clarinews@clarinet.com (ELLEN WULFHORST, UPI Business Writer) (01/19/90)
NEW YORK (UPI) -- Bear Stearns Cos. reported second-quarter earnings Thursday, showing a rebound from the previous quarter but a sharp decline from a year ago due to poor conditions in debt and equity markets, risk arbitrage and mergers and acquisitions. Net income for the quarter ended Dec. 31 was $29.1 million, or 29 cents a share, off 54 percent from the same period a year ago when the company showed net income of $63.3 million, or 63 cents a share, in the best quarter in its history, Bear Stearns said in a statement. Quarterly results were up 32 percent from $22.1 million, or 22 cents per share, in the previous quarter ended Sept. 29. In the securities industries, analysts measure performance on a quarter-to-quarter basis, due to the fast-paced nature of the business. Revenues for the latest quarter were $578 million, off from $632.6 million in the year-ago period. The company said it was pleased with its performance for the quarter, which included the Oct. 13 mini-crash when the Dow Jones Industrial Average plunged 190 points. The quarter was one of ``unfavorable market conditions in both the debt and equity markets, a lack of risk arbitrage opportunities and a decrease in merger and acquisition activity,'' the company said in a statement. ``The performance of all of our operating departments confirms that the company consistently is able to produce profits during challenging market conditions,'' said Alan C. Greenberg, chairman and chief executive officer. He added that Bear Stearns believes it has ``the ability to add talented professionals throughout the firm.'' Many firms in the securities industry have been laying off employees in a continuing fallout from the October 1987 stock market crash. Analysts agreed that Bear Stearns fared better in the poor environment than other Wall Street firms that have been predicting bleak end-of-the-year results. ``What explains it is senior management and traders at Bear Stearns are good,'' said Gary Hovis, an analyst at Argus Research. ``They can make money in a bad market and other brokerages can't seem to do that.'' Bear Stearns was not heavily involved in areas such as the retail business or investment banking, whhere there has been a slowdown in activity, said Perrin Long Jr., an analyst with Lipper Analytical. Also, he said, Bear Stearns has benefited by its highly cost-conscious attitude. ``Management has a culture that costs are the most important thing,'' Long said. ``They save paper clips. They save rubber bands. Other firms don't have that kind of culture. ``What hits firms when times are poor is the whole question of fixed costs. If they have a high cost of operations, they get hurt when times are slow,'' he said. ``Bear Stearns' cost of operations has never been as high as at other firms.'' Brokerages such as Shearson Lehman Hutton have predicted ``horrendous'' quarterly results and, overall, the industry average will proabably be off some 25 percent, he said. Other publicly traded brokerage firms are scheduled to release their latest earnings reports over the next few days. For the six months ended Dec. 31, net income was $51.2 million, or 51 cents a share, off 39 percent from $83.8 million, or 82 cents a share, a year earlier. Six-month revenues were $1.2 billion, compared with $1.1 billion a year earlier. Bear Stearns also declared a 5 percent common stock dividend and a 14 cent quarterly cash dividend. The 5 percent stock dividend marks the fourth time in the past 18 months the company has increased the dividend on common stock either through cash or stock dividends, the company said. ``The board's action today reflects our confidence in where the company is going and our satisfaction with the results of the first six months of fiscal 1990,'' Greenberg said.