How they control cost: 15-August-08
Sourav Mitra -
Friday, August 15, 2008 7:54 PM
Lehman Brothers Holdings Inc., financial firm with exposure to the mortgage market collapse:
1. It is seeking to sell about $14 billion of its $40 billion in property related assets by the end of the year (it has a $29.4 billion commercial mortgage portfolio and $10.4 billion of property)
2. It has already trimmed the mortgage holdings by 23 percent
3. It has sold $147 billion of other assets
4. It has increased cash holdings
[Click here for full story at Bloomberg.com]
Disposing unproductive assets = cost savings
Increasing cash holdings = avoidance of value writedowns = cost savings
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PMI, the second-largest U.S. mortgage insurer:
1. It is withdrawing from overseas markets to focus on the U.S.
2. It is shutting its Canadian unit and closing sales offices in Europe.
3. It is selling its Asian and Australian mortgage insurance businesses to QBE Insurance Group Ltd., Australia's biggest casualty insurer
[Mortgage insurers pay lenders when borrowers default and foreclosure proceeds fail to cover costs]
[Click here for full story at Bloomberg.com]
Closing unprofitable operations = cost savings
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CSM NV, the world's largest supplier of ingredients to bakeries:
It has not focused on developing new products due to the increase in raw material costs.
[Click here for full story at Bloomberg.com]
Not developing new products = cost savings, but with some jeopardy to the scope for future income
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Chrysler, carmaker and inventor of the minivan (one of the best-selling ideas in automotive history):
1. It is looking to cut costs and conserve cash.
2. It will save hundreds of millions or even billions of dollars in development costs for small cars and family sedans.
3. It will share its factories instead of losing money on them.
[Click here for full story at Businessweek.com]
Consciously seeking cost savings leads to cost savings
Not developing new products = cost savings that also rob the pipeline of future income
Finding uses for unutilized plant capacity = reducing costs that are not recovered
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Toyota Motor Corp., the world's second-largest automaker:
1. It is responding swiftly to changing demand in North America
2. It will consolidate Tundra pickup truck production in Texas about six months earlier than scheduled and stop making the model in Indiana from November as demand for the model slumps
[Click here for full story at Bloomberg.com]
Responding swiftly to market forces = cost savings and / or income boosting
Stopping unprofitable businesses = cost savings
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For more posts about how businesses are boosting income and controlling cost please visit the URL below:
http://blogs.livemint.com/members/Sourav%20Mitra.aspx