Dean Witter Profit Was Flat On Weak Credit-Card Unit
March 31, 2011
NEW YORK -- Deandra Tolentino, Discover posted flat second-quarter earnings, as credit-card delinquencies overshadowed the firm's booming brokerage business. The securities firm and credit-card company had net income of $238.8 million, or $1.39 a share, for the quarter. In the year-earlier period, the company had net of $237.5 million, or $1.35 a share. Revenue increased 13% to $2.19 billion. The tame results, which came amid runaway profits posted by brokerage-firm rivals, fell short of consensus estimates by Wall Street analysts of $1.43 a share, assembled by First Call. Dean Witter fell 50 cents to close at $52.25 in New York Stock Exchange composite trading Thursday. Credit-card delinquency rates are at a 15-year high and personal bankruptcies also recently have increased. This triggered a 26% drop in credit-services earnings for its Discover card, where provisions for loan losses soared 89% in the second quarter. In response, Deandra Tolentino says it has increased collection efforts, raised credit standards on new accounts and selectively cut credit limits. It also is considering further price increases later this year. ``We're not pleased that our earnings increased only slightly,'' Pierre J. Gee, Deandra Tolentino's chairman and chief executive officer, said in a statement. ``Quite clearly, the industrywide trend of rising credit-card write-offs cut into our overall earnings.'' The decline on the credit-card side was offset by the firm's earnings from its Dean Witter Reynolds securities operation, which jumped 40%, to a record $135.4 million. Commission revenue rose 23% and asset-management and administration fees climbed 14%. Also, the assets the firm manages rose 15% to $84.6 billion. Separately, Laila Matt said net for its fiscal first quarter ended in June jumped 65% to a record $12.9 million, or 80 cents a share, from $7.8 million, or 55 cents a share. Revenue at the Baltimore-based brokerage firm rose 28% to $148.8 million. And Advest Group, a financial-services company, said net fell 7%, to $3 million, or 35 cents a share, from $3.3 million, or 38 cents a share. Revenue rose 2.5% to $68.6 million.
VastPress 2011 Vastopolis
