NEW YORK (CNN/Money) -
J.P. Morgan Chase & Co. reported a sharp drop in third-quarter earnings Wednesday that beat Wall Street expectations for the period, as the company said it will eliminate 2,000 jobs to cut costs.
The investment bank said it does not plan to exit any specific areas of business despite the hefty job cuts.
The firm reiterated its goal to limit its exposure to venture capital investing, where it has taken large losses, Chief Financial Officer Dina Dublon told reporters on a conference call Wednesday.
This unit takes early stakes in startup companies with the aim of profiting when companies go public or are bought. But many startup technology companies either failed to sell stock to the public or fell victim to the market rout when their shares started trading.
"Our conclusion is that we should not exit any one area," Dublon said of the investment banking cuts. "The strategy of having a breadth of products and having a global footprint is something that, having gone through the review ... is the right strategy to continue with."
The nation's No. 2 bank earned $325 million, or 16 cents a share, excluding special items, down from $1.1 billion, or 55 cents a share, earned in the year-earlier period. Analysts surveyed by earnings tracker First Call had a consensus earnings-per-share forecast of 7 cents in the period, with a range of estimates from a loss of 8 cents a share to an 18 cent-a-share profit.
The company's problems occurred in its investment banking sector, which posted an operating loss of $256 million, compared with operating earnings of $702 million a year earlier. Significantly higher credit costs, a drop in merger and acquisition activity, as well as a drop in both underwriting fees and trading revenue, hit results there, and the investment banking unit will see the planned job cuts.
The company estimates it will save about $700 million a year from the 2,000 job cuts, or an average of $350,000 per position eliminated. It said severance costs will be about $450 million, and that it will take a charge for $300 million of it in the current period.
By comparison, the company's retail banking and middle market financial services unit reported its third straight quarter of record results as operating income increased 92 percent to $807 million.
"While the strength reflected in our retail and operating services businesses is a major positive, our performance in the aggregate is very disappointing," said a statement from CEO William Harrison.
Including special items, the company posted net income of $40 million, or 1 cent a share, down from $449 million, or 22 cents a share, a year earlier.
Shares of J.P. Morgan Chase (JPM: Research, Estimates), a component of the Dow Jones industrial average, fell 32 cents Wednesday to close at $18.29.
-- Reuters contributed to this report.