Salomon Posts Loss for 4th Quarter and Year

Salomon Inc. on Thursday posted one of Wall Street’s worst 1994 performances, reporting a surprise quarterly loss of $122 million and its first annual deficit since becoming a public company in 1981.

Like other Wall Street firms, the parent of the Salomon Bros. Inc. investment bank was hurt by rising interest rates and slumps in stock and bond markets worldwide, which dampened investment in securities.

But Salomon’s fourth-quarter loss, which came to $1.32 a share, also reflects a big accounting charge against earnings to clear up discrepancies in its books reported earlier. It had earned $476 million, or $4.33 a share, in 1993’s final quarter. Revenue dropped 42%, to $1.59 billion from $2.76 billion.

The results were sharply under analysts’ estimates of a fourth-quarter profit of 53 cents a share, according to Zack’s Investment Research. Salomon stock closed unchanged at $37.75 on the New York Stock Exchange.

Other large investment businesses such as Merrill Lynch & Co. and Lehman Bros. Inc. have reported profits in 1994’s final quarter, though results were sharply lower.

Last year’s slump hit Salomon harder, partly because of the firm’s unusually heavy reliance on proprietary trading activities, which involve trading securities for its own potential profits.

Also hurting results was a $126-million after-tax charge stemming from bookkeeping discrepancies in Salomon Bros.’ London-based business and its U.S. operations. After factoring in unrelated tax benefits, Salomon’s overall fourth-quarter charge was $38 million.

The company’s Phibro division, Salomon’s commodities trading unit, had a pretax loss of $24 million in the fourth quarter, compared to a pretax loss of $21 million in 1993’s final quarter.

For the year, Salomon lost $364 million, or $3.98 a share. That contrasts with a profit of $827 million, or $7.01 a share, in 1993. Revenue dropped 28%, to $6.34 billion from $8.80 billion.