Bear Stearns Cuts 400 Jobs, Issues Earnings Warning
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Bear Stearns Cos. Inc. Tuesday laid off 400 of its 11,000 employees, about 3 percent of its staff, and at the same time warned that it will have difficulty meeting first quarter earnings estimates in light of current market conditions.
However, the company said the two moves were unrelated, explaining that the staff cuts were part of a long-planned effort to improve margins.
About 120 of the job cuts came from the company's IT development center in Tampa, Fla., which it plans to close. In all, about half the cuts came from Bear Stearn's technology operations. Other cuts came from its fixed-income and equities trading departments as well as other parts of the company. No bankers were let go.
Bear Stearns cited falling stock markets -- with stock offerings drying up and companies hesitant to enter merger agreements with low visibility -- as the reason for its warning Tuesday. Analysts are looking for EPS of $1.38, according to First Call/Thompson Financial. Other financial firms are expected to follow with warnings of their own.
The company will record a second quarter charge of $8 million as a result of the cuts.
stock tumbled about 6 percent -- from a close of $54.59 a share to $51.37 a share -- in after-hours trading Tuesday.