Bear Stearns reported a steep loss for its fourth quarter, its first ever in its eight-decade history, exceeding analysts’ fears about how much the investment bank would suffer from subprime mortgages bets.
The investment bank said it lost about $854 million, or $6.90 a share, for the fourth quarter, compared to a profit of $563 million, or $4 a share, for the same time last year. Analysts surveyed by Bloomberg News had expected a loss of $1.82 a share.Bear Stearns also said it had written down $1.9 billion of its holdings in mortgages and mortgage-based securities, up from the $1.2 billion it had anticipated last month. As a result of its disastrous results, Bear Stearns said its management will not receive bonuses this year.
The news caps a disastrous year for the investment bank, one of the nation’s largest underwriters of mortgage bonds. Beginning this summer with the housing slowdown, Bear Stearns has stood as the prime example of how Wall Street’s big bet on securities based on risky home loans went bad.
While many of its peers, including Merrill Lynch, Morgan Stanley and Citigroup, have announced far more in devaluations, Bear Stearns draws far more of its profit from its trading operations. That was reflected in its fixed income unit, which reported a net loss of $1.5 billion, down sharply from the $1.1 billion in profit the bank reported for the same time last year.http://dealbook.blogs.nytimes.com