Wachovia loses $8.9B in 2nd Q, cuts 6,350 jobs

Media General News Service and Associated Press reports
Published: July 22, 2008

CHARLOTTE, N.C.—Wachovia Corp. said today it lost $8.86 billion in the second quarter, slashed its dividend and announced 6,350 job cuts after losses tied to mortgages soared.

Even excluding one-time items, the results substantially missed Wall Street estimates, and shares sank to mid-1991 levels in premarket trading.

“These bottom-line results are disappointing and unacceptable,” Chairman Lanty Smith said in a statement. “While to some degree they reflect industry headwinds and weaker macroeconomic conditions, they also reflect performance for which we at Wachovia accept responsibility.”

The nation’s fourth-largest bank by assets says it lost the equivalent of $4.20 per share in the April-June period. In the same timeframe last year, the bank earned $2.34 billion, or $1.22 per share.

Excluding a goodwill impairment of $6.1 billion and merger-related and restructuring charges of $128 million, Wachovia lost $2.67 billion, or $1.27 per share. Second quarter results include the bank’s October acquisition of A.G. Edwards Inc.

Analysts on average expected a loss of 78 cents per share on revenue of almost $8.4 billion.

The Charlotte-based bank cut its quarterly dividend to 5 cents per share from 37.5 cents, which will conserve approximately $700 million of capital per quarter.

Late yesterday, Wachovia announced plans to leave the wholesale mortgage lending business.

On July 9, Wachovia had projected a $2.6 billion to $2.8 billion quarterly loss, equal to $1.23 to $1.33 per share, excluding goodwill items.

The same day, it named former Treasury Undersecretary and Goldman Sachs Group Inc. executive Robert Steel as chief executive, replacing the ousted Ken Thompson. Within a week of being on the job, the bank’s shares tumbled to a new 17-year low.

In premarket trading today, the stock shed nearly 12 percent to $11.80. That level would mark the stock’s lowest price since roughly June 1991.

As of Jan. 1, Wachovia employed the equivalent of 5,345 full-time workers in the Richmond area.