Layoffs spread, CEOs see more pain ahead

By Scott Malone

BOSTON (Reuters) - Fear of a deepening recession is spreading throughout corner offices across corporate America, prompting chief executives in all sectors to slash thousands of jobs as they scramble to find ways for their companies to survive the worst economic crisis since the Great Depression.

AT&T Inc and DuPont Co led the list on Thursday of blue-chip U.S. companies laying off workers in the weeks before the Christmas holiday. A number of surveys showed that CEOs were planning more cuts, as a measure of corporate chieftains' confidence fell to a record low.

The pace of the cuts left even some U.S. CEOs wondering if things were going too fast.

"The idea of a company that's earning money, not losing money, that's not, let's say 'industrially endangered,' to have just cutbacks so they can earn another $12 million or $20 million or $40 million in a year where no one's counting is really a horrible act," said Barry Diller, CEO of Internet media company IAC/Interactive Corp.

"It's certainly not necessary," Diller said at the Reuters Media Summit in New York. "It's doing it at the worst time, it's throwing people out to a larger, what is inevitably a larger unemployment heap, for frankly no good reason."

CEO CONFIDENCE TUMBLES

The Business Roundtable's quarterly CEO Economic Outlook Index tumbled to 16.5 in the quarter, the biggest drop it has ever taken, to the lowest point by far in the survey's six-year history. A reading below 50 means that CEOs expect contraction rather than growth.

The index had stood at 78.8 in the third quarter. The prior low of 49.3 was recorded in the first quarter of 2003.

"Given the cost pressures we are seeing, they are really tightening their operations and really tightening their growth priorities," said Harold McGraw, chairman and CEO of The McGraw-Hill Cos, who serves as Roundtable chairman.

McGraw said companies were counting on more stimulus action from Washington to buoy the economy.

The CEOs, who were polled between November 3 and November 17, said they expect the U.S. economy to be flat overall next year, with recovery in the second half offsetting a weak start.

Sixty percent expect to cut their U.S. headcount over the next six months. Fifty-two percent expect to cut U.S. capital spending and 45 percent foresee a decline in sales.

"What we have to do is get our costs and cash in line with the current reality," DuPont CEO Chad Holliday told Reuters. "If you wait too late, then you fall behind the curve."

Business Roundtable's 160 member companies employ almost 10 million people and generate $5 trillion in annual revenue.

SPREADING DOWNTURN