AOL and Starbucks Announce Major Job Cuts: Round Two of Layoffs

The year is off to a somber start for many workers, with news of more job cuts coming amid tough times generally. Major companies announced massive layoffs this week, blaming the weak economy.

AOL Inc. chief executive Randy Falco sent an internal memo to employees today about plans to cut about 700 jobs, 10 percent of its workforce. AOL, a division of Time Warner Inc., serves as an Internet services and media company. But with the recession, many online marketers are tightening advertising budgets. Other cost-cutting measures include freezing salary increases.

Starbucks announced today plans to slash as many as 6,000 jobs and close 300 stores this year. The Seattle-based coffee giant reported a 69 percent drop in profit for the fiscal first quarter. Last summer, the company announced it would close 600 stores, laying off 1,000 employees.

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Discount Retailer Target

Target Corp., the popular discount retailer, also announced major layoffs yesterday. Target plans to reduce staff at its Minnesota headquarters, including about 600 employees and 400 open positions, primarily in the Twin Cities area. Later in the year, the company plans to close its Little Rock, Ark., distribution center, which staffs 500 employees.

In a statement to Reuters, the company cited the economy as the main reason for cutting jobs.

Stores have struggled financially because of poor retail sales in December and throughout the holidays. Other moves by the company include suspending senior salary increases, operating expenses and holding off on new store openings.

Besides general merchandise, the discounter also sells food and operates a co-branded credit card partnership with Visa. According to the company's October 2008 corporate report, Target maintains about 1,685 stores across 48 states. Soon after the company released its news statement, Target shares closed up 19 cents at $33.34 per share on the New York Stock Exchange today.

Several major U.S. and foreign companies announced thousands of new layoffs in the past few weeks as they work to adjust to new economic realities.

Home Depot, Sprint and Caterpillar

Sprint Nextel, the nation's third largest wireless carrier, was one of at least four large U.S.-based companies announcing large-scale job cuts. Pfizer, which is buying rival pharmaceutical giant Wyeth for $68 billion, is planning to cut 8,000 jobs by the end of March, about 13 percent of its work force.

"Labor reductions are always the most difficult action to take, but many companies are finding it necessary in this environment," Sprint Nextel CEO Dan Hesse said in a statement.

The closure of Home Depot's high-end EXPO stores, meanwhile, will affect 7,000 employees, or 2 percent of the company's work force. In addition, Home Depot today said it would also institute a salary freeze for company officers.

Construction equipment manufacturer Caterpillar said it would cut 20,000 jobs -- nearly 20 percent of its workforce -- after reporting that its profits fell 32 percent. The company said the job cuts were designed to help "deliver our 'trough' profit target" of $40 billion in sales and revenues.

President Obama said today in his speech on fuel-efficiency standards that layoffs at Caterpillar, Home Depot, Sprint Nextel and elsewhere "are not just numbers on a page."

"As with the millions of jobs lost in 2008, these are working men and women whose families have been disrupted and whose dreams have been put on hold," he said. "We owe it to each of them and to every single American to act with a sense of urgency and common purpose."

Obama said he looked forward to signing a stimulus plan "that will put millions of Americans to work."

Well-known companies headquartered in the Netherlands also announced major layoffs today: financial services company ING said it would cut 7,000 jobs while Phillips Electronics plans to cut 6,000. Both companies employ people in the United States.