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Bear Stearns Cos. (BSC)
Bear Stearns Reports 34% Profit Rise in 3Q
New York-based Bear Stearns Cos., the No. 5 U.S. securities firm and one of the nation's top investment bank, released third-quarter earnings results that beat Wall Street expectations. Profits in the three months to Aug. 31 rose 34% from a year ago, helped by strong results across most of its businesses, especially in the investment-banking and institutional equities businesses. Quarterly income rose to $378.3 million, or a record $2.69 a share, from $283.3 million, or $2.09 a share, a year earlier. This result easily overcame Thomson Financial analysts estimates of $2.38 a share.
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Capital market revenue rose 15 percent to $1.4 billion, reflecting sharp upswings in stock trading, equity derivative sales and mergers and acquisitions activity. On the other hand, Stearns' largest segment, known as the fixed-income business, declined 4 % from a year ago to $774.0 million. Despite, the company stated that its credit and mortgage businesses "have remained strong." At the same time, investment banking revenue soared 65 percent to $299.9 million as underwriting and merger services sold efficiently. Further, merchant banking revenue increased to $93 million from $3 million on investment gains and fees.
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Bear Stearns' solid results came a day after its rival Lehman Brothers reported a 74 per cent profits jump in the third-quarter, supported by strong stock and bond underwriting. Chairman and CEO James Cayne was pleased about the current situation and the strong results. He said: "Bear Stearns continues to perform well in every area, our fixed income division is more diversified, our banking effort broader, our client relationships stronger and our talent pool deeper than ever before. He believes that the "balanced nature of Bear Stearns' business mix remains a driver of their excellent results throughout shifting market cycles."
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Analysts expected investment banks to report their second best quarter ever after an unusually active summer. These expectations were fueled with the earnings release by Lehman Brothers and Bear Stearns, two days in a row. Shares of the company fell 2.3 percent to $103.19 in composite trading on the New York Stock Exchange this morning. It will be interesting to see if Bear Stearns can continue with the stellar performances also in future. It is surely a stock to watch over the next few months.
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Profile |
Bear Stearns Co.'s is the parent company of Bear, Stearns & Co. Inc., a worldwide investment banking and securities trading firm. The company's business includes corporate finance and mergers and acquisitions, institutional equities and fixed income sales and trading, private client services, derivatives, foreign exchange and futures sales and trading, asset management and custody services. Through its Securities Corp., it offers prime broker and broker dealer clearing services.
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