Bear Stearns Posts First Loss

Subprime writedowns hobble 'bond shop,' loss almost four times what analysts expected
By Kevin Spak,  Newser Staff
Posted Dec 20, 2007 9:19 AM CST
This is an undated handout file photo of Bear Stearns Cos. Inc. chief executive James E. "Jimmy" Cayne. (AP Photo/HO/Bear StearnsCos. Inc., file)   (Associated Press)
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(Newser) – Analysts expected Bear Stearns to post its first-ever loss today, they just expected it to be smaller. After $1.9 billion in subprime writedowns, the company posted a $6.91 loss per share, dwarfing the $1.82 analysts predicted. Executives gave up their bonuses, as revenue from debt sales and trading were wiped out, Bloomberg reports. “They’ve got a myriad of problems,” one analyst said.

The writedowns eclipsed the company’s $1.2 billion forecast. While many of the firm’s competitors have taken bigger hits, Bear Stearns’ stock has fallen further because of over-reliance on fixed-income. “Their problem is they're not as diversified,” an analyst explained. “They’re kind of a bond shop.” A recession would likely help the company, slowing rivals and increasing the price of bonds.