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Bear Stearns beats Street
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June 14, 2000: 11:36 a.m. ET
But net profit drops 40% due to costs from a jury award to former client
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NEW YORK (CNNfn) - Bear Stearns Cos. Inc. reported fiscal second-quarter operating profit Wednesday that exceeded the analysts' estimate, but net results were dragged down by a $111.5 million jury award; a verdict the brokerage firm is appealing.
The Wall Street firm earned $214.4 million, or $1.40 per diluted share, for the quarter ended May 26, up from $198.1 million, or $1.38 per share, in the year-earlier quarter. The latest results easily beat the $1.26 per share analysts' estimate compiled from a survey by earnings research firm First Call Corp.
Second-quarter revenues, net of interest expenses, dipped 3 percent to $1.32 billion. Commission revenues jumped 18 percent to a record $321.7 million, but transactions revenues fell 22 percent to $513.9 million. The company cited a weaker fixed-income market sparked by rising interest rates for the decline. Investment banking revenues slipped 3 percent to $235.8 million.
"We achieved solid results this quarter, despite more volatile market conditions and declining trading volumes, predominantly in the fixed-income markets," chef executive James Cayne said. "Furthermore, weakness in the Nasdaq, particularly technology shares, led to a decline in equity new issue activity."
Bear Stearns stock gained 1-5/16 to 42-3/16 in Wednesday morning trading.
The operating results do not include a special charge of $96 million, or 63 cents per share, to cover the cost of a New York federal jury's $111.5 million award last month to a former Bear Stearns client, Henryk de Kwiatkowski, who contended he lost about $300 million in currency trading in the mid-1990s through the firm's negligence.
The verdict in the civil case was one of the largest damage awards ever involving an individual investor suing a Wall Street firm.  Bear Stearns is appealing the jury's decision.
Bear Stearns "believes the verdict was against the weight of evidence and inconsistent with existing law," a company statement said. "The company intends to vigorously pursue all legal remedies available to it."
Including the litigation costs, net income totaled $118.4 million, or 77 cents per diluted share, a 40 percent drop from year-earlier results. There were no one-time items for the 1999 quarter.
For the first half of the fiscal year, net income including one-time items totaled $396.6 million, or $2.67 per share, down from $428.8 million, or $2.83 per share, in the corresponding period last year. Revenues for the six months totaled $632.1 million, from $518.7 million in the prior period. 
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Bear Stearns
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