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bbymgr
01-23-2009, 09:55 AM
Harley to cut 1,100 jobs as 4Q profit falls

MILWAUKEE Harley-Davidson Inc. says it will cut 1,100 jobs over two years and scale back its operations as its fourth-quarter profit slid amid the weak motorcycle market.

Harley says it will consolidate two engine and transmission plants in Milwaukee into another Wisconsin facility. It will shrink its paint and frame operations at its York, Pa., plant and close a distribution facility in Franklin, Wis.

The company also says it will end its domestic transportation fleet, and plans a 10 percent to 13 percent reduction in shipments for 2009.

Harley says earnings fell 58 percent to $77.8 million, or 34 cents per share, from $186.1 million, or 78 cents per share, last year. Sales fell 6.8 percent to $1.29 billion.

Analysts expected earnings of 57 cents per share on sales of $1.29 billion.

6ballsisall
01-23-2009, 09:58 AM
Ouch. Hate to keep reading about all these massive layoffs. (i.e. 5k w/ Microsoft yesterday, etc...)

I'm not a betting man any longer but I think one that is could place a wager on late this year for the bottom to be reached IMO. The big question in mind is how long we sit at the bottom

JohnE
01-23-2009, 10:01 AM
Ouch. Hate to keep reading about all these massive layoffs. (i.e. 5k w/ Microsoft yesterday, etc...)

I'm not a betting man any longer but I think one that is could place a wager on late this year for the bottom to be reached IMO. The big question in mind is how long we sit at the bottom

I agree 100%.

TMCNo1
01-23-2009, 10:31 AM
I heard the Tyson Foods was laying off 18% of their chickens and McDonald's was now using small eggs for their Egg McMuffins!:rolleyes::D

Mag_Red
01-23-2009, 11:04 AM
That's a big earnings loss for only a 6% drop in sales!

j2nh
01-23-2009, 11:33 AM
Profit comes at or near maximum factory utilization, but I agree that sounds like a lot for only a 6.9% drop in sales.

End of 09 for the bottom sounds about right 6ballsisall, and like you I am no longer a betting man. After almost 6 months the banks are still not certain of their losses and future exposures. Manufacturing is grinding to a halt, people have lost 40-50% of their 401's, this is going to be a tough year. Average investors are going to be looking for safe havens (gold) because after a beating like this who is going to risk going back into the market. My respect for wall street firms and large banks is gone.

6ballsisall
01-23-2009, 12:05 PM
good points jn2h.

I have not personally confirmed this yet, but did get some information from a source I believe to be quite reliable. It's interesting that there is this big push to stop Foreclosures one way or another. We are throwing around Billions upon Billions of dollars to the banks to try and keep people in their homes. YET, according to the information I received, there is a significantly better tax advantage to banks to foreclose on a house vs. do a loan modification or short sale on a house. If thats true, what a disappointment to the taxpayer, even the ones that are for this bailout scenario.


/ Not trying to turn this into a political thread or post.

MYMC
01-23-2009, 01:26 PM
good points jn2h.

I have not personally confirmed this yet, but did get some information from a source I believe to be quite reliable. It's interesting that there is this big push to stop Foreclosures one way or another. We are throwing around Billions upon Billions of dollars to the banks to try and keep people in their homes. YET, according to the information I received, there is a significantly better tax advantage to banks to foreclose on a house vs. do a loan modification or short sale on a house. If thats true, what a disappointment to the taxpayer, even the ones that are for this bailout scenario.


/ Not trying to turn this into a political thread or post.
Jeff, you can offset profits by the losses...but a loss is a loss. I was told a long time ago by a very wealthy individual that you should celebrate paying taxes because it means you are making money. While I do realize this is an oversimplification and outrageous taxes are an insult and a hindrance to the true entrepreneurial spirit the meaning of the phase is clear.

It is in a banks best interest to preserve these loans IF you see an economic turn around down the road. Banks make poor real estate companies and if you view a foreclosure from a macro view the damage that is done is worse than giving the homeowner some slack on term/rate, when there can be profit over the longer term.

BTW...if the banks were not sitting on the money from the first TARP payment and actually using it to lend to QUALIFIED buyers some of this would actually be turning around (IMHO).

j2nh
01-23-2009, 01:27 PM
good points jn2h.

