Intersecting Minds: Education, Business and Technology at the North Carolina State Jenkins Graduate School of Management

What goes up… | January 22, 2009

Must come down? At least that’s what it feels like this morning. On the heels of two high tech companies announcing positive news yesterday, Microsoft says today that they are going to cut 5,000 jobs today after missing earnings expectations due to the weak economy: “Software maker Microsoft announced Thursday it will cut up to 5,000 jobs in the next year and a half, or 5.5% of its global workforce, citing further deterioration of global economic conditions. The company also posted lower fiscal second-quarter earnings that missed analysts’ forecasts.”

In other economic news, housing permits and starts hit their lowest number in 50 years, declining 15.5% over last year. While not completely unexpected, this is another blow to the housing and construction industries: “The Commerce Department said housing permits fell 10.7% from the prior month to an annual rate of 549,000 in December, while starts were down 15.5% from November to an annual rate of 550,000. Both measures were at the lowest levels since the government started tracking the data in 1959.”

In global economic news, China’s sharp growth rate over the last decade has begun to greatly slow. Now the world’s third-largest economy after passing Germany late last year, China is reporting a sharp decline in GDP growth this morning: “China’s economic growth slumped to 6.8% last quarter, dragging down the pace of expansion for all of 2008 to a seven-year low of 9% as the full force of the global financial crisis struck home.”

Locally, the bankruptcy of Nortel Networks is causing concern amongst both employees and commercial property owners: “When Nortel Networks filed for bankruptcy protection last week, it wasn’t just employees and investors who worried. Owners of offices in and around Research Triangle Park cringed, too. Nortel holds long-term leases on almost 1.4 million square feet of space — mostly offices — on its 216-acre RTP campus. And under Chapter 11 bankruptcy protection, which Nortel is seeking, companies are allowed to walk away from leases, or “reject” them in bankruptcy parlance.”

Oh, and the Dow opened down 140 points in the first hour of trading today.

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