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Morgan sees weak 4Q
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December 9, 1998: 1:55 p.m. ET
Banker says results to be below 3Q, year-ago due to proprietary activities
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NEW YORK (CNNfn) - J.P. Morgan & Co., which continues to be plagued by weakness in Asian and other international markets, said Wednesday that its operating earnings for the fourth quarter will be below those of the prior three months - which were themselves significantly lower than those posted in the fourth quarter of 1997.
Morgan (JPM) also said it will take a $100 million pretax charge for the quarter related to a previously announced cost-reduction program.
In a statement, the New York-based investment banker blamed weak results in "proprietary activities," which it said were partially offset by a recent increase in client activity.
In the third quarter of 1998, Morgan posted net income of $156 million, or 75 cents a diluted share, including a $34 million after-tax gain on the sale of its Australian investment management business. In the final quarter of 1997, the company's net income was $271 million, or $1.33 a share.
Morgan also announced that it would purchase up to $750 million of its common stock in 1999 and beyond through either open market purchases or negotiated transactions. The company said it has bought back $755 million worth of its shares so far this year.
The banking firm also said it's raising its quarterly dividend by 4 cents a share to 99 cents a share, with the first increased payment to be made Jan. 15.
In its statement, Morgan said that its capital actions "reflect confidence in the outlook for Morgan's global business."
In the key aspect of the cost-cutting plan announced in November, Morgan said it would cut 740 employees - or 5 percent of its workforce - from the payroll by the end of 1998. The firm joined others on Wall Street in trimming staff to address the financial shortfall caused by the international economic slowdown.
In afternoon NYSE trading, J.P. Morgan shares were down 3-5/16 to 103-1/4.
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J.P. Morgan
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