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Bear Stearns Cos. (NYSE: BSC) embattled CEO Jimmy Cayne is lucky his firm reported its horrid quarterly results showing its biggest profit decline in more than a decade so soon after Ben Bernanke delighted the market through a larger-than-anticipated rate cut. Good thing too that the market reacted positively to comments made by CFO Samuel Molinaro that the worst is over though it wasn't clear when he developed his psychic abilities.
For now, investors are basking in the present sending shares of New York-based Bear are up in early afternoon including Goldman Sachs (NYSE: GS), which reported better-than-expected third-quarter results today. Lehman Brothers Holdings Inc. (NYSE: LEH), which reported strong earnings yesterday, also showed gains as did Merrill Lynch & Co. (NYSE: MER). Morgan Stanley (NYSE: MS), which disappointed investors, was a laggard.
Nonetheless, the contrasts between Bear Stearns and the rest of Wall Street are stark.
For example, Goldman had net income of $2.85 billion, or $6.13 per share, for the quarter ended Aug. 31. Net revenue surged 63% to $12.3 billion. Analysts had expected earnings of $4.35 per share on revenue of $9.5 billion, according to Thomson Financial.
Net income at Bear Stearns before the payment of preferred dividends was $166.1 million, or $1.16 per share, well below the $1.78 expected by analysts. Revenue dropped 38% to $1.33 billion amid declines in the company's fixed income business.
Bear Stearns has the most exposure to fixed income on Wall Street and the least to international markets, S&P analyst Matt Albrecht told Bloomberg News. ``Their reliance on the mortgage market isn't going to help as that market continues to roil," he told the news service.
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Reader Comments (Page 1 of 1)
9-20-2007 @ 6:40PM
Seth said...
Lehman Brother's and Goldman Sachs were both able to weather the current credit crisis because of diversified revenue. Both companies also most likely took advantage of their vast connections. Bear Stearns needs to diversify its revenue (particularly its overseas revenue) and take advantage of the connections available to its Board members. Given the fact that the Directors at Bear Stearns are well connected http://www.newsvisual.com/newsvisual/2007/09/bear-stearns-bo.html#more , this should not be a huge problem and Bear Stearns should be able to bounce back from this rather quickly.