Bank One shares fall, dividend questioned
Reuters, 04/6/2000 15:24
CHICAGO, April 6 (Reuters) - Bank One Corp. (NYSE:ONE) shares fell more than 7 percent Thursday morning, one day after newly appointed Chairman and Chief Executive James Dimon held his first conference call with analysts.
Some analysts said the current dividend level is at risk at the nation's fourth-largest bank, a company one analyst called a "train wreck."
Bank One shares were down 2-5/8 at 32-9/16 at 11:30 a.m. CDT (1620 GMT). With 7.4 million shares traded, the stock was the fifth most active on the New York Stock Exchange.
While Wednesday's conference call was light on specifics, analysts came away noting that any turnaround in Bank One's sagging fortunes would take a while to accomplish.
"I...seem to be hearing that there's a lot of work cut out there for him," Joseph Duwan, a bank analyst at Keefe, Bruyette and Woods, said after the call.
Bank One has seen its share price plunge by more than half in recent months as customer service problems and other issues at its credit card unit caused it to lower its earnings expectations several times.
Many analysts say the problems at Bank One reach beyond the First USA credit card unit.
"In our view, it's a train wreck," Nancy Bush, an analyst at Prudential Securities, said in a research report, initiating a hold rating on the stock. "While there have been about four earnings revisions recently, as well as the ousting of the CEO, we do not yet think that we have come to the end of the bad news."
One comment by Dimon on Wednesday fueled concerns that the company would cut its dividend. In January, Bank One said its board would discontinue its tradition of setting a stock dividend every two years, but said the board favors maintaining the current dividend rate of $1.68 a share.
When asked about the dividend, Dimon said, "companies should do what's right in balance sheet matters, not what's least painful." But he did not say if Bank One would change its dividend.
"This comment does not detract from our view that the dividend is at risk," Michael Mayo, an analyst at Credit Suisse First Boston, said in a research report. He maintained a sell rating on Bank One.
Some analysts said they expect Bank One to again lower earnings guidance as it spends to improve computer systems and customer service.
"In the next several weeks, we would expect revised EPS guidance by management following a more thorough review by the new CEO," Warburg Dillon Read analyst Jennifer Thompson said in a research report. "In our opinion, the guidance will come down." chicago.equities.newsroom@reuters.com))
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