Just call it another data point confirming the breadth and depth of the global economic slowdown. Freeport-McMoRan Wednesday suspended its dividend and cut production by 5% in 2009 and 11% in 2010, due to a sharp decline in prices, the company announced (pdf).Freeport said it will reduce capital spending by $1.2 billion, a gargantuan 50% reduction from its previous estimate for 2009 capital spending. The company also suspended its $2 annual dividend.
Shares of Freeport (NYSE: FCX) Tuesday closed up 91 cents to $21.82 amid a broader market rally, but are declining $4.02, or over 18%, in premarket trading (8:27 am).
For the cutbacks, Freeport cited a large decrease in key commodity prices stemming from declining demand. Copper prices have declined to an average price of $1.69 per pound in November, compared to a nine-month average of $3.61 per pound as of September. Molybdenum prices have decline to $9 per pound as of December, compared to about $30 per pound in mid-October.
Economist Richard Felson said Freeport's 2009 operational cuts underscore the magnitude of the global economic slowdown. "Copper is a key component in housing and commercial buildings, for pipes and wiring, so the price declines we've seen speak to the construction slowdown in China, and in emerging markets more broadly," Felson said. "Unfortunately, Freeport is more evidence that we are heading for, if not already in, a global recession."
Stock / Economic Analysis: For decades the global economy moved forward with at least one, and during most periods two major, economic regions of the world growing. However, the increased interdependence and interconnectedness of the modern economy increased the economic 'stakes' of the game: it held out the prospect of stronger booms, but also of deeper busts, during economic troughs. There's abundant evidence we're now experiencing the latter. Hence, large fiscal stimulus -- perhaps two or three packages per year in each region -- in all major regions of the world (U.S., E.U., Asia) is now the order of the day, to jump-start the global economy.
Apple backs AT&T in continuing spat with Verizon
Closing Bell: The recession is still over, still... do you feel it?
Struggling Playboy outsources business ops
Reader Comments (Page 1 of 1)
12-03-2008 @ 10:54AM
BHarrison said...
As the French philosopher Rousseau stated: "People have the government that they deserve . . ." If the people tolerate incompetence AND corruption, then they do not derve anything better.
If the ongoing economic debacle doesn't convince people that they need to be concerened and vocal about their Congressional representation, and how the CEOs and Corporate Boards run the corporations, then there is little hope for anything to substantially change.
We can see and are experiencing what happens when the vast majority are apathetic, and allow our leaders to do whatever they want to do for THEIR SELF INTERESTS; and they wind up defrauding the citizens and the investors.
We have become a nation of people who are easily led and manipulated by 30 second sound bytes . . . no one takes the time to look below the surface of the propaganda machines . . . and in turn, we get what we were willing to settle for, being defrauded by our "leaders".
Even now, Congress is not pushing for the indictment and prosecution of the CORRUPT CEOs who oversaw the orchestration and perpetuation of the FRAUDS against the American people.
I am confident that there are a hundred willing, and qualified businessmen who could and would take the positions of EACH the corrupt CEOs at substantially lower salaries and compensations. What is the government's and the Boards of Directors "infatuation" with CEOs who have PROVEN their INCOMPETENCE and CORRUPTION? We certainly do not need these corrupt and failed "leaders".
Everyone only has 24 hours in THEIR day; it is the same for everyone. These FAILED CEOs have had their chances and failed; it is time for NEW management to orchestrate the economic recoveries.