News You Need to Know 1

Obama Hits the Hill Running

There may be only one President at a time, but for now there appear to be two. Barack Obama arrived in Washington on Jan. 4 and jumped right into negotiations with Congress over an economic stimulus package. Aides say the President-elect is pressing for about $775 billion worth of stimulus over two years, including some $300 billion in tax relief for individuals and businesses. Balanced budgets? Forget about it. On Jan. 6, Obama said: "Potentially, we've got trillion-dollar deficits for years to come." The tax cuts in the package should win over some Republican lawmakers. Struggling sectors such as autos, banking, and homebuilding are excited that Obama may support a measure giving them refunds on past years' taxes. It would lengthen the period for money-losing companies to write off operating losses against previous profits from the current two years to four or five.

—Edited by Harry Maurer & Cristinal Linblad

Cutbacks at Alcoa

Only a year ago, Alcoa (AA) was getting scolded for not expanding fast enough as commodity markets boomed. Now, with aluminum prices down by half from last summer as customers slash orders, the top U.S. producer said on Jan. 6 it will cut 15,000 jobs, or 15% of its global workforce. It will also chop capital spending by 50% this year. Another commodity biggie is ailing even more: Chemical maker LyondellBasell put its U.S. unit into Chapter 11 on Jan. 6.

—Edited by Harry Maurer & Cristinal Linblad

Chipped Chipmaker

Next in the parade of companies unveiling nasty numbers: Intel (INTC). Having already forecast, on Nov. 12, its biggest quarter-on-quarter sales drop, the chip king on Jan. 7 said it now expects fourth-quarter revenue to be worse yet: $8.2 billion, down nearly $2 billion from forecasts in the fall and 20% from the third quarter. Demand for PCs and servers is cratering. Also on the tech front, Verizon Wireless surprised nearly everyone by saying on Jan. 7 that it will tap Microsoft (MSFT), not Google (GOOG), for search and ad services on its phones.

See "Intel Sales Take a Nosedive"

—Edited by Harry Maurer & Cristinal Linblad

Detroit's December

Be careful what you wish for. Carmakers couldn't wait for 2008 to end: U.S. auto sales sank 35% in December, closing out an annus horribilis that saw 13.2 million vehicles roll off the lot, the fewest since 1992. Making matters worse, soaring fuel prices last summer scrambled truck sales, where Detroit makes its richest margins. For the first time since 2000, Americans bought more passenger cars than trucks. Even mighty Toyota Motor (TM) says it will lose money this year. In fact, Toyota's sales are so skimpy that on Jan. 6 the company said it would idle 12 plants in Japan for 11 days in February and March to keep inventory from piling up. And that's the problem. As bad as 2008 was, it might look good compared with 2009.

—Edited by Harry Maurer & Cristinal Linblad