Battered by the mortgage crisis, shares of Washington Mutual Inc. will open today, the 25th anniversary of its initial public offering, trading near their lowest levels in 12 years.
And analysts are wondering what the Seattle thrift company can do to salvage investor confidence and remain independent.
Wamu is reportedly looking for a capital infusion, though some analysts say an outright sale may be a better option. Already beaten down in recent months, the shares have been hit hard in recent days. Merrill Lynch & Co. Inc. predicted Friday that the company could lose $11.2 billion this year as more homeowners default on mortgages. That research was issued the same day The Wall Street Journal reported Wamu was seeking a capital infusion.
On Monday the shares fell 6.3%, to $10.04, following a 9% drop Friday. They have dropped roughly 75% since August.
Wamu went public March 11, 1983, at a price of $12.50 a share, and at the height of the mortgage boom, the stock traded at around $40.
Kerry Killinger, Wamu's chief executive, said in an interview that he is not interested in selling the company and is looking at a retail growth plan to return it to profitability after losses in 2007. A Wamu spokesman would not discuss the report Monday.
Nancy A. Bush, the president of NAB Research LLC, said Monday seeking a capital infusion from a sovereign wealth fund, as companies like Citigroup Inc. have done, may not be an option. "Wamu is almost entirely a creature of the mortgage markets and I'm not sure foreign investors or anyone has much interest in that."
Short of a capital injection, a sale could garner investors' support, analysts said.
Despite Mr. Killinger's public position, speculation abounds that Wamu is — behind the scenes, at least — willing to consider buyout offers. Two companies that consistently make analysts' list of those pushing for growth and having the capital wherewithal to make a major deal are Wells Fargo & Co. and JPMorgan Chase & Co.
Jeff Harte, an analyst at Sandler O'Neill & Partners LP, noted in an interview Monday that JPMorgan Chase CEO James Dimon has expressed interest in expanding his company's retail banking operation in certain parts of the country, and in gaining market share in mortgages.
Buying Wamu would address both interests, Mr. Harte said. "California and Florida are the two states that are gaping holes in Jamie Dimon's footprint," and Wamu has strong operations in those two states. "I could envision them buying Wamu, but the question is, is the price right yet? That's a question they may be trying to answer."
Ms. Bush said: "The way things are going, people like Jamie Dimon may have more options than Wamu, more options than they can deal with."
Mr. Dimon would not discuss the speculation.
In interviews last week both John Stumpf, Wells' chief executive officer, and Howard Atkins, its chief financial officer, said they were not interested in deals involving large companies that carry a lot of risk.
For all the gloom enveloping Wamu's stock, Howard Shapiro, an analyst at Fox-Pitt Kelton Cochran Caronia Waller, says things are not as bleak as some critics suggest. In a research note last week, he wrote that Merrill's research seemed overly pessimistic. Merrill's forecast of up to $11.2 billion of losses against only $2.6 billion of reserves does not account for Wamu's ability and plans to beef up reserves, Mr. Shapiro wrote. It is likely to set aside up to $8 billion of loan-loss reserves this year and is braced for further losses.
