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Strategies & Market Trends : VOLTAIRE'S PORCH-MODERATED -- Ignore unavailable to you. Want to Upgrade?

To: stockman_scott who wrote (45365)	12/19/2001 2:14:14 PM
From: Sully-	Read Replies (1) \| Respond to of 65232

FleetBoston to Lay Off 700 Workers Banking Giant FleetBoston to Cut 700 Jobs, Take Hundreds of Millions of Dollars in Write-Downs By JUSTIN POPE AP Business Writer BOSTON (AP) -- Banking giant FleetBoston Financial Corp. said Wednesday it would lay off 700 workers and take hundreds of millions of dollars in write-downs for the job cuts, investments gone bad and exposure to the Argentine financial crisis. The Boston-based company characterized the charges, which will total $650 million after taxes in the fourth quarter, as an effort to clean up its balance sheet ahead of an expected economic recovery in the second half of next year. ``We had come to expect a kitchen sink quarter, and they provided that,'' said Gerard Cassidy, an analyst at RBC Capital Markets in Portland, Maine. ``It's very much to this management's credit that they tried to be a leader in attacking these problems,'' Cassidy said, but added that he was still surprised by the size of some of the write-downs. At midday, shares in FleetBoston changed hands at $38.10, up 35 cents or about 1 percent, on the New York Stock Exchange. The company called the job cuts necessary to keep expenses in line with revenues, ``particularly in a weak capital markets environment.'' Spokesman James Mahoney said the cuts would be spread across the company's operations between Maine and Pennsylvania. FleetBoston, the nation's seventh largest financial holding company and the parent of Fleet Bank, said the largest component of the charge would be a $475 million write-down of its $3.6 billion Principal Investing portfolio. Chief financial officer Eugene M. McQuade told analysts on a conference call that 80 percent to 90 percent of those losses were on investments made during 1999 and 2000. He blamed an ``unprecedented'' slump in initial public offerings, leverage financing and other sectors that have driven Fleet's investment in the portfolio down 25 percent. He said the technology and telecommunications component was down 50 percent. The company also said it would take $150 million in charges as it swaps its Argentine investments for government securities. That will cost it $20 million annually in lower returns, but the securities are likely to be more secure, FleetBoston said. ``On the positive side, the debt is now collateralized by various tax receipts in the country, and we think that makes it much more collectable,'' McQuade said. The company now has a total for the year of $200 million in charges related to Argentina, where it has operated for 85 years. FleetBoston also planned to take a $100 million charge to cover severance and other costs related to laying off 700 of its 55,000 workers. The dismissals are on top of 750 layoffs earlier this year. The charges will all but wipe out FleetBoston's profits in the fourth quarter. The fourth-quarter charges of $650 million amount to 62 cents per share. After factoring them in, net profit is projected at $30 million, or 3 cents a share. Before taxes, the charges total just over $1 billion. McQuade said he was comfortable with analysts' estimates that the company will earn $3.26 per share in fiscal 2002. Ratings agency Standard & Poor's revised its outlook for the company and its affiliates from stable to positive. biz.yahoo.com