J.P. Morgan to Take a Pretax Charge Of $100 Million in 4th Period Due to Cuts
J.P. Morgan & Co., still buffeted by this fall's tumultuous markets, said it would take a pretax charge of $100 million in the fourth quarter because of cost-cutting, and warned that operating earnings for the quarter would be weaker than those of the third quarter.</br></br>The forecast of weaker earnings is another sign that global markets are still a drag on corporate performance despite the resurgence of the stock market. The nation's fourth-largest bank attributed the expected quarterly shortfall to reduced revenue in its proprietary equity investments and trading, activities which were slammed during the roller-coaster markets of September and October.</br></br>The disclosure hit the company's shares, which dropped $2.375 to close at $104.1875 in New York Stock Exchange composite trading.</br></br>But J.P. Morgan said both the number of clients and revenue from many investment-banking activities had picked up during the quarter. J.P. Morgan recently has been an agent or adviser on several high-profile deals, including the advice it provided in the $75.3 billion merger of Exxon Corp. and Mobil Corp. "Our position is strong going into the new year as markets recover," said a company spokesman.</br></br>The charge relates to J.P. Morgan's continuing cost-cutting plan. The company previously said it planned to cut about 5% of its employees, or roughly 740 people, during the fourth quarter in piecemeal fashion. J.P. Morgan, which has been hampered by high costs in recent years, has said it plans to cut $400 million in core expenses in 1999, while reinvesting at least $100 million in additional savings it expects from cost cuts.