Credit Suisse Reports $1-Billion Loss
Credit Suisse First Boston reported a $1-billion fourth-quarter loss as Chief Executive John Mack fired 2,500 employees and settled U.S. regulatory charges of violating rules in stock sales.
Charges totaling $646 million left the investment bank’s parent, Credit Suisse Group, with a loss of $468 million, spokesman Paul Rimmer said. Switzerland’s second-biggest bank started reporting quarterly earnings in 2001.
The losses, which also reflect unprofitable investments in Argentina and Enron Corp., are wider than those of rival securities firms except Merrill Lynch & Co.
CSFB, which ranked fourth among merger advisory firms last year and fifth in stock underwriting, reported a $289-million loss in the third quarter, prompting Mack to pledge $1 billion in cost reductions. That included firing 9% of the firm’s payroll of 27,623.
Separately, CSFB said it named Stephen Volk as chairman. Volk succeeds former Donaldson, Lufkin & Jenrette Inc. CEO Joe Roby.
CSFB’s fourth-quarter charges included a $100-million settlement with the Securities and Exchange Commission and the National Assn. of Securities Dealers, following allegations the firm benefited from kickbacks in exchange for allotting investors sought-after shares from initial public offerings. Charges for cutting staff amounted to $745 million.
After tax, fourth-quarter charges totaled $646 million. In addition to the charges, the firm lost $213 million on Argentine securities and $126 million investing in Enron.
CSFB’s full-year loss was about $961 million, compared with a profit of $1.41 billion in 2000.
Other company earnings, excluding one-time gains and charges unless noted:
* French telecommunications equipment supplier Alcatel reported a fourth-quarter loss of $1.3 billion, largely because of restructuring charges and inventory write-downs, in line with its earlier forecast. But the company generated a positive operating cash flow of $1.73 billion in the quarter, helping it trim debt far below its goal. Sales fell 20% to $5.8 billion.
* Computer Sciences Corp. said fiscal third-quarter profit rose as it reduced costs and was hired to manage more corporate and government computer systems. Net income rose to $87.1 million, or 51 cents a share, from $65.6 million, or 38 cents, a year earlier. Sales rose 9% to $2.9 billion from $2.66 billion.
* MGM Mirage Inc., which gets two-thirds of its revenue from Las Vegas casinos, said fourth-quarter profit fell 65% on a drop in tourism after the September terrorist attacks. Net income fell to $23.7 million, or 15 cents a share, from $68 million, or 42 cents, a year earlier. Revenue fell 12% to $896.3 million, as cash flow fell 36% at the Bellagio and 35% at MGM Grand.
* Procter & Gamble Co. said fiscal second-quarter earnings rose 8.8% after the largest U.S. household-goods maker boosted sales for the first time in more than a year. Net income rose to $1.3 billion, or 93 cents a share, from $1.19 billion, or 84 cents, a year earlier. Sales climbed 2.2% to $10.4 billion, boosted mainly by the newly acquired Clairol hair-care line.
* Starwood Hotels & Resorts Worldwide Inc., owner of the Westin and Sheraton hotel chains, had its first loss since 1998 as the September terrorist attacks led to a drop in international travel. Starwood had a loss of $54 million, or 28 cents a share, compared with profit of $131 million, or 64 cents, a year earlier. Revenue fell 21% to $878 million.
* Verizon Communications Inc. reported fourth-quarter profit of $2.1 billion, or 77 cents a share, virtually unchanged from a year ago, as declining sales in its core local telephone business offset higher sales of long-distance, high-speed Internet access and wireless services. The results, which exclude a $1.4-billion charge for job cuts, matched analyst expectations. Revenue rose less than 1% to $17 billion, below Wall Street forecasts of $17.17 billion.
