Could JP Morgan’s Directors Have Helped to Staunch the Bank’s Flow of Red Ink?
Wednesday morning brought more bad news for the financial sector as JP Morgan Chase & Co (NYSE: JPM) announced in a statement that its fourth-quarter earnings fell by 21 percent from the previous year’s Q4 results, helping to make it for the entire financial industry one of the worst quarters since 1929.
Specifically, fourth-quarter income was down from the 2006 level of $3.9 billion to $3.0 billion, which, in terms of earnings per share, was down from the 2006 level of $1.09 to $0.86, the bank said.
Still, while the bank’s fourth-quarter results were down, its overall performance for 2007 was good: income was up 15 percent; continuing operations brought in a record $15.4 billion, with earnings per share $4.38; and, by comparison, that was up from the 2006 income figure of $13.6 billion, with earnings per share at $3.82.
JP Morgan sought to give its earnings results a positive spin by emphasizing the full-year increase rather than the fourth-quarter decrease in earnings:
“I am pleased with our company's record results for the year, despite our mixed performance in the fourth quarter,” said CEO/Chairman Jamie Dimon in the statement.
He then explained the specific areas in which the bank performed strongly:
“The diversified nature of our company helped offset areas of weakness. Asset Management, Treasury & Securities Services, Commercial Banking and Private Equity reported record or near-record revenue and earnings, while investment banking fees had strong growth in the quarter and were at record levels for the year. We also experienced organic growth across Retail Financial Services, with increases in deposits, checking accounts and mortgage originations.”
The markets also appeared to be focusing on the bank’s annual results since its share value was up 5.41 percent on Wednesday: while the share price previously closed at $39.17, it was trading at $41.29 in late morning trading (11:36am ET).
NewsVisual decided to create an IntellectSpace Knowledge Map in order to illustrate the business connections of JP Morgan’s Board of Directors as a method for assessing their knowledge of business and for determining the likelihood that the bank’s Management Team would benefit from the former’s advice.
The Knowledge Map shows that six of the bank’s Directors serve on other corporate boards. Most noteworthy is Director William H Gray III, who is also a Director for Dell Computer Corp, Pfizer Inc, Prudential Financial Inc, and Visteon Corp.
Likewise, the following three Morgan Directors are noteworthy for serving on more than one other corporate board: Director James S Crown is also a Director for General Dynamics Corp and Sara Lee Corp; Director Ellen V Futter is also a Director for American International Group Inc and Consolidated Edison Inc; and Director Robert I Lipp is also a Director for Accenture Ltd and The Travelers Companies Inc.
(Note: the information contained and presented in Knowledge Maps is public information from the Securities and Exchange Commission of the United States of America).
Click here or copy this link into your Internet Explorer browser for an interactive version of this IntellectSpace Knowledge Map: http://nv.intellectspace.com/ispace/GuestMonitor.aspx?id=39ce0d34-951d-421e-9f65-c1b43d2b3c18
Great Post...Great insight, you mind if I add the link to my blog as a story for jPM?
Posted by: Mike C | January 16, 2008 at 10:37 AM
Why the sensational spin? In a week when Citigroup post's a stunning loss that includes an even more stunning writedown due to the credit crisis, JPM, who are very close in scale and business to Citigroup, post a 3 billion dollar profit. Down somewhat from a blowout 2006, but given the economic stresses of 2007 and the fact that 2006 was an above average year, these earnings are strong.
Posted by: Geno | January 16, 2008 at 01:18 PM