Special Report: Global Financial Crisis

    BEIJING, Jan. 9 -- The recession is forcing the biggest U.S. companies to acknowledge that forecasts made last year were too optimistic and that demand for products ranging from computer chips to linens is falling faster than projected.

    Intel Corp, the world's largest chipmaker, reported a 23 percent drop in fourth-quarter sales on Wednesday, steeper than a November projection.

    Time Warner Inc, the largest media company, will report its first annual loss in six years because of a 25 billion U.S. dollars write-down and falling AOL and print ad sales. Lenovo Group Ltd, the maker of ThinkPad laptop computers, said yesterday it's cutting about 2,500 jobs, 11 percent of the payroll.

Intel Corporation President and CEO Paul S. Otellini speaks at the Oracle OpenWorld conference in San Francisco, California Sept. 23, 2008.(Xinhua/Reuters Photo) Photo Gallery>>>

    "Companies are going to have to continue to adjust their forecasts until our current macro environment stabilizes," said John Praveen, chief investment strategist at Prudential International Investments Advisors LLC, a unit of Prudential Financial Inc, which manages about 602 billion dollars. "General expectations were that we were probably going to see earnings disappointments and downgrades with the global recession."

    Winemakers, retailers and strip clubs are also reporting shortfalls or reducing projections as the recession squeezes consumer spending. The economy changed "very quickly and dramatically", leaving companies short of where they thought they'd be, said Chris Marangi, an analyst for Rye, New York-based Gabelli & Co, which manages 26 billion dollars .

    The U.S. economy fell into recession in December 2007, according to the National Bureau of Economic Research. The Labor Department may report today that employers cut 500,000 jobs last month, putting 2008 losses at 2.4 million, according to a Bloomberg survey. The jobless rate could hit a 15-year high.

    ADP Employer Services yesterday estimated companies eliminated 693,000 jobs in December, the most since the gauge on payroll data was created in 2001.

    Intel's sales

    Intel Chief Executive Officer Paul Otellini, 58, said he expects the U.S. recession to be the worst he's seen. Intel's fourth-quarter sales fell to 8.2 billion dollars from a year earlier, missing the November forecast of 9 billion dollars and an earlier prediction of at least 10.1 billion dollars.

    The Santa Clara, California-based company's sagging revenue indicates demand is falling across a broad swath of the technology industry since Intel chips run about 80 percent of the world's personal computers and also power corporate servers.

    Intel fell 93 cents, or 6.1 percent, to 14.44 dollars on Wednesday in NASDAQ Stock Market trading. The stock lost 45 percent in 2008.

    Time Warner's 25 billion dollars asset write-down points to additional fallout from the recession: companies taking charges to reflect the declining value of assets. About a fourth of Standard & Poor's 500 companies trade at a price-to-book ratio of less than 1, indicating investors view their assets as being worth less than reported on balance sheets. Write-downs, while non-cash, reduce net income.

    Time Warner, based in New York, is lowering the value of the company's cable systems and publishing and Internet businesses. A verdict against Turner Broadcasting System and the bankruptcy of Lehman Brothers Holdings Inc, a Time Warner tenant, also contributed to the 2008 loss.

    The company, which is scheduled to report earnings Feb 4, predicted in November profit of as much as 1.07 dollars a share from continuing operations. Time Warner fell 69 cents, or 6.3 percent, to 10.29 dollars on Wednesday on the New York Stock Exchange and declined 39 percent last year.

    "We are in a very unique point of time where we've never seen the type of declines that we've seen over a very short period," said Pat Becker Jr, chief investment officer at Becker Capital Management Inc in Portland, Oregon, which owns 1.4 million Intel shares and manages about 1.8 billion. "We're just not in a good forecasting environment."

    Hold the wine

    Bed Bath & Beyond Inc, the largest US home-furnishings retailer, reported its fifth straight drop in quarterly profit yesterday and lowered its forecast for the year ending in February as customers flocked to the liquidation sale at bankrupt rival Linens 'n Things Inc.

    Constellation Brands Inc, the world's largest winemaker, on Wednesday lowered the top end of the company's profit forecast for the February fiscal year. Third-quarter sales of wine brands that include Robert Mondavi and Clos du Bois fell 2 percent.

    Even Rick's Cabaret International Inc, the Houston-based owner of strip clubs, withdrew its 2009 forecast on Dec 29, saying the company can't predict how some locations will fare.

    (Source: China Daily/Agencies)