The stock market lost ground Monday morning, although major benchmarks recovered from the worst of their losses immediately after the open. Concerns about the reaction to the U.S. prohibition of doing business with companies deemed national security risks -- notably Huawei -- weighed on investor sentiment. As of 11:35 a.m. EDT, the Dow Jones Industrial Average (DJINDICES: ^DJI) was down 58 points to 25,706. The S&P 500 (SNPINDEX: ^GSPC) fell 10 points to 2,849, and the Nasdaq Composite (NASDAQINDEX: ^IXIC) dropped 104 points to 7,712.
Amid uncertain conditions in the global economy, many companies are taking steps to maximize their internal efficiency, and Ford Motor (NYSE: F) was the latest major employer to announce layoffs intended to help control costs. Meanwhile, after having dealt with the prospect of having a key merger blocked, Sprint (NYSE: S) got encouraging news that could result in its tie-up with T-Mobile US (NASDAQ: TMUS) going forward as planned.
Ford restructures its corporate operations
Shares of Ford Motor were down less than 1% as the automaker said that it would move forward with plans to cut about 10% of its salaried workforce. The layoff of roughly 7,000 workers will focus on white-collar office jobs rather than assembly line personnel. CEO Jim Hackett said that Ford expects to eliminate almost a fifth of its upper-level managers as part of the job cuts.
Ford hopes that these measures will help it accelerate its cost-cutting efforts as part of a broader restructuring of operations. The automaker believes that it can trim $600 million annually with the move. At the same time, reducing upper management numbers should help Ford be nimbler, reducing bureaucracy and making it easier for the company to move forward with swift strategic decisions.
The move is seen affecting about 2,300 U.S. employees, with the remainder coming from overseas operations. Although some workers will be laid off directly, others will have the chance to accept severance packages as part of voluntary programs.
Ford opened 2019 on a strong note, with encouraging profit growth coming from new vehicle launches and general economic strength. The automaker hopes that by working to be as efficient as possible, it can keep its bottom line moving in the right direction.
Sprint hopes for success
Meanwhile, Sprint's share price soared almost 25% on Monday morning as investors got excited about the prospects for its long-awaited deal with T-Mobile to gain regulatory approval. The catalyst for today's jump came from Federal Communications Commission Chair Ajit Pai, who said that he would recommend that the merger go forward based on amended deal terms.
Recently, many had feared that regulatory obstacles would prevent the Sprint/T-Mobile merger from happening. Some decision-makers remained nervous that cutting the number of major domestic wireless carriers from four to three would result in an unacceptable loss of competition. Even with Sprint noting that it might not be able to compete effectively as an independent company, investors had still started to lose hope in the merger.
But Pai's comments suggested that Sprint's efforts to find middle ground were successful. In order to get the deal done and appease regulators' concerns, the two companies proposed selling off prepaid wireless specialist Boost Mobile, as well as committing to a three-year time frame to build out a 5G network while pledging not to raise its monthly rates in the interim.
Even if the merger gains approval, it won't necessarily mean that the combined Sprint/T-Mobile will be able to compete at the same level as its wireless rivals. Yet for Sprint shareholders, the prospect of the deal moving forward is their best chance of reaping the rewards of their patience.
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