PaineWebber beats Street
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October 11, 2000: 10:05 a.m. ET
Brokerage posts third-quarter profit of 85 cents a share, above forecasts
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NEW YORK (CNNfn) - PaineWebber Group Inc., the fourth-largest U.S. brokerage firm, reported third-quarter earnings Wednesday that exceeded Wall Street forecasts though they were slightly below year-ago results.
The company earned $135.8 million, or 85 cents a share, in the quarter ended Sept. 30, 2 cents above the 83-cent-a-share estimate of analysts polled by First Call/Thomson Financial. The company earned $138.2 million, or 86 cents a share, in the year-earlier period.
It was the second quarterly decline in profit for the New York-based brokerage, which is in its final months as an independent company before Switzerland's UBS AG completes its $16 billion purchase. UBS AG agreed in July to purchase PaineWebber for roughly $16 billion in cash and stock.
Even so, the company's performance was solid, given the internal disruption from its pending merger, which resulted in slower investment banking revenue, according to Joan Solotar, an analyst with Credit Suisse First Boston.
Solotar worked with Donaldson Lufkin & Jenrette before switching over to her firm's acquirer, CSFB, this week.
"The fact that they were even close to consensus given the disruption was pretty good; there is uncertainty among employees about whether they have a job and a virtual shutdown of their institutional business," she said.
"Most people will probably view this positively, but of course there's a cap as to how far the stock will go, given the acquisition," she added. Solotar last month lowered her third-quarter forecast to 85 cents from $1.04.
UBS will pay PaineWebber shareholders $73.50 a share; the stock ended the day Tuesday at $68.25, indicating it doesn't have much further to go to reach UBS's offer price. PaineWebber shareholders will vote on the pending purchase Oct. 23.
Revenue including net interest in the latest quarter rose 17 percent to $1.44 billion from $1.24 billion. Within that, commissions rose 17 percent to $528.9 million and asset management revenue rose 33 percent to $314 million. Total non-interest expenses rose 20 percent to $1.2 billion.
For the first nine months, PaineWebber earned $439.6 million, or $2.83 a share, compared with $462.3 million, or $2.88, a year ago. Revenue rose 14 percent to a record $4.45 billion.
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PaineWebber
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