PayPal to cut about 325 jobs in major reorganization

SAN FRANCISCO, Mon Oct 29, 2012 – PayPal is cutting about 325 jobs as part of a major reorganization by its new president, David Marcus, designed to regain an innovative edge and head off rising competition.

PayPal, the online payment pioneer owned by eBay Inc., said on Monday the full-time jobs would be eliminated as it combines nine product-development groups into one. The company is also cutting about 120 contractors.

EBay announced a $15 million pre-tax restructuring charge, to be recorded in its fourth quarter, related to the job reductions.

PayPal, which started in the late 1990s as a scrappy Silicon Valley start-up, had almost 13,000 employees earlier this year.

“In a large company, at some point you reach the law of diminishing returns when more people means slower,” said Marcus, who used to run mobile payments start-up Zong, which PayPal acquired last year.

“You have a lot of duplication of roles with nine product groups merging into one,” he said.

Wall Street considers PayPal the crown jewel of eBay because it is growing fast and profit margins are expanding. But in Silicon Valley, PayPal is considered a slow, bureaucratic behemoth – a reputation that has made it difficult for the company to attract and retain smart software engineers and designers.

PayPal needs such talent more than ever because a slew of payments start-ups, including Square, Stripe and Dwolla, are developing rival services and products that are beginning to catch on with merchants and consumers.

“PayPal has been on a very strong growth trajectory, but it’s facing a period of disruption ahead,” said Kevin Hartz, chief executive of ticketing start-up Eventbrite.

“We just haven’t seen a lot of innovation that’s needed for them to continue their leadership,” added Hartz, who was an early investor in PayPal and owns a small stake in Square now.

Marcus said he is reorganizing PayPal to help engineers and designers develop new products and services more quickly, to keep up with new rivals.

Twinkie maker Hostess files reorganization plan

NEW YORK, Thu Oct 11, 2012 – Hostess Brands Inc., the bankrupt maker of Twinkies and Wonder Bread, filed a reorganization plan that includes wage cuts, reduction in health and welfare benefits and a freeze on pensions for at least two years.

Hostess is seeking to eliminate unsecured claims worth $2 billion to $2.5 billion under the plan and its equity owners may end up losing their investments, the company said in a court filing.

Hostess filed for Chapter 11 bankruptcy protection in January for the second time in less than three years as it struggled with crippling costs associated with its pension plans.

Union and non-union employees will take an 8 percent wage cut and will see only modest hikes in the coming years, the company said.

Health and welfare benefits will also face cuts under the reorganization plan, which needs to be approved by the court.

Hostess, which has 18,000 employees, received court permission earlier this month to impose a pay-cutting collective bargaining agreement on thousands of workers in a bakery union.

“Upon emergence, our union-represented employees will hold a 25 percent equity ownership, a $100 million interest-bearing note and have two seats on the board of directors,” said CEO Gregory Rayburn in a statement.

Kodak to seek more time for filing reorganization plan

ROCHESTER, NY., Fri Sep 28, 2012 – Eastman Kodak Co. said it will submit a motion to a bankruptcy court on Friday to extend its right to file a reorganization plan until Feb 28, 2013, and expects to cut 200 more jobs.

The company said earlier this month it would cut 1,000 jobs by the end of this year.

Kodak, which invented the digital camera but had trouble adjusting to the digital age, has already cut 2,700 jobs this year as it looks to emerge successfully from bankruptcy in 2013.

Morgan Stanley rejiggers brokerage regions, cuts four top jobs

NEW YORK, Mon Jul 30, 2012 – Morgan Stanley has eliminated four regional manager jobs in a reorganization of its brokerage joint venture that trims the number of regions, the second time in eight months it has reduced its manager ranks.
The Morgan Stanley Smith Barney brokerage, the largest in the United States with nearly 17,000 financial advisers, will have four regional managers reporting to three divisions led by Richard Skae in the Northeast, Arnold “Bill” McMahon in the Midwest and South, and Douglas Kentfield in the West.
A Morgan Stanley spokeswoman said Monday the changes “create a more effective and efficient regional structure.” The four managers affected by the realignment, who were not identified by the company, will be offered other management jobs.
Morgan Stanley is trying to cut costs as it faces pressure to boost the performance of a business that has generated lower-than-expected results since Morgan Stanley and Citigroup Inc combined their brokerage businesses in 2009 to create Morgan Stanley Smith Barney.
The joint venture cut the number of regions to 16 from 19 in December.
Morgan Stanley’s profit margin in wealth management improved to 12 percent from 11 percent in the second quarter, but still fell short of its reduced “mid-teens” percent target.

Dynegy Holdings files for plan of reorganization

HOUSTON ― Dynegy Inc. said it has joined its unit Dynegy Holdings in filing a proposed plan of reorganization with a U.S. bankruptcy court that lays out a path for the bankrupt unit’s emergence from Chapter 11 in 2012.

