Funds News

TIMELINE: A dozen key dates in the demise of Bear Stearns

NEW YORK (Reuters) - The following are a dozen important dates or events in the demise of Bear Stearns.

1) December 14, 2006 - Bear Stearns posts record earnings, touting huge profit gains from then-booming businesses advising on mergers and arranging credit derivative, distressed debt and leveraged finance deals.

Bear stock closes at $159.96. The average price target from Wall Street research analysts covering the stock, according to Reuters Estimates, is $166.24.

2) January 12, 2007 - Bear shares close at a record $171.51 on momentum from its strong earnings report the previous month. The average price target: $174.

3) May 24, 2007 - Bear shares close at $147.55, a six-week low, after Goldman Sachs slashed its quarterly earnings target for the rival investment bank, citing concern about Bear’s heavy exposure to the mortgage securitization business. The average price target: $181.73.

4) June 14, 15 & 16, 2007 - On June 14, Bear reports earnings declined for the first time in four quarters on weaker results from its mortgage securities business. On June 15, The Wall Street Journal reports a hedge fund run by Bear has suffered big losses on soured subprime mortgage investments. (A second fund with similar troubles would soon emerge.) The next day, the 16th, the Journal reports that Merrill Lynch, a creditor to the fund, seized some of its assets. The stock closes at $150.09 on Friday, June 15. The average target price:


5) July 17, 2007 - As losses from subprime mortgages begin to threaten credit markets around the world, Bear Stearns informs investors in its two struggling hedge funds that the funds have “very little value” remaining. Bear shares end the day at $139.91. The average target price: $178.23.

6) August 5, 2007 - Warren Spector resigns under pressure as co-president and co-chief operating officer of Bear, having lost the confidence of long-time CEO James Cayne for his handling of the subprime mortgage crisis. The stock closes at $113.81 on Monday August 6. The average target price: $164.29.

7) October 5, 2007 - Prosecutors launch a criminal probe into the collapse of the two Bear Stearns hedge funds. The stock closes at $131.58. The average target price: $144.17.

8) December 20, 2007 - Bear reports its first-ever quarterly loss, driven by $1.9 billion of bad debt write-downs. It also says executives will not receive annual bonuses. Bear shares close at $91.42. The average target price: $121.67.

9) January 8, 2008 - James Cayne is replaced as CEO by investment banker Alan Schwartz. The stock closes at $71.01. The average target price: $111.36.

10) March 12, 2008 - Responding to market rumors of a cash crunch at the bank, Bear CEO Alan Schwartz goes on CNBC television and assures viewers that the firm has ample liquidity. The stock closes at $61.58. The average target price: $98.87.

11) March 14, 2008 - JPMorgan, backed by the Federal Reserve, provides an undisclosed amount of emergency financing to Bear Stearns. Bear says its liquidity position had deteriorated dramatically in the previous 24 hours. The stock plunges to close at $30.85. The average price target: $93.62.

12) March 16 & 17, 2008 - JPMorgan agrees on March 16 to buy Bear for $236 million, or $2 a share, representing just over 1 percent of the firm’s value at its record high close just 14 months earlier. The deal essentially marks the end of Bear’s 85-year run as an independent securities firm. On Monday, March 17, Bear shares close at $4.81 on optimism another buyer may emerge. The average target price: $2.