Wednesday, April 8, 2009

Summary Blog: CBC Job Cutters?

http://www.nytimes.com/2009/03/26/business/media/26tele.html?_r=2&ref=business

Summary:
The articles is saying that CBC ( Canadian Broadcasting Company) the publicly owned operator of national television and radio networks, is going to cut about 800 jobs and try to sell assets to fight a growing financial shortfall caused by a advertising downturn, it said on Wednesday. This company which has 9850 employees and receives more than 1 billion dollars a year from the federal government, is expecting this shortfall to hit 171 million dollars. It blamed weak ad market, higher costs, a base salary financing shortfall and aging infrastructure. Its projections assumed the government would authorize 125 million dollar in asset sales. Other than the government funding, CBC usually generates $600 million a year in revenue from commercial activities. About 400 employees are being laid-off from the English-language services, and 335 are being laid-off from the French-language services and 70 are being cut in other areas of the company.

Connections:
The connection is the changed financial statement the company due to the significant decrease in wages expense. Since CBC is cutting jobs and selling assets to try and beat the recession, even though they are supported by the government, they would have more cash in the bank instead of having a lot of long-term assets. Also the manager has to choose which employees to lay off, so each one will be different and the accounting department will have to record everything. From calculating the last paycheck and paying it, but changing the info on employees will be a big task. I think that they should change their strategy in getting business from business ads, by changing the management or perhaps make better deals to bring in more business. But because of this turn-of events, the shareholders of the company are probably not very confident in the company, so selling some assets would then lower the shares costs and would lose interest in the company. Which would in turn weaken the company further, and then as people lose faith in the company it will continue to lose money, resulting in bankruptcy.

Reflections:
As we all know, the news has been filled with stories about companies big or small are cutting jobs and facing downfalls. This is not a different case, but the thing is, CBC is Canada's first broadcasting company. So from historical sentimental value its also has pride as being the first and one of the biggest broadcasting company in Canada. So due to these two facts it is possible that the Canadian government will support CBC and then they wouldn't have to worry about being shutdown or selling the company. Although they may not make a lot of money, but because the government is pratically running the company all they have to do is find some other business and they can keep it running without that much revenue.

Monday, March 23, 2009

Ch. 16 Reduced Resort Rages?

http://www.forbes.com/feeds/ap/2009/03/11/ap6155146.html

Summary:
Vail Resorts, a ski resort, is planning on cutting their employees wages by as much as 10 percent to try and reduce operating costs of their resort. A move like this was predicted to save more than $10 million annually. But not all employees are getting the 10 percent cut, the percentage is decided on a sliding scale, seasonal employees receive a 2.5% cut, and executives get a 10% cut. Even Chief Executive Rob Katz said that he will not take any salary for 12 months and receive a 15% pay reduction. The effects of these for seasonal employees will take place at the end of the winter season, and the other employees will be on April 2. Also year-round employees will receive stock-based bonus values from 1.5%-7.5%.

Connection:
The biggest thing is about the wage reductions of a company in order to cut back operation costs. This goes directly with the current chapter we are doing about payrolls and the complex systems of keeping track and giving wages. With the new changes being put in place for the near future the accounting department for that company is going to be kept busy calculating the new wage amounts for each employee and giving out compensation for the employees that have been laid off. So the numbers for the coming year will be quite a experience for the accounting team. That is all the connection between the chapter and this article.

Reflection
Due to the recent recession nearly every business in the world has been struggling to keep in business, or has at least been affected in a negative way that would put them in an troublesome position. So to cope with this recession many businesses are forced to make some drastic decisions, some completely closed down, and others laid-off a lot of people, but in this case they cut the wages of its employees by a lot. But i still think that is very compassionate considering they still have a job unlike others who lost their jobs and are depending on the government to help them. But if this continues i don't think that these employees will be lucky for very long, and just end up like thousands of others.

Friday, March 6, 2009

Ch.15 Can Canwest pull through?

http://www.cbc.ca/money/story/2009/02/27/canwest-deadline.html

Summary:
On Friday, February 27, Canwest Global Communications Corp. had their debt repayment date pushed back by 12 days, but the company has reduced the media company's credit by two thirds, from $300 million to $112 million. Although Canwest has $92 million drawn under the credit line, it said that they had enough cash on hand and cash flow to continue work normally through the period. But the company and its banker are still negotiating on pushing the deadline further back. During all of this, the company is taking measures to reduce expenses and think of alternate business plans to keep this company alive. Even the spokesperson had said that it was "business as usual" it is clear that the company is struggling through this time, as The DBRS puts pressure on them by saying that if they failed to pay their debt of $100 million the company would be in default. But this debt was only so great because of their earlier acquisition of the former Southam newspaper chain and Alliance Atlantic entertainment. So to pay off their debts Canwest is struggling to sell several of its non-core assets. It has even put 5 of its E! television station for sale.

Connections:
This shows that have a good credit and liquid assets are good for running a company. Which is perfect for our Ch.15 topic when bankers decide whether they should loan a company or individual money by seeing there credit history and trust. So after this incident banks may not lend money to Canwest again for a long time because they couldn't meet its deadline. Also because they had bought the other companies, they should have seen their common-size comparative income statement to see if that company is profiting enough or losing money before purchasing it, or else it may become a burden to own. But by selling their assets to try and pay off their debt is smart choice because if all they needed was this little bit of time to catch back up then losing some assets is a suitable sacrifice.

Reflection:
Although having ambition is a good thing, in this case a company expanding by purchasing other companies. It is imperative that the company think everything through before acting on it. One of the many questions is, if the company i bought did not make enough profit to cover its worth of buying it, would it be a good choice? Or maybe if the economy were to suddenly go to a change for the worse would i still be able to keep it running? But everything is not always logical, as emotion may have played a factor in the decision making, I think that even it may not have been the best choice. The ability to buy another company is a great way to show how powerful and sufficient a company is. I hope that for the days to come that Canwest can shine after this predicament.