I have not personally confirmed this yet, but did get some information from a source I believe to be quite reliable. It's interesting that there is this big push to stop Foreclosures one way or another. We are throwing around Billions upon Billions of dollars to the banks to try and keep people in their homes. YET, according to the information I received, there is a significantly better tax advantage to banks to foreclose on a house vs. do a loan modification or short sale on a house. If thats true, what a disappointment to the taxpayer, even the ones that are for this bailout scenario.


/ Not trying to turn this into a political thread or post.

Not a political thread, more like a reality thread. Surprised that banks would choose the foreclosure direction, given their lack of liquidity, the stagnant housing market and the tax breaks they will already get from their recent losses but who the heck can understand this anyway. Huge loss of respect for bankers and Wall Street in general, this whole derivative fiasco with unquantifiable exposure is absurd. It won't solve the problem now but those responsible should be put in jail to make sure this never happens again.

6ballsisall
01-23-2009, 01:36 PM
Jeff, you can offset profits by the losses...but a loss is a loss. I was told a long time ago by a very wealthy individual that you should celebrate paying taxes because it means you are making money. While I do realize this is an oversimplification and outrageous taxes are an insult and a hindrance to the true entrepreneurial spirit the meaning of the phase is clear.

It is in a banks best interest to preserve these loans IF you see an economic turn around down the road. Banks make poor real estate companies and if you view a foreclosure from a macro view the damage that is done is worse than giving the homeowner some slack on term/rate, when there can be profit over the longer term.

BTW...if the banks were not sitting on the money from the first TARP payment and actually using it to lend to QUALIFIED buyers some of this would actually be turning around (IMHO).

I think there is some truth in this Mike, and good valid views here. Perhaps the REAL answer why banks aren't doing what the guberment wants them to (stop foreclosures at most any cost) is because according to my Neighbor (where I got the info from and a very high up banking type) when you do the modification, the buyer has to prove they are credit worthy under some actual standards now. With all the mortgage fraud and unqualified buyers that got a big loan prior, perhaps the banks hands are slightly tied in even doing a Modification.

All interesting stuff IMO.

wakeX2wake
01-23-2009, 01:37 PM
my 401k looks more like a 200.5k

MYMC
01-23-2009, 02:14 PM
I think there is some truth in this Mike, and good valid views here. Perhaps the REAL answer why banks aren't doing what the guberment wants them to (stop foreclosures at most any cost) is because according to my Neighbor (where I got the info from and a very high up banking type) when you do the modification, the buyer has to prove they are credit worthy under some actual standards now. With all the mortgage fraud and unqualified buyers that got a big loan prior, perhaps the banks hands are slightly tied in even doing a Modification.

All interesting stuff IMO.
Interesting...
I'm not the sharpest knife in the drawer, but I would have to think that given where all this stands (or is headed) that at this point I would do some investigation as to why the mortgage is failing (rate, job loss etc) and if the mortgage holder is in trouble by whatever established guideline (i.e. not fraud) then do whatever is needed to get through it. I believe that people are basically good and that things like this would not be forgotten by the vast majority.

JimN
01-23-2009, 03:10 PM
That's a big earnings loss for only a 6% drop in sales!

It is but they have their finance division, too, which suffers in slow times. I have to think that if the 6% drop was mainly in parts and accessories, it cost them more than if it was just sagging bike sales. Plus, the union the workers are in is awfully strong and they have gotten great pay/benefit packages for decades.

I'm sure glad I sold my Harley stock when I did and I really hope my brother sold his when I told him to.

JimN
01-23-2009, 03:21 PM
Interesting...
I'm not the sharpest knife in the drawer, but I would have to think that given where all this stands (or is headed) that at this point I would do some investigation as to why the mortgage is failing (rate, job loss etc) and if the mortgage holder is in trouble by whatever established guideline (i.e. not fraud) then do whatever is needed to get through it. I believe that people are basically good and that things like this would not be forgotten by the vast majority.

When I bought my house, the rule of thumb was that people shouldn't spend more than 29% of their gross pay on housing but in the past 5-8 years, they were approving people who would end up spending up to 59%. That's just stupid. To think the bulk of these people will be able to pay on time for the long haul is ignoring the fact that they couldn't afford it in the first place. Then, when these people lose their jobs, they end up walking away from the house. They went for the zero down plan and when the market started to sag in their area, they were upside-down a on the loan, especially after repeatedly re-financing to consolidate, remodel, buy boats/cars, etc and take vacations. It was bad financial planning on all sides. Someone on a local radio station was working for a mortgage broker at the peak of this and he said that they were told to approve the loams as long as the applicant could fog a spoon.

