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."