Capital One: Putting Pink Slips In Employee Wallets (COF)

Capital One (COF-NYSE) has announced an update to a restructuring, or in otther words has announced lay-offs.  The company claims this is ongoing, but history says that isn’t really so and the headlines are focusing on the total layoffs announced.

HERE IS THE WORDING: The initiative includes actions already taken during the second quarter of 2007 in the company’s US Card, Mortgage Banking, and UK businesses, as well as savings associated with cost synergies from the acquisition of North Fork Bank. Many of the planned actions leverage the capabilities of recently completed infrastructure projects in several of the company’s businesses. The scope and timing of the expected cost reductions are the result of an ongoing, comprehensive review of operations within and across the company’s businesses, which began several months ago.

That sounds like the government claiming a joint-office initiative went smoothly.  The company is targeting a combined $700 million pre-tax savings in 2009 and is saying that $200 million of the $300 million total charges will be this year (with $90 million in Q2). Approximately $150 million of these charges are related to severance benefits.

The cost restructuring initiative is expected to eliminate approximately 2,000 current jobs across the company.  Capital One claims that approximately half of these planned job eliminations have already occurred and the impacted associates have been notified, but the media is sure going with the 2,000 job headlines.  Shares, however, are up 1.5% to $80.05 in after-hours trading.  The 52-week trading range is $69.30 to $87.19.

What’s in 1,000 more Capital One workers’ wallets? Pink Slips…..

Jon C. Ogg
June 27, 2007

Jon Ogg can be reached at [email protected]; he does not own securities in the companies he covers.