graphic
graphic  
graphic
News > Companies
graphic
J.P. Morgan Chase 3Q falls
Tops forecasts on strong retail business but investment banking falls into red; cuts 2,000 jobs.
October 16, 2002: 4:46 PM EDT

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.  Top of page


-- Reuters contributed to this report.




  More on NEWS
P&G pulls out of NFL breast cancer campaign
Post-it note eating insider trader pleads guilty
Digital tip jar coming to a coffee shop near you
  TODAY'S TOP STORIES
Occupy Wall Street, abolish my debt too!
Alibaba surges 38% in huge IPO debut
7 things you can do on Alibaba




graphic graphic

Market indexes are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer Morningstar: © 2014 Morningstar, Inc. All Rights Reserved. Disclaimer The Dow Jones IndexesSM are proprietary to and distributed by Dow Jones & Company, Inc. and have been licensed for use. All content of the Dow Jones IndexesSM © 2014 is proprietary to Dow Jones & Company, Inc. Chicago Mercantile Association. The market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. FactSet Research Systems Inc. 2014. All rights reserved. Most stock quote data provided by BATS.
Market indexes are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer Morningstar: © 2014 Morningstar, Inc. All Rights Reserved. Disclaimer The Dow Jones IndexesSM are proprietary to and distributed by Dow Jones & Company, Inc. and have been licensed for use. All content of the Dow Jones IndexesSM © 2014 is proprietary to Dow Jones & Company, Inc. Chicago Mercantile Association. The market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. FactSet Research Systems Inc. 2014. All rights reserved. Most stock quote data provided by BATS.