A week after announcing more than 300 layoffs at its Minneapolis headquarters, Ameriprise Financial said Wednesday that it lost $369 million, or $1.69 per share, in the fourth quarter. Comparing those results to the prior-year period, when Ameriprise posted net income of $255 million, or $1.08 per share, illustrates how far the stock market and financial sector have fallen.
"Our results were disappointing, as the declining markets affected our balance sheet and income statement," Ameriprise CEO Jim Cracchiolo said. "We expect the tough conditions to persist through this year," he added.
To cope with the bloodletting, the financial planning and insurance company took $420 million in pretax, net realized investment losses and is cutting costs. Cracchiolo expects the firm's reengineering to save $280 million this year.
Total net revenue declined 40 percent, to $1.4 billion in the fourth quarter. Excluding market factors, core revenue was $1.8 billion, down 21 percent from the same period the year before.
Core operating earnings, which exclude one-time items such as write-offs of Lehman Brothers debt and the costs of propping up investors in the failed Reserve money market fund, were $176 million for the fourth quarter, or 80 cents a share, compared with $262 million in earnings, or $1.11 a share, in the last three months of 2007.
Analysts polled by Thomson First Call had expected core earnings of about 25 cents a share.
During a conference call after the market closed Wednesday, Ameriprise executives noted that the company's balance sheet remains strong, with $6.2 billion in cash and cash equivalents, and it has applied for the federal government's Troubled Assets Relief Program -- just in case.
Chief Financial Officer Walter Berman also highlighted the company's investment portfolio, with just 5 percent of total assets rated below investment grade and less than 1 percent exposed to subprime mortgage assets.
But the quarter presented many challenges. Fees dropped 35 percent, attributed mostly to the market's plunge. Ameriprise's distribution fees also fell 20 percent, as clients moved from equities to cash. Despite low interest rates, investors embraced fixed investments such as certificates of deposit and fixed annuities.
Ameriprise's mutual fund subsidiaries RiverSource Investments and Threadneedle also experienced outflows during the quarter.
Among the bright spots: Sales of branded plans rose 6 percent, to $56 million in the quarter, which Cracchiolo attributed to clients' desires for a strategy to achieve goals despite the market turmoil.
For the year, Ameriprise reported a net loss of $38 million, or 17 cents per share.
Excluding market effects and separations costs from the American Express spin-off, core operating earnings for 2008 were $886 million, a 6 percent drop from 2007. Ameriprise's shares closed at $22.12, up 8 percent.
Kara McGuire • 612-673-7293
