Posted on 06/21/2002 4:16:40 PM PDT by Willie Green
For education and discussion only. Not for commercial use.
Wall Street may lose as many as 35,000 jobs, or 10% of its workforce, in the coming year, analysts said.
Yesterday, Merrill Lynch continued its cutbacks, slashing 45 people in New York and New Jersey from its Nasdaq trading desk.
The volume of trading has collapsed this year along with the prices of most Nasdaq stocks with the tech-heavy index plunging again yesterday below 1,500.
Meanwhile, analysts said Morgan Stanley — which yesterday reported quarterly earnings fell 14% — has quietly cut 1,337 jobs, or 2% of its staff, in the last three months. It may not be done for the year, analysts said.
"Everyone is looking at cutting," said Reilly Tierney, an analyst at Fox-Pitt Kelton. "It's going on silently. The firms recognize that there's a morale factor. Sometimes, it's better to surgically go ahead rather than ruining everyone's day."
Tierney said he "wouldn't be surprised to see Morgan Stanley do another 3,000 [cuts] this year. A lot of that will come through normal attrition."
"We're happy where our headcount is," said Stephen Crawford, Morgan Stanley's chief financial officer. "We obviously maintain the flexibility to change our view."
Morgan Stanley employed 58,538 people as of May 31.
The 200 brokerage firms that trade on the New York Stock Exchange employed 330,000 people at the beginning of 2002, which is down from 365,000 from a year earlier, Tierney said, adding, "we'll have a net reduction this year and next."
Tierney estimates Goldman Sachs, which employed 22,136 people as of the end of February, will cut about 1,000 people by the end of the year.
Goldman officials have said the company planned to reduce its staff, though they haven't provided specific numbers. Goldman reports earnings today.
Merrill Lynch, which cut some 15,000 jobs last year, is also likely to continue to trim staff, Tierney said.
"They recognize how inefficient they are," Tierney said. "They can't control revenue, but they can control costs," adding Credit Suisse will also cut workers.
Bear Stearns and Lehman, two brokerage firms that focus on fixed income, may not be as aggressive in reducing their headcount, because the bond business continues to help their earnings. Bear Stearns yesterday said quarterly profits rose 20%.
Tierney said job security on Wall Street depended on the business line. "If you're in areas that aren't doing well — mergers, high yield and, to some extent, equity — you're shaking in your boots."
Meanwhile, stocks tumbled after Advanced Micro Devices and Apple Computer said profits would fall short of forecasts.
The Dow fell 144.55 to 9,561.57 and the Nasdaq dropped 46.13 to 1,496.83. IBM fell $2.59 to $73.35, Intel dropped $1.93 to $20.09, and SBC Communications declined $1.74 to $31.24.
The other indicator is when you see a bear on the cover of Time Magazine.
Thank Heaven, it's been a long 2 years!
I'm sure it's made it around here, but just in case, did you see about the assassination of an Italian official who dared raise the idea of allowing layoffs in certain, narrow sectors? He was shot dead on his driveway, I believe.
Fire 'em, and hire 'em, whichever way works. Not that Wall Street, particularly, deserves it, which it does, but the satisfaction is supreme. The only thing better would be this headline,
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