Bear Stearns Cos. said Tuesday that it lost $96 million in last month's stock market crash, virtually wiping out the brokerage holding company's second-quarter profit and prompting cuts in employees' incentive pay and bonuses.
The company attributed the losses to its stakes in corporate takeover situations and the need to establish reserves to cover the unsecured obligations of some of the arbitrageurs and options traders who execute their trades through Bear Stearns.
For the fiscal second quarter ending Oct. 30, the firm reported net income of $413,000--a 99% drop from the $49.9 million earned in the same period last year. Gross revenue for the quarter was $441.9 million, a 2.7% decrease from the $454.1 million reported a year earlier.
A strong performance in retail and institutional sales, merger and acquisition fees and bond trading allowed the firm to post a net loss of just $8.6 million for October, despite the market's collapse.