Royal Dutch Shell plc, or as many of us know it as, just Shell announced yesterday that it will have to eliminate 5,000 jobs due to the 62% drop in 3rd quarter net income.

It reported a net income of $3.3 billion or 53 cents per share, but that is less than half of the net income that it reported last year of $8.5 billion. Since the drop, the company has to do something, so like most companies the first place it cuts is its workforce. The cuts represent about 10 percent of the total number of employees for the company.

CEO of the company, Peter Voser, said in a statement, “Our third quarter results were affected by the weak global economy. We see some indications that energy demand and pricing are improving, but the outlook remains very uncertain, and we are not expecting a quick recovery.”

The company did not disclose where the cuts would be coming from, just that they would be coming.

It is quite annoying when a company starts to expect the kind of money they were making when things were outrageously overpriced. Of course the company make $8.5 billion in the third quarter last year, that is when gas prices were outrageous (and not to mention oil was at nearly $150 a barrel). With oil at half the price it was a year ago, it only makes sense that the company’s profits would be taking a tumble. I mean, we’re paying $2.50 at the gas station when we used to be paying $4.00, or more in some cases.

It is also irritating when the first thing a company resorts to as a cost cutting measure is to get rid of jobs. Could the executives not put their minds together to get a better idea than to cut jobs? This is 10 percent of the company’s workforce that they are talking about.

I suppose, though, in the near future that gas prices will be ridiculous again and that the economy will be on the right track once more. Until then, everyone can expect stories such as this one to come out about how jobs are being lost and profits are falling.

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Facebook has been operating in the red since the beginning of the company just a handful of years ago. Today it was reported that the company is finally beginning to have profitable operations and that according to CEO Mark Zuckerberg, the company is now cash flow positive and has been since the second quarter.

From the Facebook Blog as posted by Zuckerberg:

“We’re also succeeding at building Facebook in a sustainable way. Earlier this year, we said we expected to be cash flow positive sometime in 2010, and I’m pleased to share that we achieved this milestone last quarter. This is important to us because it sets Facebook up to be a strong independent service for the long term.

Over time, Facebook will continue to be as strong as all of the connections you make. We’ll continue building new and better things to make connecting with the people you care about as easy and rewarding as possible. We thank all of you for helping us reach the point where we are connecting 300 million people, and we hope to serve you and many more people in increasingly deep and innovative ways in the months and years ahead.”

In a previous release from Facebook, the company was not expected to be cash flow positive until sometime in 2010, so seeing profits in the second quarter 2009 is a welcomed surprise.

Facebook also boasts more than 300 million users all across the world.

“If financial institutions won’t cooperate with us, we will assume that they are sheltering money in tax havens and act accordingly,” Obama said.

With the plan in place, companies wouldn’t be able to write off domestic expenses for generating profits abroad.

He also wants to do away with tax benefits that are saught by companies that outsource employees to other countries.

Chairman and Chief Executive Mike Jeffries said even in the weak economy Abercrombie will not be offering deals at the same level as its competitors.

“We are not promotional, and by promotional I mean 50 percent off a category or buy one get 17 free, somebody whispering to you about a secret sale. We don’t do stuff like that,” Jeffries said in a conference call with investors. “We do take clearance markdowns as a natural rhythm of the business and we’re strategic about how we take markdowns.”

So, even though it is attempting to “cut costs” the store will not be offering discounts or promotions on items that obviously fewer people are buying because they “don’t do stuff like that.” Well, people won’t buy “stuff like that” until they can afford it, which could be awhile.

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Last year, Starbucks closed several hundred stores all across the country due to falling profits and a looming recession. Now it has announced another 300 store closings and a loss of 6,700 jobs. Two-hundred of the stores will be located in the U.S.

I never understood why Starbucks chooses to locate in some areas, but not others. For example, I live in a college town with a student population of around 12,000. We have one Starbucks inside the student union and it’s a collaboration with Barnes and Noble. Yet, in the Grapevine Mills Mall just outside Dallas, there were 2 full size Starbucks. I like Starbucks, but for me, it’s just too inconvenient to buy on a regular basis.