Congress is squarely in the sights for the blame on this but nobody is holding them responsible.

Monte
01-23-2009, 03:25 PM
Interesting...
I'm not the sharpest knife in the drawer, but I would have to think that given where all this stands (or is headed) that at this point I would do some investigation as to why the mortgage is failing (rate, job loss etc) and if the mortgage holder is in trouble by whatever established guideline (i.e. not fraud) then do whatever is needed to get through it. I believe that people are basically good and that things like this would not be forgotten by the vast majority.

My opinion is that it is a combination of all the above. People were allowed through Fannie and Freddie to obtain balloons or adjustable rate mortgages. All was well in the beginning, but when the interest rates started to climb those with jobs had major problems paying, Those without jobs simply could not make payments. I have some opinions of who is truly at fault, but I will refrain from making this thread political. I think the best scenario/ solution to the problem is mandating that the lending institutions go back to everyone who has one of those types of mortgages and place them on a reasonable fixed interest rate.

ShamrockIV
01-23-2009, 06:07 PM
i thought new president would have this fixed by now.

MYMC
01-23-2009, 06:43 PM
When I bought my house, the rule of thumb was that people shouldn't spend more than 29% of their gross pay on housing but in the past 5-8 years, they were approving people who would end up spending up to 59%. That's just stupid. To think the bulk of these people will be able to pay on time for the long haul is ignoring the fact that they couldn't afford it in the first place. Then, when these people lose their jobs, they end up walking away from the house. They went for the zero down plan and when the market started to sag in their area, they were upside-down a on the loan, especially after repeatedly re-financing to consolidate, remodel, buy boats/cars, etc and take vacations. It was bad financial planning on all sides. Someone on a local radio station was working for a mortgage broker at the peak of this and he said that they were told to approve the loams as long as the applicant could fog a spoon.

Congress is squarely in the sights for the blame on this but nobody is holding them responsible.

My opinion is that it is a combination of all the above. People were allowed through Fannie and Freddie to obtain balloons or adjustable rate mortgages. All was well in the beginning, but when the interest rates started to climb those with jobs had major problems paying, Those without jobs simply could not make payments. I have some opinions of who is truly at fault, but I will refrain from making this thread political. I think the best scenario/ solution to the problem is mandating that the lending institutions go back to everyone who has one of those types of mortgages and place them on a reasonable fixed interest rate.
Understood and agreed...my issue is one of economics...

Back story: I for one was a beneficiary of a no doc variable loan. I was coming out of a divorce, and had just started a new business...it was all I "qualified" for. When the rate was due to change I reapplied and moved to a 30yr fixed as I now could prove income etc...I rolled the dice and it worked, and yes the banks on some level were rolling them with me.
My point is that not all of this is due to fraud or evil... The issues spun from this are such that the attitude of let them fail just is not applicable anymore, it would be better to let GM and Chrysler go chapter 11 than to allow the foreclosure boom to escalate, too much is tied to real estate (and that is the real problem)...its just gone too far. If nothing is done we will be right back to October 1929. I am not one for bail outs or hand outs but I believe this is a time when we are simply left with no choice.

MYMC
01-23-2009, 06:58 PM
Some light reading...

1920s (Decade)

* During World War I, federal spending grows three times larger than tax collections. When the government cuts back spending to balance the budget in 1920, a severe recession results. However, the war economy invested heavily in the manufacturing sector, and the next decade will see an explosion of productivity... although only for certain sectors of the economy.

* An average of 600 banks fail each year.

* Organized labor declines throughout the decade. The United Mine Workers Union will see its membership fall from 500,000 in 1920 to 75,000 in 1928. The American Federation of Labor would fall from 5.1 million in 1920 to 3.4 million in 1929.

* Over the decade, about 1,200 mergers will swallow up more than 6,000 previously independent companies; by 1929, only 200 corporations will control over half of all American industry.

