RealTime IT News

Instinet Triggers $100M Cost Reduction Plan

Electronic stock broker Instinet Group Tuesday ignited a cost reduction plan to pare operating costs by $100 million that includes the layoff of 300 employees.

Part of an ongoing effort to produce a leaner cost structure, New York-based Instinet said it plans to record charges of $58 million in the fourth quarter of 2002 and will incur an additional $15 million of expenses over the first three quarters of 2003. The fourth quarter 2002 charges result from a reduction in Instinet's workforce by roughly 300 employees, or about 17 percent of its staff.

The cuts are being spread across both the U.S. and its international operations and will include consolidation of office space within the New York City area. The additional expenses in 2003 relate to the speedy amortization of leasehold improvements of some of Instinet's office space in the New York City area.

Instinet's cost reduction play is tied directly to the concern's integration of competitor Island, which it purchased in September for $508 million in stock.

"We have set a target of reducing costs by $100 million over the next twelve months as we integrate Instinet and Island," said Instinet Chief Executive Officer Ed Nicoll, who before the purchase served as the chairman of Island. "These cost reductions are part of a previously announced plan to eliminate redundant positions within the Instinet-Island combination, to reduce overhead to reflect current market conditions, and to bring greater efficiency to the company as a whole."

The Island purchase gave Instinet Group, which is majority-owned by financial information giant Reuters Plc, a leg-up to compete with the Nasdaq Stock Market's "SuperMontage" trading system.