March 21, 2008: 4:45 AM EDT
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MBAs bearish on Bear job offers

Bear Stearns' meltdown has left dozens of recruited students wondering where they'll be next year.

By Matthew Boyle, writer

Monday's plunge shows investors can lose their shirts even when the feds decide a firm is 'too big to fail.' More
On Monday, $240 million would buy you storied Wall Street firm Bear Stearns -- or companies like Ebix, Microtune, or a fraction of Facebook. More

NEW YORK (Fortune) -- The campus-recruiting page on the Bear Stearns corporate Web site says, in part, "If you're really good at what you do, you probably have a lot of choices when it comes to [starting] your career."

Let's hope so.

For many business school students looking forward to a career in investment banking, this will be a spring break they'll never forget.

Bear Stearns' (BSC, Fortune 500) meltdown and pending sale to JPMorgan Chase (JPM, Fortune 500) has left dozens of aspiring Masters of the Universe in the lurch. The recruiting season for investment banking positions - both full time and internships - ended months ago, back when Bear's stock traded for quite a bit more than the price of a venti mocha latte at Starbucks.

So what happens to those unlucky students who accepted positions at the now-defunct Bear Stearns? Will they get jobs at JPMorgan, or should they start learning how to make Frappuccinos?

Some career services directors aren't optimistic. "If a student comes in and tells me he has an offer from Bear Stearns, I will tell them it's adios and goodbye," says Jim Dixey, director of Graduate Business Career Services at Texas A&M's Mays Business School. "If your focus is investment banking, you need to look at Plan B and C."

Fortunately for Dixey, no Texas A&M MBA or graduate students had accepted offers this year at Bear Stearns. Other MBA career counselors aren't so lucky. Wendy Tsung, associate dean of MBA Career Services at Emory University's Goizueta Business School, says that two students out of a graduating class of around 200 accepted full time positions at Bear Stearns. The investment bank has told her it would honor all job offers, but "that is subject to change," she said. "No one has any good information at this point," she added.

The same goes for Columbia Business School, where a spokeswoman said the school was in discussions with both banks. "It's a tad bit premature" to say anything now, she said. Across the pond in London, Bear Stearns recruits at Cass Business School have been told they may not have a job, according to professor Giorgio Questa, who directs graduate programs in banking and international finance.

The pain is not confined to Bear Stearns: "Other banks are canceling jobs too," Questa says.

A Bear Stearns spokeswoman referred queries to JPMorgan spokesman Brian Marchiony. "We're still in early stages of assessing businesses, but we are committed to building a great pipeline of people and intend to keep students updated as much as possible," Marchiony said. In a typical year, Bear hires between 80 and 100 MBAs, according to industry sources.

David Haeberle, a finance professor at Indiana's Kelley School of Business who helps students land jobs on Wall Street, says it's realistic to assume that JPMorgan would honor the Bear offers, if only to preserve its reputation on campuses. Still, "no official word has been shared with impacted students," he says.

This uncertainty is certainly not helping those students, many of whom are enjoying (or were enjoying) spring break this week. The two Goizueta students who thought they had jobs at Bear are "concerned," Tsung said, and she has counseled them to reach out to their contacts at the investment bank to stay on top of what's going on. Of course, those contacts could be facing the axe as well, as layoffs are likely as JPMorgan brings Bear into the fold.

JPMorgan CEO Jamie Dimon reportedly spoke to Bear's 500 senior bankers on Wednesday night, urging them to stay. Meanwhile, JPMorgan's rivals are attempting to poach Bear's top talent. It's safe to assume that those rivals are going after MBA hires as well.

It's unclear what, if any, impact job eliminations will have on future MBA recruiting, but one thing is clear: There will be one less blue-chip Wall Street employer at recruiting fairs next fall.

The situation reminds Tsung of her days at consulting firm Accenture (formerly Andersen Consulting), back when it broke away from parent Arthur Andersen in 2000. "At least there is light at the end of the tunnel because Bear is being absorbed [by JPMorgan Chase]," she said.

A better analogy can be drawn with Enron and its implosion in 2001. Dixey was at Georgetown's business school at the time, and recalls the staff holding breakfast meetings after graduation with more than a dozen students who thought they were going to work for the infamous Houston energy firm. "It was job therapy on steroids," he recalls. "We focused them in an entirely new direction."

The situation seems brighter for undergrads, at least at some schools. Beverly Hamilton-Chandler, director of Career Services at Princeton, says "everybody who has an offer [from Bear] will be fine. They will be working for JPMorgan Chase." (Interestingly, this came as news to the JPMorgan spokesman.) About a half-dozen Princeton students accepted summer internships, she said, while the number of seniors who have accepted full-time roles is not yet known.

But the news isn't all good on that front - one undergraduate at the University of Illinois who was hired by Bear was about to go in for his mandatory drug test when the firm collapsed, and has heard nothing since.

Hamilton-Chandler says most corporate recruiters have been more conservative in their hiring in recent years, hoping to avoid what happened during the recession that followed the dot-com collapse in 2000. Then, many firms had to postpone or even take back offers, which were sometimes accompanied by a cash payment of up to three months' pay, dubbed an "apology bonus." Some Bear interns may be offered cash "sweeteners" in lieu of a job, according to the Cass School's Questa.

A recent survey of employers by the National Association of Colleges and Employers shows that the hiring scene has cooled considerably since the fall, when employers projected a 16% increase in college hiring. Today, that figure is just 8%. "Graduates who were focused on particular industries, such as finance, may need to adjust their target," said NACE executive director Marilyn Mackes.

Wherever the would-be Bear employees end up, the bank's collapse will serve as a painful early lesson in how the business world works. Dixey feels that it's a lesson many cocksure MBAs sorely need.

"I think a lot of MBAs have this perception that they are locked in, and are shocked when they lose their [job] offer," he says. "It has always amazed me that there is great deal of naiveté on their part." To top of page

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