AmEx to slash 5,000 jobs, takes a $1 billion hit

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New York--In the largest job cuts it has made in a decade, American Express Corp. said Thursday that it would slash 5,000 jobs due to the weak economy and take more than $1 billion in charges against its earnings for this quarter. The job cuts come on top of the 1,600 AmEx employees eliminated earlier this year. Second-quarter earnings will drop about 76% from a year ago as a result of the writedown, the company said.The charges are tied to AmEx's aggressive junk-bond investments. In announcing them, AmEx CEO Kenneth Chenault admitted the company had misjudged the risks in its $3.5 billion portfolio of junk bonds. He repeatedly told analysts and investors Wednesday that the company would take a more conservative approach to investing the money it takes in from selling insurance and investment products. Analysts have said that if Chenault doesn't the right the ship in the next year, pressure might build for him to sell the company, which has been considered as a potential takeover target by another financial company.Most of the job cuts come from four divisions of the company's global operations: technology, human resources, corporate travel business and corporate lending overseas. Chenault declined to break down the cuts by division or geography. About 60% of AmEx's employees work in the U.S. In early morning trading, AmEx shares rose to $38.11, up slightly from Wednesday's close of $37.50.
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