Dear Valued Visitor,

We have noticed that you are using an ad blocker software.

Although advertisements on the web pages may degrade your experience, our business certainly depends on them and we can only keep providing you high-quality research based articles as long as we can display ads on our pages.

To view this article, you can disable your ad blocker and refresh this page or simply login.

We only allow registered users to use ad blockers. You can sign up for free by clicking here or you can login if you are already a member.

10 Companies With the Heftiest Job Cuts Since the Financial Crisis

Page 1 of 2

It’s now been five years since the U.S. hit the height of the financial crisis and well-respected investment house Lehman Brothers went from market maven to bankrupt and nonexistent practically overnight. The past half-decade has been a time of once-in-a-lifetime gains for some investors while marking unparalleled financial and job losses for others.

What hasn’t stopped, though, throughout the boom and bust cycle are the constant lessons on investing to which we’re all both students and professors. That’s why I was so intrigued last week to come across a study commissioned by AOL, Inc. (NYSE:AOL) and assigned to employment services firm Challenger, Gray & Christmas to research which companies had laid off the most employees since the financial crisis. As you might imagine, being a cumulative total and not being conducted on a percentage basis, bigger companies led the list.

According to the data, here are the 10 U.S. companies with the heftiest job cuts since the financial crisis:

Company Total Jobs Lost
General Motors Company (NYSE:GM) 77,100
Citigroup Inc. (NYSE:C) 75,000
Hewlett-Packard Company (NYSE:HPQ) 74,300
Circuit City Stores Inc (OTCMKTS:CCTYQ) 41,305
Caterpillar Inc. (NYSE:CAT) 40,111
Bank of America Corp (NYSE:BAC) 37,402
JPMorgan Chase & Co. (NYSE:JPM) 35,000
Merrill Lynch 35,000
Verizon Communications Inc. (NYSE:VZ) 30,700
U.S. Postal Service 30,000

Source: AOL, Challenger, Gray & Christmas, individual company employee figures.

There probably aren’t too many surprises on this list, but I, nonetheless, took away a few interesting investing angles.

The financial sector still has a long way to go
The first thing I noticed is that this list is littered with financial service companies — four out of 10, to be exact. That likely isn’t a huge shocker since the liquidity crisis itself was responsible for bankrupting Lehman Brothers and forcing numerous other brokerages and banks like Bear Stearns and Washington Mutual to seek the refuge of a bigger buyer.

What I find noteworthy, though, is that despite many of these banks sporting record level of liquidity in accordance with new Basel capital requirements, many financial institutions are operating at staffing levels that are nowhere near pre-recession standards. In fact, over the past few weeks we’ve actually witnessed even more job cuts, with Bank of America shedding 2,100 mortgage service jobs and Wells Fargo & Co (NYSE:WFC) shuttering 2,300 in August due to weak mortgage application originations.

The ultimate lesson here is that financial institutions are a double-edged sword. On one hand, there’s still a lot of work to be done. We’re five years removed from the financial crisis and housing bubble, yet Bank of America is still dealing with litigation associated with its foreclosure and mortgage practices. JPMorgan Chase, on the other hand, recently settled a civil suit filed against it following its “London whale” derivatives losses, which totaled $6.2 billion on top of $1.5 billion in legal fees. This goes to show that even after five years of increased scrutiny, banks’ internal controls can still fall short of investor expectations.

Yet financial institutions’ shortcomings lends to the idea that there could still be considerable upside to this sector. Bank of America, inclusive of its troubles, is still only valued at 72% of its book value despite being the nation’s second-largest bank by total assets ($2.13 trillion). In a similar fashion, Citigroup is valued at a mere 81% of its book value and is the third-largest bank with $1.88 trillion in assets. These are gigantic banks with a laundry list of legacy problems, but they are slowly getting better by the day and could still represent an intriguing investment opportunity.

Innovation is everything
I probably don’t have to go into a manifesto explaining this as I’ve done so on numerous occasions before, but innovation is the heart and soul of a business. Without it, a business will fold.

Circuit City and its employees learned this all too well when the company filed for bankruptcy protection and eventually liquidated in late 2008/early 2009. It fell victim to the showrooming effect, unable to compete with Best Buy Co., Inc. (NYSE:BBY)‘s enormous in-store selection and being outbid on the price and convenience factor by, Inc. (NASDAQ:AMZN). However, Circuit City isn’t the only victim on this list.

The U.S. Postal Service is front and center when it comes to being phased out by the latest and greatest information technology in the world: email. Although the USPS is doing what it can to streamline operations and reduce costs, there’s only so much a physical mail logistics company can do in a world that’s constantly moving to a digital platform.

Hewlett-Packard is another victim here. Along with Dell Inc. (NASDAQ:DELL), HP failed to anticipate the rapid decline in PC sales and has been scrambling to reduce head count and introduce new cloud-based hardware and software products in order to turn the tide.

Finally, even General Motors struggled with innovation. Although anyone would tell you it was GM’s highly levered balance sheet and hefty pensions that put it into Chapter 11 bankruptcy in 2009, I’d surmise its lack of overhauls to its Silverado, Sierra, and other prominent vehicles failed to get U.S. consumers excited about its brand and only added to its troubles.

The point is that innovation drives bottom-line results. Even if a company is raking in the dough now, if there isn’t a long-term solution or evolution for its business, it probably won’t make for a good investment.

Page 1 of 2

Biotech Stock Alert - 20% Guaranteed Return in One Year

Hedge Funds and Insiders Are Piling Into

One of 2015's best hedge funds and two insiders snapped up shares of this medical device stock recently. We believe its transformative and disruptive device will storm the $3+ billion market and help it achieve 500%-1000% gains in 3 years.

Get your FREE REPORT and the details of our 20% return guarantee today.

Subscribe me to Insider Monkey's Free Daily Newsletter
This is a FREE report from Insider Monkey. Credit Card is NOT required.
Loading Comments...

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 102% in 3 years!! Wondering How?

Download a complete edition of our newsletter for free!