Capital Spending

Concerns over Europe's debt crisis and political gridlock caused top U.S. CEOs to soften their expectations on hiring, sales and capital spending in the next six months, according to survey results released Wednesday. The Business Roundtable's quarterly CEO Economic Outlook Index dropped from 96.9 last quarter to 89.1 for the second quarter of 2012. The index can range from 150 to negative 50, with a figure above 50 signifying economic expansion and below 50 indicating a contraction.  The group's chairman, Boeing Co. Chief Executive Jim McNerney, said that "continued political wrangling in D.C. " is causing "continued concern" among members of the Roundtable, which represents top U.S. companies.

Concerns over Europe's debt crisis and political gridlock caused top U.S. CEOs to soften their expectations on hiring, sales and capital spending in the next six months, according to survey results released Wednesday. The Business Roundtable's quarterly CEO Economic Outlook Index dropped from 96.9 last quarter to 89.1 for the second quarter of 2012. The index can range from 150 to negative 50, with a figure above 50 signifying economic expansion and below 50 indicating a contraction.  The group's chairman, Boeing Co. Chief Executive Jim McNerney, said that "continued political wrangling in D.C. " is causing "continued concern" among members of the Roundtable, which represents top U.S. companies.

Google Inc. boosted the amount it plans to spend on computers and offices this year by 17% as it adds new services and expands outside the U.S. Capital spending will rise to more than $700 million this year, up from a May forecast of $600 million, Google, based in Mountain View, Calif., said in a filing with the Securities and Exchange Commission.

The people who know best say U.S. companies will ramp up hiring this year. Chief executives are more upbeat about the economy than they were at any time in the last eight years, a survey indicates. And that optimism will translate into increased hiring and capital spending over the next six months, according to the data released Wednesday by the Business Roundtable, whose members are CEOs of big companies. "Our CEOs see momentum in the economy over the next six months, with increased demand fueling greater investment and job creation," said Ivan G. Seidenberg, chairman of the business group and CEO of Verizon Communications Inc. "This shift continues a trend as reflected in recent employment data, with the private sector leading the way in creating more jobs.

The 1,000 largest manufacturers in the United States reported that they spent $28.6 billion in the second quarter, down 4.5% from the first quarter and 1.7% from the fourth quarter of 1984, according to the Conference Board, a business-backed group that studies economic conditions. Of 17 manufacturing industries, 13 registered capital spending declines, one reported no change and three--petroleum, rubber and transportation equipment--had gains.

Unocal Corp. and Mobil Corp. became the latest major oil companies to announce cuts in 1999 capital spending because of persistently weak oil prices. Their announcements came hard on the heels of warnings from Exxon Corp., San Francisco-based Chevron Corp. and Texaco Inc. that a $9-a-barrel drop in oil prices in the fourth quarter of 1998, to an average of $14, would severely curb spending.

Intel Corp. will spend 20% more next year on tools and facilities for making chips, analysts estimate, suggesting that the world's largest microchip maker has a rosy outlook for the industry overall. Although Intel's official forecast for 2005 capital spending is not scheduled to be made until January, analysts got an early look from a forecast made by Intel executives last week on the ratio of capital spending to cost of goods sold.

The Bartlesville, Okla.-based oil company reported that it has approved a $1-billion capital spending budget for 1986, a $400-million reduction from previous estimates. The budget allocates 64% of the $1 billion for exploration and production projects. The firm attributed the downward revision to lower oil prices. Phillips Petroleum's capital expenditure budget in 1985 was $1.4 billion, of which $1.1 billion was actually spent.

The Los Angeles-based oil producer said falling oil prices forced it to implement a contingency plan that will reduce its 1986 capital spending to $1.1 billion from a planned $1.5 billion. Chairman Armand Hammer said spending on oil and gas operations will drop to $750 million from $1 billion. The elimination of 700 jobs in late 1985 was a first step in the contingency plan, the firm said.

The Commerce Department said today that U.S. firms plan to increase capital spending by 1.4% in 1987 from the 1986 level--only half the estimated increase of three months ago. The small increase is in line with the forecasts of many private economists, who believe that the new tax law will depress business investment this year.

