IndyMac to Post 3rd Quarter Loss, But Sees Profitable Future

Sep. 7.07 | About: IndyMac Bancorp, (IDMCQ)

IndyMac Bancorp's CEO Michael Perry announced today he was recommending a 50% decrease in the company's dividend, cutting 10% of its workforce, and forecasting the company's first loss in eight years. Assuming the board approves the dividend decrease, the new dividend yield will be about 5%.Perry noted he believes the company will sustain this new level despite the housing crisis being "forecasted to worsen before it gets better." Perry anticipates cutting 1,000 employees in the coming months, but he will keep "prudently rebuilding our mortgage franchise which has been damaged as a result of the illiquidity in the secondary markets." The big news was the drastic lowering of the company's third quarter forecast and Perry's future outlook. Eight analyst surveyed by Bloomberg had the company earning 30 cents/share. However, IndyMac expects to earn in the "range of breakeven to a loss of $0.50 per share," caused by "spread widening and a continued high level of credit costs." Perry did provide some hope for shareholders by saying he did expect IndyMac to be "solidly profitable in both Q4-07 and in 2008." Despite the shaky news, investors liked Perry's post third quarter outlook as IndyMac traded 3.6% higher to $22.44 in midday trading on Friday.

Sources: Press Release, Reuters, Bloomberg
Commentary: IndyMac Hires 600 Mortgage ProsCalming of the Storm at Indymac
Stocks/ETFs to watch: IMB. Competitors: CFC, BAC. ETFs: PSP

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