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.
Instinet Triggers $100M Cost Reduction Plan
