In the succeeding quarters, the first quarter results show the trends. The companies will continually lower costs through the divestitures and workforce reduction and pay cut. The revenue strategies will be consolation through mergers and acquisition and outsourcing. With the only $1.4 billion which was a better than analyst projection, the general motors corporation reported a net loss amounting to $6 billion while the Ford Motors company has a $1.4 billion which was better than analyst projection. By the major losses, similar with the automotive industry, the technology industry was also dominated. In the revenue of $27.4 billion, the hewlett packard company public reported a 3percent decline. The outsourcing providers were no exceptions as well, the Convergys Corporation with a $21 million loss and Tele Tech Holdings, Inc with 8 to 10 percent decline in the revenue
There are still companies which remian bullish in tough times, the International Business Machines Corp has a growth markets revenue up to 4 percent Sykes Enterprises, Incorporated enjoyed an 8 percent increase in its operation margin and cash flows from the operation. This quarter grew its operating income by 6 percent, the Telus International Philippines Inc. reported with approximately $3.59 million net income increase. The cost cutting by the workforce reduction and pay cut, the companies are cutting costs dramatically. The Ford’s goal is to decrease an operating cost to $4 billion. The GM successfully implemented a cost reduction amounting to $3.1 billion for the quarter. The Ford closed 17 factories in the US and Canada and laid off tens of thousands of employees.
The General Motors reached an agreement with the Canadian Auto Workers Union for implementation of a 15 to 15 dollar an hour wage cut. The trend will continue but it will not be sufficient to bring in positive earnings. The consolidation through Divestiture, the another way to lower costs and attain liquidity is through the divestiture. The automaker giants also plan to consolidate their business through divestiture. The GM plans to cut its Saturn, Hummer, Saab and Pontiac brands and sell the Opel brand in the Europe. The Fiat S.P.A., Magna International and RHJ International are currently bidding for the Opel. The Ford also takes a similar approach and it is now currently in talks with the parties interested to buy its Swedish Volvo Unit.
In the consolidation through Mergers and Acquisition, lowering the operation costs is only one side of the coin, this is to produce net profits, revenue generation is also necessary. The consolidation through mergers and acquisition if done properly can lead to the revenue generation. To be a positive move for the HP as EDS is the only HP division that generated positive income, the HP’s acquisition of EDS proved o be a positive move.
REFERENCE:
http://www.blog.infinit-o.com/bulls-and-bears-first-quarter-results-reveal-profitability-strategies/
