Brokerage giant A.G. Edwards plans to cut work force

ST. LOUIS -- Brokerage giant A.G. Edwards Inc. will cut jobs as part of an effort to stem declining profits blamed on a weak economy worsened by the terrorist attacks, company officials said Thursday.

The announcement came the same day the St. Louis-based company reported a sharp decline in quarterly and nine-month earnings.

"Business conditions through our third fiscal quarter were clearly challenging, and were exacerbated by the tragic events of Sept. 11 and the general anxiety of the retail investor in the days following," chairman and chief executive officer Robert L. Bagby said.

A.G. Edwards operates 705 offices in 49 states, the District of Columbia and London. The 114-year-old company has about 6,900 brokers and about 17,200 full-time employees, including 5,000 in St. Louis.

Edwards representatives in Cape Girardeau were unavailable for comment Thursday afternoon.

Company spokeswoman Margaret Welch said specifics of the cutbacks have not been determined. Job reductions will be achieved through a combination of voluntary retirements, attrition and some layoffs. No jobs will be lost at branch offices.

The company hopes to reduce non-branch salary expenses by about 8 percent, saving an estimated $21 million annually. Welch would not speculate on the number of layoffs in St. Louis, where the majority of non-branch employees work.

Earnings down

Net earnings for the quarter ending Nov. 30 were $22.2 million, or 28 cents per share, on revenues of $555.9 million. The earnings were down 61 percent from the same quarter in 2000, when the company earned $57.2 million, or 69 cents per share, on revenues of $634 million.

For the nine months, A.G. Edwards earned $108.5 million, or $1.34 per share, down 55.1 percent. Revenues decreased 16.3 percent to $1.76 billion from $2.10 billion in the first nine months.

The company cited a 26 percent drop in commission-based revenue for the quarter, compared to the same quarter a year ago, and a 4 percent drop from the second quarter. The Sept. 11 attacks occurred early in the third quarter.

Other firms struggle

Other brokerage firms are struggling, too. On Wednesday, Morgan Stanley Dean Witter & Co. reported that profits fell 28 percent for its fourth quarter. In October, Merrill Lynch & Co., the nation's largest brokerage firm, said it has eliminated 6,100 jobs since the start of the year.

Analyst Alexander Paris Jr. of Barrington Research Associates Inc. in Chicago said A.G. Edwards "has a reputation as the best-managed firm on Wall Street." He noted that the stock performance has remained relatively strong.

"That's primarily because investors are looking over the valley," Paris said. "We, too, feel very strongly that 2002 will be a much stronger year, but you need to get there. The job cuts and other cuts are absolutely essential."

Paris said another reason the stock price has remained high is continuing speculation that A.G. Edwards is a takeover target. "The best defense against a takeover is strong performance," he said.

Bagby said, "Our goal is to remain independent. We continue to believe it is in the best interest of the shareholders, clients and employees that we remain independent."

A.G. Edwards stock closed down 2.7 percent to $43.35 in trading on the New York Stock Exchange.