Wachovia racks up massive $8.9 billion loss
The banking firm plans to shake up its mortgage unit, slash its dividend payout to shareholders, and cut thousands of jobs.
Chief executive Bob Steel, hired less than two weeks ago to bring the struggling bank back to its former glory, had hinted that he envisioned a smaller, leaner Wachovia.
Net loss for the quarter was $8.66 billion compared to a profit of $2.34 billion in the prior-year period. Net loss available to common stockholders was $8.86 billion, or $4.20 per share, compared to earnings of $2.34 billion, or $1.22 per share, a year ago. The company said that the current-year quarter included a noncash goodwill impairment charge of $6.1 billion in commercial-related subsegments, reflecting declining market valuations and asset values.
Excluding the goodwill impairment charge and net merger-related and restructuring expense of $128 million, second-quarter net loss available to common stockholders was $2.67 billion, or $1.27 per share. The company was expecting a loss, excluding goodwill impairment charges, in the range of $2.6 billion – $2.8 billion or $1.23-$1.33 per share.