The unexpected plunge in the equity markets last fall and asset writedowns have contributed to a second consecutive quarterly loss for Vancouver's Canaccord Capital Inc. (TSX:CCI).
The investment dealer's third-quarter net loss of $62.4 million for the period ending December 31, 2008, compared with a net profit of $15 million in 2007's third quarter as its revenue fell 52.5% to $87.2 million from $183.4 million. Canaccord also absorbed restructuring costs.
Its investment banking division revenue plummeted 76.2% to $20.1 million from $84.9 million. Commissions from its private client division fell 31.3% to $51.5 million from $74.9 million.
The company recorded a non-cash $27.5 million writedown in the value of its Canaccord Adams investment banking division and took a non-cash charge of $4 million for Canaccord Enermarket Ltd., its oil and gas advisory business.
It also posted a $7.5 million charge related to its cost-cutting restructuring plan.
Despite the disappointing results, Canaccord CEO Paul Reynolds remained positive in a letter to shareholders. He noted that the company is gaining market share in the U.S. due to the dramatic changes in the banking industry. Reynolds added that Canaccord is also working to strengthen its private client services with the division's head John Rothwell aggressively addressing cost issues.
While Canaccord had instituted a cost-reduction plan last June, the deterioration of the markets in October and November outpaced the savings the company made in the quarter. The company plans to cut its business costs further through reductions in staff and management salaries.
Canaccord's share price range during the past week: between $4.26 and $4.40; 52-week high: $12.85; 52-week low: $2.87.