Wednesday, January 19, 2011
American Express Warns on Earnings, Cuts Jobs
By LAUREN POLLOCK
American Express Co. said it will cut about 550 jobs as it consolidates some facilities as the card company projected fourth-quarter earnings that slightly missed Wall Street estimates.
The company, which issues charge cards that must be paid off each month, as well as credit cards that allow customers to carry a balance, said the moves reflect a decline in service volumes as more routine transactions have migrated to online and mobile channels.
As part of the restructuring, a facility will be closed in Greensboro, N.C., and the company will study whether to transfer work done at a Madrid service center. The moves will lead to total charges of $38 million to $51 million this year and annual cost savings of about $70 million, starting next year.Excluding charges for restructuring, severance and other items, the company expects earnings of 94 cents a share for the fourth quarter. Analysts polled by Thomson Reuters were looking for 95 cents.
"Despite an uneven economic environment, credit-quality trends also continued to improve, with key indicators for the quarter now back to—or better than—historical levels," Chief Executive Kenneth I. Chenault said. "This improved credit quality translated into lower provision expenses for the quarter."
The consolidations are expected to be completed by the end of the year. The company has about 58,000 employees.
In October, American Express said its third-quarter profit surged 71%, beating analysts' expectations, as cardmember spending climbed 14% and loss provisions tumbled.
Fourth-quarter results will be released Monday.
