Tumbling stock prices and a profit shortfall have certainly complicated efforts by Chase Manhattan Corp. and J.P. Morgan & Co. to sell their merger, but people inside and outside the companies still seem to accept the deal as a long-term positive for both.

Chase’s shares reached their 52-week low Wednesday, trading at $32.375 in the late afternoon, a decline of 36% from the day the deal was announced in mid-September. They closed at $36.875, down 2.8% for the day. Morgan’s shares have been caught in the downdraft, falling 27% since mid-September. They closed Wednesday at $134.25, down 2.5% for the day.

The deal’s price has declined 40% in value since it was announced as well. Chase agreed to exchange 3.7 of its shares for each share of Morgan. Rising anxiety within the two companies about the fate of the transaction may have prompted the chief executives to issue a joint memorandum last week reassuring employees about their enthusiasm for the merger and imploring them not to be distracted by the declines in the stock prices.

The executives reinforced that message during a conference call with analysts and investors Wednesday. Dina Dublon, Chase’s chief financial officer, repeated to the audience what Douglas A. Warner 3d, Morgan’s chairman, told the board Tuesday: “We are ready and committed to moving from a transformational to a performance stage.”

Analysts and some employees of the two companies seem to agree, saying the real danger may be more in independence. Scuttling the deal “would be a disaster to morale,” said one Morgan employee, who asked not to be named. “You’d have nothing to promise clients by way of consistency.”

Morgan’s stock might have performed better Wednesday had it not been linked to Chase, analysts said. However, if J.P. Morgan were scouting a deal today, its options would probably be more restricted, said Lawrence Cohn, an analyst at Ryan Beck & Co. At this point, he said, J.P. Morgan “couldn’t walk away from Chase and find somebody who would want them for a higher price.”

“I don’t think the merger is in trouble at all,” Cohn said. “The numbers make it even more apparent that the merger solves a big Chase problem,” he said. Chase has more clients than its internal operations can manage, while Morgan has the infrastructure to support more activity than its business generates. As a combined entity, the banks would be more efficient and could lower expenses, he said.

Chase executives have repeatedly defended the price they agreed to pay for Morgan — about 3.5 times book value — saying the combination of their firm’s extensive client roster with Morgan’s impressive product capabilities and infrastructure will create a company with higher growth potential and lower risk due to diversification.

Could Chase have found a partner in another securities firm at a lower price? Yes, said Marc J. Shapiro, vice chairman and head of finance and risk management, but the degree of integration risk would have been far higher. “We’re comfortable with the pricing here,” Mr. Shapiro said.

Anxiety aside, inside the companies, employees said the integration is steamrolling ahead, with integration committees being formed in virtually every business unit. Later this week 250 more senior positions in the combined investment bank will be announced. The companies said regulatory applications have been filed, and though they originally planned to complete the merger in the first quarter, that deadline might move up to the end of this year.

Bankers from both companies have also begun to visit prospective clients together. In the last three weeks, 54 joint calls have been made on clients, and the Chase-Morgan alliance has “won” 19 assignments, Mr. Shapiro said. “That’s a higher batting average than either of us would have had on our own, and some of that business neither one of us would have gotten alone,” he said.

Seventy-five more such joint client calls are planned for the next two weeks, Mr. Shapiro said.

In the meantime, Chase investors have to contend with higher expenses that are dragging on earnings. Chase reported earnings per share in the third quarter of 68 cents, a full 25 cents below the consensus estimate, because of high expenses and sharply lower profits from private equity investing.

Financial stocks as a group fell again on a weak day in general for the markets. American Banker’s 225-bank index fell 0.87%, while its index of the top 50 banks fell 0.78%. The Standard & Poor’s 500 index fell 0.9% and the Nasdaq fell 1.3%.

Many bank stocks fell Wednesday. Wachovia shares fell 31.25 cents, or 0.6%, to $49.9375, SouthTrust rose 46.88 cents, or 1.6%, to $29.59375, and State Street fell $4.80, or 4.2%, to close at $109.77.


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