State Street Corp. will slash 1,800 more jobs on top of the 1,000 recently announced as a part of a cost-reduction package that aims to cut operating expenses by $125 million throughout the remainder of 2003, the company announced yesterday.
The Boston-based financial service firm expects operating expenses in the third and the fourth quarter will each be $55 million below that of the first quarter.
The company anticipates that severance benefits and expenses related to the reductions will result in a pre-tax charge of $125 million to $175 million and decrease reported second-quarter diluted earnings per share by approximately $0.25 to $0.35 per share.
The latest job cut will kick in at "all levels" of the company, mainly through "voluntary early retirement and enhanced severance programs," according to a company press release. The companys workforce stands at over 22,000 worldwide after its acquisition of the custody service of Germanys Deutsche Bank AG earlier this year, when it announced it would cut 1,000 jobs as it integrates the purchase.
"We are positioning State Street for improved profitability," said David A. Spina, chairman and CEO of State Street Corp., in a statement.
State Street, which has $6.2 trillion in assets under custody and $763 billion in assets under management, is suffering because its customers business of managing assets has been hard hit in the bear market, Gerard Cassidy, analyst at RBC Capital Markets in Portland, Maine, said in a Reuters story.
"We have been saying for 18 months that State Streets revenue growth would be a problem as the bear market continued," Cassidy said. "State Street is now fighting tooth and nail to get through these tough times."
State Streets stock has fallen more than 40% from its 52-week high.