JPMorgan sells $10b shares, faces Q3 loss
Sunday, 28 September 2008
NEW YORK/SEATTLE, Sept 27 (Reuters): JPMorgan Chase & Company capped off its purchase of Washington Mutual Inc Friday by selling US$10 billion of stock, more than it expected, while analysts warned the company faces a third-quarter loss.
The $1.9 billion acquisition of WaMu makes JPMorgan the second-largest US bank by deposits and marks the largest bank failure in US history. It also saddles JPMorgan with the troublesome mortgages that caused painful write-downs and credit losses for the thrift.
"It's too early to know if JPMorgan is a big winner or loser from this deal," said James Ellman, portfolio manager at hedge fund Seacliff Capital.
Investors gave the deal an early vote of confidence, though, sending JPMorgan shares up more than 10 per cent.
"They basically bought the company for nothing," said John Stein, co-founder of investment firm FSI Group. Stein added that, if JPMorgan's assumptions about WaMu's holdings are right, "It's a great deal."
Jamie Dimon, JPMorgan's hard-charging chief executive, sees the deal as a boost to the empire he has been building since he arrived from Banc One four years ago.
"We're building this franchise for the long term-not for next year or the next five years, but for the next 100 years," he said on a call with investors.
The $1.9 billion acquisition of WaMu makes JPMorgan the second-largest US bank by deposits and marks the largest bank failure in US history. It also saddles JPMorgan with the troublesome mortgages that caused painful write-downs and credit losses for the thrift.
"It's too early to know if JPMorgan is a big winner or loser from this deal," said James Ellman, portfolio manager at hedge fund Seacliff Capital.
Investors gave the deal an early vote of confidence, though, sending JPMorgan shares up more than 10 per cent.
"They basically bought the company for nothing," said John Stein, co-founder of investment firm FSI Group. Stein added that, if JPMorgan's assumptions about WaMu's holdings are right, "It's a great deal."
Jamie Dimon, JPMorgan's hard-charging chief executive, sees the deal as a boost to the empire he has been building since he arrived from Banc One four years ago.
"We're building this franchise for the long term-not for next year or the next five years, but for the next 100 years," he said on a call with investors.