Bear Stearns Co. (BSC) reported its first quarterly loss both as a public company and in eight decades, taking a $1.9-billion writedown on mortgages. The fourth quarter loss of $6.90 per share was well below the consensus forecast for a $1.69 loss, while the sub-prime related asset writedowns exceeded the firm’s previous guidance of a $1.2-billion loss.
Institutional equities and investment banking came in weaker than expected, Goldman Sachs analyst William Tanona told clients in a note.
He added:
The good news is that Bear’s sub-prime mortgage related woes appear largely behind it, but the bad news is that unlike peers, Bear’s businesses are not as diversified on a product or geographic basis and its core fixed income trading/underwriting businesses will likely be negatively impaired for some time.
While Bear Stearns shares may react somewhat positively in the near term, Mr. Tanona expects long-term investors will be concerned with the firm’s ability to compete with its peers given current challenges facing the market.
