Shares of Bank One Corp. got a lift on Friday, a day after the Chicago companys top executives visited New York to give a more detailed look into its strategy, but the presentation itself received mixed reviews.
When the presentation was over, the believers in Bank Ones story still believed, perhaps a bit more. And the skeptics remained skeptical, perhaps a bit more. Susan L. Roth of Credit Suisse First Boston wrote in her research note that most of managements initial goals have been achieved. She went on to say that the management team is materially improving the near-, intermediate-, and longer-term earning power but added that earnings had fallen short of expectations because the original targets had not factored in the deterioration in the U.S. economy. She cut her full-year earnings outlook to $2.45 a share, from $2.55.
And Henry C. Dickson, an analyst at Lehman Brothers Holdings Inc., said that Bank One chief executive James Dimon presented a clear picture of the new direction the company is moving in.
For some, the meeting yielded more questions than answers. One topic of debate: Is Bank One anywhere near ready to attempt a banking acquisition?
Mr. Dimon indicated that the company should be ready to undertake an acquisition in the general bank as early as the end of this year, Putnam Lovell Securities Inc. analyst Jennifer A. Thompson wrote in a report after the meeting.
We consider this a risk to the stock and a concern, particularly since the full integration of technology systems is not expected to be completed until the end of 2002, and considering that the company has yet to achieve sustainable top-line-driven core EPS growth, Ms. Thompson added.
Katrina Blecher, an analyst at Sandler ONeill & Partners LP, was another who came away with unaddressed concerns. She had expected to hear earnings guidance and a fine-tuning of the restructuring ahead but said she was disappointed to hear nothing concrete.
The information provided didnt give a clear road map as to how the company expects to grow earnings, Ms. Blecher said. She pointed out that she wanted to hear more about revenues and other financial details but that the only concrete information was about expenses.
In the presentation Mr. Dimon and chief financial officer Charles W. Scharf appeared for the first time with the full complement of Bank Ones top executives, among them Philip G. Heasley, the CEO of First USA, its credit card division.
Bank One said it wants to cut $200 million of expenses during the second half, from a basis of $9.2 billion in the first half of 2001. The company also said that conversion and streamlining accelerations may require restructuring charges up to $200 million during the second half of the year, a measure that apparently failed to impress Ms. Blecher.
Struck by the similarity in the numbers, Ms. Blecher said that the way we see it mathematically, there would be no decline in expenses if the company decides to prepay expenses through a one-time charge. She rates Bank One market perform.
Catherine L. Murray of J.P. Morgan Chase Securities Inc. wrote in her research note that the meeting was constructive but little new information was disclosed. She added that the continuing lack of top-line earnings growth would pressure the companys earnings for the foreseeable future.
Lori Appelbaum of Goldman, Sachs & Co. said she saw the meeting as reassurance for her position. She agreed that there was little hard news in the presentation but said that, once again, it became apparent where the companys problems remain, centering particularly around deposit growth and First USA.
On Friday, Bank One traded down briefly in the morning but ended the day up 1.12%.