IndyMac Laying off 1,000 and Cutting Dividend in Half
The Friday afternoon bomb was dropped by IndyMac announcing plans to lay off half of it’s work force and cut it’s dividend in half from 50 cents to 25 cents a share. The weakness in the secondary credit market is being blamed for the weakness in the lender.
This is no surprise. I think that every mortgage company that does not have an internal financing arm is facing significant hurdles going forward. If you can lend out of your assets you will do well writing prime loans. But if you market is in the Alt-A and Subprime markets or dependent on outside financing, you will be facing a tough period until the credit markets stabilize.
The job cuts amount to 10% of the workforce and will be conducted over several months. Chief Executive Michael Perry said he will ask IndyMac’s board to reduce the quarterly common stock dividend to 25 cents a share from 50 cents, a level he expects IndyMac to maintain through the housing slowdown.
IndyMac also said it might break even or post a loss of as much as $36.8 million, or 50 cents a share, in the third quarter. It posted a profit of $86.2 million, or $1.19 a share, in last year’s third quarter.
“We’re having a tough quarter,” Perry said on a conference call. He said IndyMac is struggling with “illiquidity in the secondary market that we really have not seen go on this long,” including “panic” in some areas. via USATODAY.com.
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