Business

Wachovia loses $8.9B, cuts 6,350 workers, dividend
by Radka Konkolova

The United States are still facing the crisis. The value of dollar is still falling and stronger inflation occurs. Almost every man and every institution has got problems with money. Especially such companies where the value of their shares is rapidly decreasing and shareholders are losing their profits and dividends from them.

Even banks have denoted huge loss. And it was surprisingly huge loss. Wall Street has hoped that nation’s bank won’t have such big problems with credit crisis. But it was probably wrong, because fourth biggest bank, Wachovia, reported on Tuesday that it lost about $8.86 billion quarterly. And this is the biggest decline ever. Shares of this bank have been declining for quite long time so this could be the reason why it is the most stricken institution by credit crisis. But mainly it is because acquisition of almost $25 million value when in October 2006 it purchased Californian company, Golden West Financial Corporation, which was specialized in mortgages. And ten months after this “advantageous” buying there started a crisis with loans and mortgages in the US. And shares still declined. For example bank lost $4.20 per share in April-June period this year. To the contrary in the same timeframe last year it earned $1.22 per share. So you can notice the loss are really in significant size. Nowadays the value is slightly increasing, but there had to be some arrangements to be so. For example the management of this bank was changed and there are another changes prepared. As a part of this plan, bank wants to reduce the amount of the workers of more than 10,750. A majority of those jobs will come from the mortgages area, open positions and contractors. The bank has already dismissed about 2,000 employees doing retail mortgage jobs. They also want to reduce amount of providing loans and mortgages and to get rid of those people who prefer to use services of this bank to borrow money rather than the other services. Such clients are not perspective and won’t help the bank to solve its problems with shares, money and loss.

Analysts on average expected a loss of 78 cents per share on revenue of almost $8.4 billion. So they haven’t been so far from the reality. But it is not much positive neither for banks nor for people, although there are many new arrangements which should help this very one and other banks to recover.

Maybe after this experience people will realise that they shouldn’t spned so much money and do many “useless” expenditures, because it can’t result well in long term…

related story: http://news.yahoo.com/s/ap/20080722/ap_on_bi_ge/earns_wachovia;_ylt=AuBcPHUvADoyLTP9LoBKuNms0NUE

by Radka Konkolova for PocketNews (http://pocketnews.tv)

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posted by Blog TechSource @ 1:53 AM