Bear Stearns’ Profit Jumps but Not as High as Forecasts
Bear Stearns Cos. on Wednesday said profit more than doubled in its fiscal first quarter from depressed levels a year ago, but the results failed to meet analysts’ estimates, sending the securities firm’s shares down 9%.
Net income jumped to $157.9 million, or $1 a share, from $64.1 million, or 38 cents, a year earlier, when global financial market turbulence battered profits at most Wall Street firms.
The results fell 13% short of Wall Street estimates of $1.15 a share, according to data tracker First Call Corp., making Bear Stearns the only large U.S. brokerage to miss forecasts for the latest quarter. Analysts in recent years have underestimated brokerage earnings, enabling Wall Street to beat consensus estimates.
“It looks like [the shortfall] was purely in the fixed-income area,” said analyst Michael Flanagan of Financial Service Analytics. “The bond markets in the third [calendar] quarter were not good at all.”
Like other Wall Street firms, Bear Stearns’ latest results failed to beat the record April-June period as rising interest rates slowed down bond and stock trading in the just-ended quarter.
Trading, or principal transactions, is a bigger business at Bear Stearns than at some rivals.
At Bear Stearns, revenue from trading grew 84% from the year-ago first quarter, but fell short of forecasts.
Bear Stearns stock fell $3.50 to close at $36.75 on the New York Stock Exchange.
Net revenue rose 41% to $1.05 billion from a year ago, but was down 31% from the previous quarter.
Investment banking revenue climbed 116% to $262.5 million. Bear Stearns said merger advisory fees fell 50% to $71 million but added that deal backlog still looks strong.
Commission income fell 5% to $228.5 million. The company attributed the decline to lower levels of investor activity.
* Fannie Mae, the No. 1 U.S. provider of mortgage funding, said third-quarter earnings increased 16% to $991 million, or 94 cents a share, in line with estimates, as its mortgage holdings grew and credit costs declined. The company’s net mortgage portfolio, or mortgages it bought minus those it sold, rose to $504 billion from $376 billion.
* SLM Holding Corp., better known as Sallie Mae, said its third-quarter earnings rose 9% to $125 million, or 77 cents a share, meeting analyst expectations. Sallie Mae purchased a record $5.6 billion of student loans in the quarter, including $2.6 billion from the July acquisition of Nellie Mae Corp. That’s up from $2 billion a year ago.
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* SMALLER LOSS
Online brokerage E-Trade Group reported a smaller-than-expected net loss. C4
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Bloomberg News and Reuters were used in compiling this report.
