 5 percent this year as
competitors have lowered their prices. As a result, Gillette's stock price
has lost about half its value since March 1999 and in October, Warren E.
Buffett, a Gillette board member and investor, forced the company's chief
executive to resign...


Daimler Says Chrysler's Problems Are Worsening


FRANKFURT, Dec. 18 -DaimlerChrysler indicated today that losses at
Chrysler, its troubled American car division, would balloon to $1.4 billion
in the fourth quarter. And next year may be worse.

The disclosure confirmed widespread suspicions that Chrysler's slide had
accelerated sharply the last several weeks, as an abrupt slowdown in the
American car market has aggravated Chrysler's home- grown problems. It also
raises new questions about the survival prospects of Jürgen E. Schrempp,
DaimlerChrysler's chairman and architect of the two-year-old merger of
Daimler-Benz and Chrysler.

In a letter to shareholders today, Mr. Schrempp said Chrysler would
probably finish 2000 with a profit of 500 million euros (about $445 million).

Because Chrysler earned $2.4 billion in profit in the first half of the
year and then lost $512 million in the third quarter, that means that
Chrysler's quarterly loss will nearly triple to about $1.4 billion in the
final three months.

The losses at Chrysler have eliminated about half of the total operating
profit for DaimlerChrysler, which is based in Stuttgart. After excluding
special one-time gains, including the sale of its aerospace unit and a
majority stake in its information-systems subsidiary, Mr. Schrempp said
DaimlerChrysler's profit would drop to about 5 billion euros ($4.49
billion) in 2000 from about 10.3 billion euros ($9.24 billion at current
exchange rates) in 1999...


Loan Woes at Japan's Banks Are Reported to Be Deepening


TOKYO, Dec. 18 - One day after the government declared two credit unions
insolvent, a Japanese newspaper released a survey showing that the loan
portfolios of Japanese banks were deteriorating after several large
corporate bankruptcies.

The Yomiuri Shimbun, Japan's largest-circulation daily newspaper, said on
Sunday that bad loans had climbed 1.8 percent, to 32.9 trillion yen, or
about $293 billion. The newspaper used the government's definition of bad
loans for its survey, but private economists and analysts using more
stringent criteria for classifying loans would put the figure much higher.

On Saturday, the Financial Reconstruction Commission, the agency
responsible for the overhaul of Japan's financial system, declared Kansai
Kogin and Tokyo Shogin, two credit unions that catered to the Korean
community here, insolvent and put them under court administration.

Many of Japan's credit unions are insolvent, but the government has been
slow to close them because it is loath to add to the public cost of the
financial system cleanup at a time when the public is increasingly angry
about how its tax money is being spent...

Louis Proyect
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