From Reuters:

Because market conditions had changed significantly, Chevron delayed the unveiling of 2009 capital spending plans until later this month from December. It made $15.8 billion in capital and exploratory expenditures in the first nine months of 2008, out of $22.9 billion budgeted in December 2007. -Reuters

I am not surprised to see the decline in earnings…after all, oil has tanked in the last few months. Even with its increase in the last couple of weeks, oil still won’t see the highs it saw last summer for at least a year, or until the recession starts to loosen its grip on the country.

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So what’s the difference between a Ponzi scheme and a Pyramid scheme? From Wikipedia:

A multilevel pyramid scheme is a form of fraud similar in some ways to a Ponzi scheme, relying as it does on a disbelief in financial reality, including the hope of an extremely high rate of return. However, several characteristics distinguish these schemes from Ponzi schemes:

* In a Ponzi scheme, the schemer acts as a “hub” for the victims, interacting with all of them directly. In a multilevel scheme, those who recruit additional participants benefit directly (in fact, failure to recruit typically means no investment return).
* A Ponzi scheme claims to rely on some esoteric investment approach, insider connections, etc., and often attracts well-to-do investors; multilevel schemes explicitly claim that new money will be the source of payout for the initial investments.
* A multilevel scheme is bound to collapse a lot faster, due to the necessity of exponential increases in participant

Today I went to the local Wal-Mart to see how after Christmas sales were going and the store was packed. Not extremely crowded, but definitely more crowded than it should be with no (or few) students in town.

Will this jump in sales increase retail profits for the quarter? Probably. In some countries today is celebrated as “Boxing Day,” like our Black Friday in the United States. This will still be a very bleak shopping season compared to holidays in the (recent) past, but we will have to wait to see the damage.

TiVo’s raise in profits is impressive because it shows that users are sticking with the service and not going with generic cable or satellite offered DVR services.

My husband and I currently have a Metrocast generic HD-DVR service offered for a monthly fee. We once owned a single tuner TiVo system, and I, honestly, loved it. Switching from a TiVo to a generic system is not impossible, but difficult, and perhaps the gain in profits show that other consumers feel the same as I do; The generic systems are adequate, but TiVo systems are more desirable.

Not to mention, TiVo has had a change in billing, which went from almost $20 a month with no contract, to (now) $12.95 a month (with a 1 year contract).

Gas has already hit at least $1.67 in some areas of the country…I’m still paying between $2.09 and $2.16 so don’t feel so bad. My friend told me around the Memphis area it is well under $1.96 a gallon. I have to admit I’m jealous.

OPEC has already cut production, they are threatening another cut because of low prices, but if people aren’t using as much as they were…no cut in production will make prices go up. If they really want oil prices to go up, perhaps they should pump some of their profits into the economies of the countries they have taken advantage of in the last year.

At the same time, gas prices have hit a 3 year low…$2.26 a gallon for regular unleaded.

However, when OPEC cuts production, all they do is hurt the rest of the world’s economy. I can’t wait for the day when we no longer run on oil and OPEC’s profits will diminish, and eventually disappear.

The fall in manufacturing is bad news for oil demand. With news like this coming out, oil will continue to drop. That’s not so bad news for consumers. I was told areas around Memphis, TN are selling a gallon of regular unleaded (87 octane) gas for under $2.00. It’s been a few years since I’ve seen gas under $2 a gallon.

Perhaps after this quarter, Exxon won’t be posting those record profits again.

I am looking forward to the sales this year…I have been trolling around message boards that are saying WalMart and Toys R Us are going to be battling for the same base this year, maybe this means I can get a few games for my Wii on the cheap

How did the markets respond to the news? Oil fell another $4 a barrel today, however the cut in production is not set to start until November 1st.

