NEW YORK (AP) — Salomon Inc. said Tuesday its third-quarter profit dropped an unexpectedly sharp 59 percent as the firm reported lower trading revenue and a loss on stock sales.
Its stock dropped more than 8 percent in early trading.
The brokerage firm’s net profits for the three months ending Sept. 30 fell to $112 million, or 88 cents per share, from $268 million, or $2.36 per share, in the third quarter of 1995.
The results were well below analysts’ average estimate of $1.19 per share according to a survey by First Call. The brokerage firm’s stock was down $3.25 at $45.37 1/2 in trading on the New York Stock Exchange.
“While the quarter-to-quarter trading results are variable,” said Chairman and Chief Executive Robert E. Denham, “overall Salomon Inc. results…are very strong.”
Salomon lost $26 million during the quarter on equity sales and trading, compared with a gain of $196 million in the third quarter of 1995. The loss was primarily the result of losses on the firm’s long-term stock-arbitrage strategy.
Fixed-income sales and trading net revenues fell to $598 million for the quarter from $733 million a year ago, reflecting lower trading activity in the firm’s own account and for customers.
But global investment banking revenues, including underwriting and investment banking advisory fees, rose 46 percent to $187 million from $128 million, reflecting a doubling of underwriting revenues.
Earnings for the first nine months more than doubled to $679 million, or $5.90 per share, from $289 million, or $2.22 a share,