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In an effort to boost struggling Bank One Corp., Chief Executive Jamie Dimon halved the company's dividend on July 19 on news of a slightly higher than expected second-quarter charge of $1.91 billion.
Dimon, who was hired in March to turn around the bank's sagging fortunes, revealed the moves in a Tuesday conference call in New York with analysts. Bank One reported losses of $1.27 billion in the second quarter, or $1.11 per share, compared to an income of $992 million, or 83 cents per share, in the same period last year. Analysts had expected the company to earn 63 cents a share, according to First Call/Thomson Financial. Still, Dimon expressed optimism about the future. "We have a 15% growth target...we expect by next year to have earned 75 cents a share," he said.
For now, Dimon said he doesn't plan to sell the bank's besieged First USA credit-card division. "We should be earning $1 billion a year there, and we're going to do that," said Dimon. (The current rate is $440 million.) Plagued by customer-service problems and a drop-off in customers, First USA has been a key factor in Bank One's falling share price. The stock has lost half of its value since August.
Bank One will make its Internet-only bank, Wingspanbank.com, a part of its retail unit. Dimon conceded that Wingspan's creation and launch have been plagued with problems. Responding to criticisms over having two Internet brands, Dimon said the bank will combine Wingspan and Bankone.com into one Net platform, but the operations will remain separate.
There will be only a few more job cuts at the nation's fifth-largest bank holding company, which reduced its workforce from 86,600 to 82,500 this year. It has also shuffled its management team, hiring a new chief financial officer, chief legal officer, and head of strategic planning.
By Pallavi Gogoi in Chicago
EDITED BY DOUGLAS HARBRECHT
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Copyright 2000, Bloomberg L.P.
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