OPEC accounts for 40% of the world’s oil produced.

I also believe that OPEC shouldn’t have dropped production. Once upon a time (September 15, 2000) crude had hit a record high of $36, and OPEC wasn’t complaining then. Now, the members have seen record profits from oil being over $100 a barrel for months and months and aren’t happy about not being able to buy the new million dollar car every month.

All one has to do is look at the headlines floating around Warren Buffet’s net worth increased by over 8 billion dollars while Bill Gates net worth went down, even in this economic environment. CEO brass are still making a killing and are being paid what it takes the average worker of the same company nearly 78 years to make almost twice as long as it took in the 70′s.

I didn’t even get to gas companies, recording record profits in the last couple of quarters. Yes plenty of people are experiencing the American dream, the problem is very few of us are doing so. Life is good at the top, everybody knows that, that’s why people work to get there. I don’t believe people are normally content at being stuck at the bottom of the financial totem pole. It’s just sometimes things happen to people and life doesn’t end up the way that they had hoped for.

I don’t think anyone needed a study to tell us that a lot of us are feeling less off than many of our other high net worth American citizens.

This comes after eBay announced its layoffs. Both online companies are seeing less and less profits and more decline in their stock prices.

Sometimes companies have to rely on firing people rather than finding ways to reduce spending or increase marketing to increase profits. Hmm.

In a KFC commercial a family goes around a grocery store to see if they can make a meal for $10…the same meal they can purchase at KFC for $10. The answer is a short no.

An Applebee’s commercial promotes a new special where 2 can eat for $20. The meal includes an appetizer to share.

Even Outback is getting in on the fun. They are promoting a $9.99 meal with a sirloin steak.

Even with rising food prices, restaurants may be seeing that smaller profits are easier to deal with than no profits.

The group’s president, Chakib Khelil, said that the cut must be significant so the market demand and supply will be balanced. He said the target price for a barrel of oil is between $90 and $70. He cited countries where it wouldn’t be feasible to pump oil if the price were to fall below $70 a barrel…Canada was one of those countries.

Of course OPEC wants to cut production. Who wants to see their profits fall 50% in 3 months? I just don’t think this will work out. Consumers are already having a hard time paying for food and gas has become something some can get around.

GM is hurting not only because consumers are looking for more fuel efficient cars, but are also looking for quality. Last night Chris and I were watching a special called "Saving GM" on CNBC and one of the head researchers said that the quality of the cars has improved, but that won’t change the minds of thousands of previous GM owners (like me) who were burned by a poor GM vehicle. However, when someone pulled off a lot in China with a new Chevy Aveo, it still sounded like a Chevy…puttering right off the lot.

I believe they have a lot of ground to make up and really need to appeal to their "burned" customer base.

Thousands of jobs being lost is definitely not good for any local economy either. Hopefully those who are losing their jobs will find something.

Talbots and Borders is also on the list.

All three of these companies have had falling sales and falling profits for years and are now operating well below a 1.0 quick ratio. Anything under a 1.0 is said to be a warning flag.

I’m sure these retailers will be hoping to be carried through until after Christmas to get the sales from holiday shoppers. However, Circuit City, I know, has been in trouble for a while, and there have been rumors floating around for years about Circuit City closing its doors.

Each year the parent company of both Red Lobster and Olive Garden said they raise prices 2 – 3 % to keep up with market prices. In 2009, they will begin raising prices by 3% or more to compensate for rising food costs.

These restaurants have definitely seen better days with their profits declining all year…really no one can afford to take a family of four out for $17/a plate pasta right now. I just made a huge pot of spaghetti for dinner that cost $7 total. It not only fed my husband and I, but there are plenty of left overs. This is just more economical and it doesn’t take that long to prepare.

Instead of raising prices, perhaps these restaurants should offer lower cost meals with smaller portions. Have you SEEN the calories in the Olive Garden’s dishes?

