American Express Slashes Workforce, Takes Charge
NEW YORK (TheStreet) -- American Express (AXP) shocked investors late on Thursday by announcing the elimination of 5,400 jobs and fourth-quarter restructuring charges totaling $742 million.
The payment processor and credit card lender also announced fourth-quarter charges totaling $153 million, for "cardmember reimbursements for various types of transactions dating back several years. This amount deals with fees, interest and bonus rewards as well as an incremental expense related to the consent orders entered into with regulators last October."
The charges totaled $594 million after taxes and American Express said that its fourth-quarter net income was $637 million, or 56 cents a share, declining from $1.250 billion, or $1.09 a share, in the third quarter, and $1.192 billion, or $1.01 a share, in the fourth quarter of 2012.
Analysts polled by Thomson Reuters on average estimated that the company would earn $1.06 a share in the fourth quarter. Excluding the special items, American Express said that its "fourth quarter adjusted net income was $1.2 billion, or $1.09 per share."
The company reported total fourth-quarter revenue of $8.1 billion, meeting the consensus estimate, however, if the card-member reimbursements were backed-out, fourth-quarter revenue would have totaled $8.234 billion, beating the estimate and increasing from $7.778 billion in the fourth quarter of 2011.
Shares of American Express were up 1% in aftermarket trading, to $61.45.
During a conference call Thursday afternoon, America Express CEO Kenneth Chenault said that the preannouncement of the layoffs was done for "greater transparency," and that the company would "save a more detailed discussion for next week." American Express will announce its full fourth-quarter results on Jan. 17.
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-- Written by Philip van Doorn in Jupiter, Fla.
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