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By Stephen Taub CFO.com Jan 11, 2001

Wall Street Rocked by Layoffs (Updated) Merrill is the latest in a string of announcements. Also, Yahoo says uh oh.

It’s official. Wall Street’s bust phase is underway. On Wednesday, Merrill Lynch & Co. said it would wipe out 60 positions in its equity and fixed-income research department. This works out to just about 4 percent of its world-wide research staff.

Now, some of these positions are currently vacant or held by people planning to retire.

However, the announcement signals the end of the boom phase of the industry’s self-imposed cycle.

Remember, Merrill already announced plans to sell a number of businesses. In fact, earlier in the week it said it will sell its energy commodity marketing and trading unit to Allegheny Energy Inc. for $490 million and a 2 percent equity interest in the Allegheny Energy Supply unit.

These cuts come on top of other recent layoff announcements in the brokerage industry. For example:

Ameritrade Holding Corp. said it will lay off as many as 230 full-time workers, or about 8 percent of its total. The online brokerage said it hopes to offer jobs in other areas to about 40 of those workers.

J.P. Morgan Chase & Co. said it will eliminate 150 employees at Morgan OnLine.

Prudential Securities said last month it will reduce the size of its investment bank and realign its research program. These moves will impact about 160 employees.

Bear Stearns Cos. said it will cut 63 positions from its Information Technology department and slow its hiring pace. More Bad Internet News The dot-com debacle is no longer restricted to flimsily financed, money-losing startups.

Yahoo! Inc., one of the only Internet companies to ever make money, said after the closing bell on Wednesday that fourth quarter earnings barely met estimates.

More significantly, it warned that the rapidly slowing economy would cause 2001 results to come in well below even the most conservative forecasts.

``There is no doubt that a significantly more challenging market is having an effect on Yahoo,'' Chief Financial Officer Sue Decker said during a conference call.

However, it did still manage to make money. Yahoo earned $80.2 million, or 13 cents per diluted share, in the most recent quarter, excluding certain unusual items, compared with $55.7 million, or 9 cents per share, a year earlier. Analysts had expected it to earn 13 cents, according to First Call/Thomson Financial.

Revenues amounted to $310.9 million, about $5 million less than the consensus forecast.

Meanwhile, tech bellwhether Cisco Systems warned yesterday that the current quarter has been ``a little bit more challenging'' than company executives had expected, amid slower capital spending.

More Layoffs

CNN News Group is expected to announce huge layoffs as part of a comprehensive reorganization of its TV and Internet operations, according to The Wall Street Journal. The cuts, expected to be announced as early as next week, aren't expected to exceed 500 to 1,000 positions. The biggest reductions will probably come in the interactive operations, which now have about 750 employees. Some positions will be eliminated by attrition and reorganization.

Adelphia Business Solutions said on Wednesday that it had reduced its national staff by 8 percent as it curtailed plans to expand its network.

Snowball.com Inc., an online network for young adults, said it was laying off about 20 percent of its staff as part of cost-cutting measures. The company said the measure was intended to speed its path to profitability.

Service Merchandise Co. Inc. said on Wednesday it will cut around 1,750 of its 16,974 workers, or about 23 percent of its total work force, as part of moves to exit Chapter 11 bankruptcy. The reductions will affect 218 stores in 31 states and at its Nashville headquarters.

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-- Martin Thompson (mthom1927@aol.com), January 11, 2001

Answers

Wall street was rocked by layoffs and celebrated with a huge buying binge in the NASDAQ? Apparently the recession is over. Who are these people?

Its hard to keep up with all the layoffs. We should do just like McDonalds and just say billions and billions laid off.

I haven't bought anything significant in ages. The only thing I want is DSL and its not available where I live. There are two harbingers that can't be any better clues to our immediate future. The big car companies have or are in the process of laying of thousands. That in turn will cause thousands of layoffs by there subcontractors. Second, the retailers are and have been hit hard which means we are not spending like its our last day on earth anymore. I've read several times that the comparison as to our economic activity was like "someone turned the lights out". Not to mention all the big and little companies that are on the verge of bankruptcy.

I can't think of any greater optimists (dreamers) than those that bought into the market today.

-- Guy Daley (guydaley@altvavista.com), January 11, 2001.