Wachovia slumps

CHARLOTTE, N.C. (AP) -- Wachovia Corp. will slash its dividend and raise $7 billion in a share sale after reporting a surprise first-quarter loss on Monday of $393 million. The company's shares fell more than 10 percent.

The nation's No. 4 bank, whose results were tainted by exposure to the troubled credit markets, also said it plans to cut 500 jobs in its corporate and investment bank.

"I'm deeply disappointed with our first-quarter results," Chief Executive Ken Thompson told analysts on a conference call. "I know these actions aren't without cost. I wish they weren't necessary, but they are."

The Charlotte-based bank's loss works out to 20 cents a share. That compared with profit of $2.3 billion, or $1.20 a share, a year earlier. Excluding merger-related and restructuring charges, the bank lost $270 million, or 14 cents a share.

Revenue fell 4.5 percent to $7.89 billion from $8.27 billion last year.

Analysts surveyed by Thomson Financial had expected Wachovia to earn 40 cents per share on revenue of $7.98 billion. The earnings estimates typically exclude one-time items.

Wachovia said it will cut its dividend by 41 percent to 37.5 cents per share from 64 cents per share. The move is expected to save $2 billion annually in order "to build capital ratios and provide more operational flexibility," it said.

The bank also said it plans to cut more jobs within its corporate and investment bank, an area that has been hit by a drop in issuance of complex securities. Since October, Wachovia has cut more than 260 jobs in corporate and investment banking, which had about 6,100 employees as of Dec. 31.

Shares in Wachovia fell $2.96, or more than 10 percent, to $24.85 on Monday.

Wachovia is part of a long list of companies that have raised capital in the wake of problems in the mortgage market, including Countrywide Financial Corp., Thornburg Mortgage Inc., Merrill Lynch & Co., Morgan Stanley and Citigroup Inc.

Its share sale will involve 145.8 million shares of common stock at $24 each, raising roughly $3.5 billion. Wachovia also expects net proceeds from a convertible preferred stock offering of about $3.4 billion. The bank said it intends to use the money it raises from the sale for general corporate purposes.