2008_12_22 Toyota In The News

[K.C.]

Toyota Offers Gloomy Profit Forecast
Automaker predicts first annual operating loss as demand shrinks

NAGOYA, Japan - Toyota Motor Corp. projected its first-ever operating loss since it began such reports, acknowledging Monday that its nine-year stretch of global vehicle-sales growth had stalled.

Crashing auto demand, especially in its key U.S. market, and the profit erosion from a surging yen proved too much for Japan's top automaker, which had been booming on the success of its fuel-efficient models, including the Camry sedan and Prius gas-electric hybrid.

Gloom dominated the annual news conference by Toyota's president, who in recent years had outlined ambitious expansion plans. This year, Toyota President Katsuaki Watanabe even refused to give a worldwide vehicle sales goal for 2009.

"The tough times are hitting us far faster, wider and deeper than expected," he told reporters at Toyota's Nagoya office. "This is an unprecedented crisis requiring urgent action."

Watanabe also blamed the strong yen, which has risen to 13-year highs against the dollar to about 90 yen recently.

Toyota lowered its net profit forecast to just 50 billion yen ($555 million) for the year through March 2009

 

[K.C.]

Stocks Drop As Toyota Cuts Outlook
Automaker's gloomy projection is more evidence of a struggling economy

NEW YORK - Wall Street began a holiday-shortened week cautiously Monday, as stocks fell in light trading while investors reacted to a bleak outlook from Toyota Motor Corp. and disappointing earnings from drugstore operator Walgreen Co.

Toyota and Walgreen provided more evidence of companies' struggles amid a sharp drop around the world in demand for all types of products. Walgreen's profit fell 10 percent in its fiscal first quarter, short of Wall Street expectations, due to the costs of opening more than 200 new stores. The company said it will slow down its expansion because of the recession.

Toyota, meanwhile, slashed its earnings forecast for a second time, warning that it now expects to report an operating loss for the fiscal year through March. It would be the Japanese automaker's first such loss since it began reporting results in 1941.

The announcement underscores the challenges that remain for car companies, whose growth has been halted by the weak economy. Toyota's American rivals, General Motors Corp. and Chrysler LLC, received a $17.4 billion lifeline from the federal government on Friday, in a move to stave off a major bankruptcy.

While investors cheered the government's pledge to provide assistance to the ailing automakers, they are wary about whether the aid will be enough to turn around the companies. The financing hinges on strict conditions that must be quickly met; GM and Chrysler must prove viability, defined as positive cash flow and the ability to pay back government loans, by March 31. Ford Motor Co. is not asking for short-term assistance.

Analysts warned, however, that trading volumes were very low this week, so stock movements are probably not indicative of the market's long-term direction.

"A truncated week is going to make it tough to generate any firm takeaways from trading," said Craig Peckham, equity trading strategist at Jefferies & Co. "I would expect to see sleepy volumes and a lot of people protecting positions going into year end."

Walgreen shares fell $1.41, or 5.4 percent, to $24.67.

Toyota's U.S.-traded shares fell $1.89, or 2.9 percent, to $62.49.

Wall Street has shown some signs of relative stability in the last few weeks. Since reaching multiyear lows on Nov. 20, the Dow is up 13.6 percent and the S&P 500 is up 18 percent.

Besides relief over the auto bailout, investor sentiment has also grown a bit more upbeat in the past few trading sessions after the Federal Reserve cut the benchmark federal funds rate to a range of zero to 0.25 percent. Investors are looking for any signs that the government is being proactive about reviving the economy.

After doling out hundreds of billions of dollars in aid this year to prop up the troubled auto and financial sectors, the government continues to be tapped by companies for assistance. Some of the largest U.S. property developers are seeking government help as the threat of default on commercial properties is growing, according to a Wall Street Journal report on Monday.

Another recipient of the government's assistance, American International Group Inc., meanwhile, is selling its Hartford Steam Boiler unit to reinsurer Munich Re AG for $742 million as it works to shed assets to pay back a government loan. AIG received a $150 billion rescue package from the government last month to help it pull through the credit crisis.

Bond prices were mixed early Monday. The yield on the benchmark 10-year Treasury note, which moves opposite its price, fell to 2.13 percent from 2.21 percent late Friday. The yield on the three-month T-bill, considered one of the safest investments, rose to 0.03 percent from zero late Friday.

Full Article
http://www.msnbc.msn.com/id/3683270/

 

[Falls]

Sad , but true ! A sign of the times .