Investment bank Bear Stearns Cos. will take a $1.2 billion write-down in the fourth quarter related to weakness in its credit portfolios, Chief Financial Officer Samuel Molinaro Jr. said Wednesday.
Investors were relieved the write-down was not bigger than the $3 billion expected, which sent Bear Stearns shares up 6.6 percent in pre-market trading.
However, the New York-based bank said the writedown will lead the company to post a loss during its fiscal fourth quarter, which ends November 30.
Reducing exposure
Bear Stearns has been "working hard" to reduce its exposure to the subprime mortgage and collateralized debt obligation markets, Mr Molinaro said at a Merrill Lynch & Co banking conference.
He said Bear Stearns is now positioned to profit if subprime mortgage bonds weaken further, but still has $884 million of exposure to collateralized debt obligations as of November 9 from $2.1 billion on August 31.
The company said the write down would lead the company to report a loss during its fourth quarter ending November 30.
November 14, 2007