It’s a bad time to be in the money management business right now. Why? Because no one has any money to manage right now. And so, jobs will be shed. Yesterday, State Street Corp, the huge money management company, announced plans to cut 1,800 people. These people will get the ax in the first quarter of 2009. In the end, 6 percent of the company’s staff will see pink slips.
The company expects to save 400 million dollars a year from the layoffs. That’s more than 200,000 dollars per person. And the bulk of the layoffs will come from the company’s U.S. operations in middle management. Hopefully these guys were smart enough to manage their own money for lean times.
Here’s more, from Reuters:
- Like other money managers paring staff, State Street has seen assets under management shrivel as financial markets have tumbled in the last months. Fidelity Investments, Legg Mason Inc and Janus Capital Group Inc have all said they plan to cut staff.
- State Street Chairman and Chief Executive Ronald Logue said the cuts will allow the company to continue delivering consistent earnings growth.
- The company, which reported a 33 percent gain in third-quarter earnings of $477 million, or $1.09 a share, said it expects operating earnings for the full year to be at the high end of a range between 10 percent and 15 percent.
- Next year, it sees operating earnings at the low end of that range, the company said.
- State Street has already told investors it may have to take a charge in the fourth quarter and has set aside $450 million before taxes this quarter if it decides to assist some funds managed at its State Stet Global Advisors unit.
- The cost for the layoffs will likely translate into a charge of between 51 cents and 55 cents a share.
Read the full story here.
