INSTANT VIEW: Bank of America cuts dividend, profit tumbles

NEW YORK (Reuters) - Bank of America on Monday cut its dividend, unveiled plans to sell $10 billion of new stock and said third-quarter profit was cut in half from a year ago.

Bank of America warned that credit quality continued to weaken during the quarter, and said the economy has moved to a "recessionary environment."

The following is analyst and investor reaction to the news:

MICHAEL JAMES, SENIOR TRADER AT REGIONAL INVESTMENT BANK WEDBUSH MORGAN, LOS ANGELES

"The stock is down over $2 from where it closed and I would expect it to have a tough day tomorrow," said James.

"Some times even when you get bad news, it's better than no news," James added.

JOHN CAREY, PORTFOLIO MANAGER OF THE PIONEER FUND AT BOSTON-BASED PIONEER INVESTMENTS, WHICH OWNS BANK OF AMERICA SHARES.

"I hadn't anticipated that (dividend cut).

"If they are raising capital, it would stand to reason that they might first look at ways to reduce some of their current cash outflows. Maybe they felt that the yield was higher than it needed to be at the current depressed share price."

"We still think it's well positioned for the future. But in the near term all of the banks, it would appear, are under pressure to bolster their capital positions.

"Judging from the market reaction, investors must view it (capital raising) as dilutive in the near term. Longer term, I think a stronger capital base will be good for them, and maybe permit them to take greater advantage of the current weakness of many of their competitors."

LOU BRIEN, MARKET STRATEGIST, DRW TRADING, CHICAGO

"I'm sure it's a surprise. It's another tile in the mosaic. Things are not good with financial companies. This reflects it. This has to be a disappointment."

RICK MECKLER, CHIEF INVESTMENT OFFICER OF LIBERTYVIEW CAPITAL MANAGEMENT IN NEW YORK, NY

"I think it's a smart move to continue to raise capital."

"This is not a market where you want to end up without enough equity."

"I don't think anything is easy in this market, but they are perceived as one of the stronger franchises and I think they will have a somewhat easier time than others (raising capital)."

"This is the market where you have got to hit the window when you can...It's probably the most responsible action they can take."

THOMAS RUSSO, PARTNER, GARDNER RUSSO & GARDNER, WHICH MANAGES MORE THAN $3 BILLION:

"We are in a very, very tough time for financial services companies, and Bank of America are not immune. You see weakness across all asset categories. The irony is, commercial banks are considered to be safe havens for investment banks. That's the world we live in."

STEPHEN MASSOCCA, CO-CHIEF EXECUTIVE, PACIFIC GROWTH EQUITIES IN SAN FRANCISCO

"I think it's pretty much expected. It's what they communicated to the Street they were going to do when they made the Merrill acquisition. But now you've got to price all this stock, so obviously the stock is going to trade down to accommodate pricing it."

(Reporting by Elinor Comlay, Muralikumar Anantharaman, Richard Leong, Kristina Cooke, Dan Wilchins; compiled by Edward Tobin)