Bear Stearns profit falls 79% for quarter

Bear Stearns Cos. said Monday that profit fell 79% in its fiscal first quarter as it was seized by a liquidity crisis that led to the investment bank’s purchase by JPMorgan Chase & Co.

Net income for the quarter ended Feb. 29 fell to $115 million, or 86 cents per share, from $554 million, or $3.82, a year earlier. Revenue, after interest expense, declined 40% to $1.48 billion.

Bear disclosed results in its quarterly report filed with the U.S. Securities and Exchange Commission. It said it missed last week’s filing deadline because it needed more time to determine operating results.

The results were consistent with Chief Executive Alan Schwartz’s statement March 12 that he was “comfortable” with analysts’ forecasts that Bear would be profitable.

Later that week, Bear suffered a sudden deterioration in liquidity, which led to JPMorgan’s agreement to acquire the company in an all-stock transaction that was first valued at $2 a share, then raised to a still-rock-bottom $10 a share.

Bear said business has fallen substantially since its liquidity crisis began. It said failure to complete the merger could “seriously jeopardize the company’s financial viability” and perhaps force it to file for bankruptcy protection and liquidate.

JPMorgan said Friday it had amassed a 48.4% stake in Bear. A majority of shareholder votes is needed to approve the merger.

Bear shares closed down 11 cents at $10.11.

Separately Monday, Bear said in a regulatory filing that it may be sued by the U.S. Securities and Exchange Commission as part of a bid-rigging probe involving financial products sold to local governments.