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Brokers report healthy gains
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July 14, 1998: 12:20 p.m. ET
Second-quarter profits better than expected, but stocks are mixed on news
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NEW YORK (CNNfn) - Despite the declines experienced in Asia, the nation's top securities firms reported healthy year-to-year gains in second-quarter profits, helped out by record low interest rates and increased fee-based business.
But the predominantly higher-than-expected net income from J.P. Morgan & Co., Merrill Lynch & Co. and Donaldson Lufkin & Jenrette Inc., evoked mixed reactions from investors on Wall Street.
Shares of J.P. Morgan (JPM) rose 2-15/16 to 128-15/16 while Merrill stock (MER) slid 2-3/16 to 105-3/4 and DLJ shares (DLJ) lost 2-9/16 to 60-1/2.
J.P. Morgan
Excluding one-time gains, J.P. Morgan reported income from operations totaled $402 million, or $2.14 a share. Analysts had anticipated earnings of $1.90 a share, according to First Call.
After a $131 million gain ($79 million after taxes) for the sale of its global trust and agency services business, net income rose 29 percent to $481 million, or $2.36 a share, from $374 million, or $1.85 a share.
Revenue rose 20 percent to $2.15 billion, attributed primarily to increased new issues underwriting as well as sales and trading activities.
Merrill Lynch
Merrill Lynch, the nation's largest brokerage firm, reported a 13 percent increase in second-quarter profits, despite softness in Japan.
Net income rose to a record $545 million, or $1.33 a share, from $481 million, or $1.25 a share. Analysts were expecting profits of $1.34 a share.
But the quarter included $75 million in charges related to Merrill Lynch Japan Securities Co., a private banking concern. The charge lowered earnings by 19 cents a share.
"The (Japan) charge might have been a little higher than people expected," said analyst Michael Sears of Lehman Brothers.
Revenue rose to $4.71 billion from $4.6 billion due to strong mutual fund activity and investment banking business.
DLJ
Meanwhile DLJ, the leading underwriter of so-called "junk" bonds, reported net income in the quarter rose 42 percent to a record $142.3 million, or $1.05 a share, from $100.2 million, or 79 cents a share.
Analysts were anticipating $1.02 a share.
The company, which is majority-owned by Equitable Cos., said revenue rose 47 percent to a record $1.6 billion as the firm achieved all-time highs in commissions and underwriting fees.
DLJ Chairman John S Chalsty said the firm made significant inroads in the mergers and acquisitions advisory industry. But much of the latest quarter's gains were attributed to the $48 billion tie-up between AT&T Corp. and Tele-Communications Inc.
-- from staff and wire reports
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