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LaBranche shrs tumble after forecasting Q1 loss

Tue Mar 17, 2009 12:17pm EDT

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NEW YORK, March 17 (Reuters) - LaBranche & Co Inc (LAB.N) shares sank as much as 33 percent on Tuesday after the New York Stock Exchange market maker forecast a first-quarter loss due to bad market conditions.

In a regulatory filing late Monday, the New York-based company said its market-making business faces "extremely poor market conditions and significantly lower volumes."

LaBranche also said it has temporarily reduced its options market-making activity because of the departure of Harsh Padia, who ran its options trading unit and was chief investment officer of its LaBranche Structured Products LLC unit.

"Poor market conditions and these trading activities have resulted in trading losses that have adversely affected our financial results during the first quarter," LaBranche said.

Richard Repetto, an analyst at Sandler O'Neill & Partners LP, estimated in a report that the first-quarter loss could be 10 cents per share. He lowered his full-year profit expectations to 30 cents per share from 82 cents.

LaBranche is one of six so-called NYSE specialists that operate on exchange trading floors and make markets by buying and selling shares. Their importance is declining as trading migrates to electronic platforms.

The number of specialists will fall to five after Barclays Plc (BARC.L) completes its announced acquisition of Bear Wagner Specialists LLC from JPMorgan Chase & Co (JPM.N).

In afternoon trading, LaBranche shares were down $1.57, or 26.3 percent, at $4.39, after earlier falling to $4.02. (Reporting by Jonathan Stempel; editing by Jeffrey Benkoe)



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