With the U.S. economy losing jobs for a second straight month in July, evidence is mounting that U.S. companies are spending huge sums on new equipment and taking other steps to make them more productive without hiring more workers. The nation's unemployment rate remained stuck at 9.5% last month, the government reported Friday, as the economy sustained a net loss of 131,000 jobs. What's more, revisions of the previous month revealed a much bigger job loss than originally reported: The nation lost 221,000 jobs in June, not 125,000.

For job seekers, things may be looking up, according to a survey of chief executives at America's biggest companies. The Business Roundtable, an association of CEOs at big U.S. companies, said Wednesday that 39% of those surveyed in the second quarter of 2010 expected to increase hiring in the next six months, while 43% anticipated no change. Only 17% reported that jobs would diminish. The percentage of CEOs who planned to hire is at the highest level since the second quarter of 2007, when it peaked at 42%. "Our member CEOs plan to continue hiring and expect improved sales," said Ivan Seidenberg, chairman of the Business Roundtable and chairman and chief executive of Verizon Communications.

Cable company Comcast Corp. reported first-quarter profit and sales that beat analysts' estimates by adding customers and cutting capital spending. Net income rose 5.5% to $772 million, or 27 cents a share, from $732 million, or 24 cents, a year earlier, the Philadelphia company said. Excluding some costs, profit was 27 cents, exceeding the 23-cent average estimate of analysts in a Bloomberg survey. Sales increased 5.3% to $8.84 billion, also topping estimates. Chief Executive Brian Roberts is offering more discounted packages of television and Internet to win customers, fending off competition from phone and satellite providers and the increasing popularity of TV on the Web. Comcast invested in upgrades to its high-speed Web products while it cut capital spending overall by 19%. The company added about 837,000 net new customers for Internet, phone and digital TV last quarter.

Dow Chemical Co. said it would slash 5,000 full-time jobs -- about 11% of its workforce -- close 20 plants and sell several businesses to rein in costs amid the recession. The company, one of the largest chemical makers in the world, expects the plan to save about $700 million a year by 2010. Dow, based in Midland, Mich., also will temporarily idle 180 plants and prune 6,000 contractors from its payroll. Exactly which workers and plants will be affected is still being determined, a company spokesman said.

Chevron Corp. said it would raise capital spending 15% next year to $22.9 billion, making its most costly push ever to lift output after crude prices climbed near $100 a barrel. The spending plan includes an estimated $17.5 billion for oil and natural gas production and $4.1 billion for refining, San Ramon, Calif.-based Chevron said.

Comcast Corp. said Thursday that its quarterly profit tripled, but higher-than-expected spending plans for 2007 dragged down shares of the largest U.S. cable company and its rivals. Comcast forecast revenue growth of at least 11% in 2007, which was in line with market expectations, but its estimate of $5.7 billion in capital expenditure was above the average analyst forecast of $4.8 billion, according to Reuters Estimates.

ChevronTexaco Corp. said it planned to raise capital spending 18% next year, investing heavily in West Africa and the Gulf of Mexico. At its annual meeting with analysts in New York, the San Ramon, Calif.-based company said it would invest $10 billion in its capital and exploratory spending program next year, up $1.5 billion from this year, largely because several big projects were at a stage that required heavy expenditures. ChevronTexaco shares fell 57 cents to $53.

Google Inc. boosted the amount it plans to spend on computers and offices this year by 17% as it adds new services and expands outside the U.S. Capital spending will rise to more than $700 million this year, up from a May forecast of $600 million, Google, based in Mountain View, Calif., said in a filing with the Securities and Exchange Commission.

Toyota Motor Corp., the world's second-biggest carmaker, said it would increase spending by 15% on new factories and vehicle development as it sought to win more market share from General Motors Corp. and Ford Motor Co. Toyota plans to raise capital spending to a record 1.25 trillion yen ($11.8 billion) this year, even after its net income fell 17% to 291 billion yen ($2.8 billion) in the fourth quarter ended March 31, the company said Tuesday. Sales rose 4% to 4.88 trillion yen ($46 billion).