* By the end of the decade, the bottom 80 percent of all income-earners will be removed from the tax rolls completely. Taxes on the rich will fall throughout the decade.
* By 1929, the richest 1 percent will own 40 percent of the nation's wealth. The bottom 93 percent will have experienced a 4 percent drop in real disposable per-capita income between 1923 and 1929.

* Individual worker productivity rises an astonishing 43 percent from 1919 to 1929. But the rewards are being funneled to the top: the number of people reporting half-million dollar incomes grows from 156 to 1,489 between 1920 and 1929, a phenomenal rise compared to other decades. But that is still less than 1 percent of all income-earners.

1922

* The conservative Supreme Court strikes down federal child labor legislation.

1923

* President Warren Harding dies in office. Calvin Coolidge, becomes president. Coolidge is no less committed to laissez-faire and a non-interventionist government.
* Supreme Court nullifies minimum wage for women in District of Columbia.

1924

* The stock market begins its spectacular rise. Bears little relation to the rest of the economy.

1925

* The top tax rate is lowered to 25 percent - the lowest top rate in the eight decades since World War I.

1928

* Between May 1928 and September 1929, the average prices of stocks will rise 40 percent. The boom is largely artificial.

1929

* Herbert Hoover becomes President.

* Annual per-capita income is $750. More than half of all Americans are living below a minimum subsistence level.

* Backlog of business inventories grows three times larger than the year before.

* Recession begins in August, two months before the stock market crash. During this two month period, production will decline at an annual rate of 20 percent, wholesale prices at 7.5 percent, and personal income at 5 percent.

* Stock market crash begins October 24. Investors call October 29 Black Tuesday. Losses for the month will total $16 billion, an astronomical sum in those days.

1930

* By February, the Federal Reserve has cut the prime interest rate from 6 to 4 percent. Treasury Secretary Andrew Mellon announces that the Fed will stand by as the market works itself out: 'Liquidate labor, liquidate real estate... values will be adjusted, and enterprising people will pick up the wreck from less-competent people'.

6ballsisall
01-23-2009, 07:02 PM
Understood and agreed...my issue is one of economics...

Back story: I for one was a beneficiary of a no doc variable loan. I was coming out of a divorce, and had just started a new business...it was all I "qualified" for. When the rate was due to change I reapplied and moved to a 30yr fixed as I now could prove income etc...I rolled the dice and it worked, and yes the banks on some level were rolling them with me.
My point is that not all of this is due to fraud or evil... The issues spun from this are such that the attitude of let them fail just is not applicable anymore, it would be better to let GM and Chrysler go chapter 11 than to allow the foreclosure boom to escalate, too much is tied to real estate (and that is the real problem)...its just gone too far. If nothing is done we will be right back to October 1929. I am not one for bail outs or hand outs but I believe this is a time when we are simply left with no choice.

Agreed...

I don't think the mortgage fraud and no doc loans played the major role in all of this either. Certainly the interest only and 125% loans people did (i.e. ATM Machine) There's actually enough information out there to support that this is heavily spilling over into mortgages that aren't of the exotic variety. Bottomline, all sorts of things played into the housing debacle

The underlying root of all of this IMO is that our economy for years has been propped up with a house of cards. You can watch any money show, read any newspaper, whatever......NO ONE predicted this, NO ONE. It goes to show how fragile the economy really is, while we all want to believe it's not. Housing, Automotive, Banking, etc...... Debt levels are at an all time high, savings are at an all time low.

Don't get me wrong, I'm not all "dooms day" with this. It's likely we'll eventually bounce back, hopefully a more realistic economy with more conservative values around money, debt, etc.... Some folks will walk from this better experienced and remember how this affected everyone, those folks will likely be the next generation of abundance.

TOO-TALL
01-23-2009, 07:28 PM
Very intresting read....

j2nh
01-23-2009, 10:33 PM
Some very good reading from Credit Suisse
http://www.housingwire.com/2008/12/10/forecast-8-million-homes-to-foreclose-in-coming-years/
In a nutshell they are predicting that 16% of all mortgages will be in foreclosure in the next 4 years, and could be worse if unemployment exceeds 8% which I believe it already has.
Freddie Mac is going to ask the Feds for another 30 to 35 billion (posted today).
First quarter is going to see records in failures for commercial real estate, stores, malls, office buildings and casinos are all going to add to the pain.

No doubt we will get through this but I honestly don't see it happening anytime soon, maybe the 3rd qtr. of 2010.