In a recent trip to Jackson, MS my husband and I noticed that the one store in Ridgeland looked closed, all the time. It wasn’t until later I realized it wasn’t.

With the new health craze, the doughnut king has fallen. Doughnuts are the epitome of sugar and grease, so therefore have no place in our health conscious society.

Now, to increase profits and minimize losses, Krispy Kreme is going to offer new menu items like ice cream and make stores smaller (opting not to have stores that produce the sugary concoction in view of customers). Oh well, hopefully a microwaveable doughnut will still be acceptable.

Anyway, I am thinking, where does this leave the dollar store? I have always gone into the dollar store and found gems as well as junk. Sometimes I can’t believe what you can actually get at the dollar store for..well…a dollar, but if you were to buy the same item in Wal-Mart it could be over $3.

At the end of August, the Dollar Tree (DLTR) posted 2nd quarter profits were 15 percent higher than the same quarter 2007. As far as profits, they’re doing well only because everything else is getting more expensive, everyone is looking for a way to cut back.

As for now, the Dollar Tree is going to remain with the Everything’s $1.00 theme. We’ll just have to wait a while and see what happens in the future.

The Mercury Sable sedan and Ford Taurus X ( a crossover Suv previously known as the Freestyle) are on the chopping block. Sales of the Taurus X are down 25% from last year and the Sable hasn’t been selling up to projections this year either.

Both are mid to full size cars and people are looking for more fuel efficient cars…They blame the Taurus X’s decline on an aging style and the Sable just doesn’t fit into the direction they want Mercury to go in.

The new special is $2 for a grande iced coffee after 2 pm. It’s a pretty good deal since the drink usually costs anywhere from $3.50 – $4. 50 depending on the flavor. The catch is you have to bring in your receipt from buying coffee that morning.

This deal would never effect me. I do not drink coffee in the morning. And, since the only Starbucks I am around is inside the student union, I’m not going there either. They’re always out of everything.

Anyway, Starbucks posted it’s first loss EVER a week or so ago, so they’re really looking for ways to bring interest back to it’s overpriced, but tasty drinks.

HSBC holds Household International Inc. partially responsible for the decline. In 2003, HSBC purchased the Illinois based lender. This was a pretty poor decision because it made the bank the largest U.S. sub prime mortgage lender.

I do not feel bad for any bank that makes these mistakes. They became greedy and purchased other banks participating in sub prime lending. Shame on them.

In the first quarter, they posted a $4.5 million loss. This was in stark contrast to their $24.9 million profit a year prior.

I have to say, I see less and less of these shoes being sold. Also, a lot of knock offs are being passed off as Crocs now too. I really don’t want to pay $29.99 for a plastic shoe when I can purchase a good knock off at Wal-Mart for $9.99. They’re just as ugly.

Whatever happens, I’m glad to see that the Crocs are becoming extinct.

Anyway, I read an article today that said Yum Brands reported a 4 percent higher profit in the 2nd Quarter. They say it is because foreign markets are getting in on Taco Bell and other restaurants. I think it’s because, in my opinion, Taco Bell is one step above dog food. The meat they put in the tacos are close to the stuff that comes out of the Pedigree can. I know, I fed my dogs that stuff earlier.

The article DID say that operating profits in the US fell by 12%. So, maybe my theory is wrong. I think Yum should go into another market in the States…vending machines for acid blockers. That would influence me to eat more in some of their stores. Really, I still wouldn’t go…Every time I end up going to Taco Bell or KFC because Chris wants to go so badly, they really mess up my order. They are really good at doing things badly. Maybe it’s just here.

I would like to say that the profits can be linked to Tylenol and Ibuprofen because of the pain of paying too much at the grocery stores and Pepcid for the sour stomach caused by the ulcers. Times are tough, thanks JnJ for making these products that keep me sane.

I noticed that they don’t only make "consumer products" (as they call them) they also make prescriptions. Good. I know that prescription drug companies are DEFINITELY not making enough money anymore.