NEW YORK - The Bear Stearns Cos. Inc. said yesterday that a bigger-than-expected write-down in its mortgage portfolio caused the first loss in the company's 84-year history.
The nation's fifth-largest investment bank took a $1.9 billion write-down in the quarter ended Nov. 30 as its mortgage-backed securities continued to lose value amid the global credit crisis. That was much larger than the $1.2 billion it said in November that it expected.
Bear Stearns' loss in its fiscal fourth quarter, and the collapse during the summer of two hedge funds it managed, prompted chief executive officer Jimmy Cayne to skip his 2007 bonus. Members of the company's executive committee also will not receive year-end bonuses.
"We are obviously upset with our 2007 results, particularly in light of the fact that weakness in fixed income more than offset strong and, in some areas, record-setting performance in other businesses," he said in a statement.
Cayne, like other chief executives on Wall Street, is under pressure as global banks have written off more than $100 billion in assets this year. Bear Stearns and other firms have seen write-downs from subprime-related investments and fixed-income trading come in much steeper than first expected.
The company's loss in its fiscal fourth quarter was $859 million, or $6.90 a share, compared with a profit of $558 million, or $4 a share, a year earlier.
The results broadly missed Wall Street expectations, as analysts were unable to get a handle on exactly how exposed Bear Stearns was to risky subprime-mortgage securities. Analysts polled by Thomson Financial had expected a loss for the quarter of $1.79 a share on $625.1 million in revenue. No analyst polled by Thomson expected a loss of more than $2.45 a share.
Bear Stearns has undergone three waves of layoffs since the collapse of the two hedge funds in the summer. About 1,500 jobs have been eliminated from its staff of about 15,500.