Dynegy Holdings, a unit of energy producer Dynegy Inc., filed for Chapter 11 bankruptcy in November to restructure expensive leases on power plants and lighten its debt load.

Dynegy Inc., whose shareholders include billionaire investor Carl Icahn and investment firm Seneca Capital, and its other subsidiaries have not filed for bankruptcy.

The reorganization plan would replace $3.4 billion in senior notes, $200 million in subordinated notes, $130 million in accrued interest and lease payments on the two power plants.

In exchange, the company would offer $400 million in cash, $1 billion in new 11-percent notes due 2018 secured by equity in the company’s coal and gas-fueled generating businesses and $2.1 billion in new convertible preferred stock that would convert at the end of 2015.

Dynegy will have the right to redeem the convertible preferred stock at varying discounts through the end of 2013.

The plan and the accompanying disclosure statement have not been approved by the bankruptcy court and are subject to further negotiations with stakeholders, Dynegy said.

Once the plan is approved by the court, Dynegy Holdings will begin soliciting its creditors for the approval, the company said.

The bankruptcy of Dynegy Holdings has turned the usual order of payment for creditors upside down, as the power company tries to protect shareholders like billionaire financier Icahn at the expense of bondholders.

Alcoa reorganizes midstream Global Rolled Products businesses

NEW YORK ― America’s biggest aluminum producer Alcoa Inc. said it plans to reorganize its midstream Global Rolled Products businesses to tap growth opportunity in emerging markets.

The business will now focus on five global markets — aerospace, ground transportation, packaging, consumer electronics and defense.

“We believe even better returns are possible by changing from a regional approach to a market approach,” said CEO Klaus Kleinfeld.

The company said the shift to a market-based structure is effective immediately.

The new organization will focus on China, Russia, Brazil and the Middle East, the company said in a statement.

Guggenheim Partners reorganizes, phases out Rydex ETF

NEW YORK ― Guggenheim Partners LLC is merging 11 asset management businesses into a new $119 billion firm as part of a rebranding effort to attract financial advisers and institutional clients.

The company is renaming its asset management business Guggenheim Investments and putting that moniker on its RydexShares exchange-traded funds and most of its Rydex mutual funds.

Guggenheim led a group of investors that acquired Rydex SGI’s parent, Security Benefit Corp, last year.

The reorganization positions Guggenheim to compete more effectively with giants such as BlackRock Inc. and Pacific Investment Management Co as well as rivals in niche asset classes such as alternative investments.

“From a product and distribution standpoint they have better breadth,” said Christian Magoon, an ETF consultant and former president of Claymore Securities. The challenge will be “giving the different product lines sufficient distribution and marketing support.”

Guggenheim’s ETF complex will have $12 billion of assets, ranking it as the eighth largest provider of ETFs in the U.S., according to Lipper. The entire company will oversee $24.1 billion of U.S. mutual fund assets.

It also will be one of a handful of asset managers to offer active and passive ETFs as well as open-end and closed-end funds, including BlackRock and PIMCO.

Guggenheim announced the change via Webcast to its 1,200 investment management employees on Tuesday.

Richard Goldman, Rydex’s former chief executive and now chief operating officer of the reorganized firm, said he’s looking forward to gaining ground against competitors such as JPMorgan, Natixis and Goldman Sachs in real estate, hedge and other alternative fund products.

About 12 percent of the company’s assets were in alternatives as of June 30.

Founded in 2000, the New York-based company’s roots come from managing money for the Guggenheim family. The firm moved into institutional asset management in 2001, specializing in fixed income.

In 2009 Guggenheim made its first push into the retail space when it bought Claymore Group, then the 13th largest U.S. ETF provider, with $1.6 billion under management.Claymore’s funds, which were rebranded under the Guggenheim name last year, have traditionally been distributed through broker-dealers such as Bank of America Merrill Lynch and Morgan Stanley.

In 2010 the Rydex acquisition gave Guggenheim entree to registered investment advisers and a strong menu of equity products.

Guggenheim is in the process of adapting some of its institutional strategies for the retail market.

In early September, it filed with the U.S. Securities and Exchange Commission to launch the Guggenheim Macro Opportunities, Total Return Bond, Floating Rate Income and Municipal Income Funds — all versions of current institutional strategies, Goldman said.

Guggenheim will keep the Rydex name on its popular Target Beta Funds, aimed at active traders. The funds now have $7 billion of assets.

Rydex built its reputation around niche strategies such as a pair of leveraged ETFs and several popular equal-weighted ETFs, said Paul Justice, an ETF analyst at Morningstar Inc. He said some advisers found these gimmicky, so eliminating the Rydex name from the higher-brow Guggenheim makes sense for branding.