Canaccord Genuity cuts workforce, posts $346.4-million loss

TORONTO -- The weakness experienced in stock markets around the world has taken a toll on one of Canada's largest brokerage firms, Canaccord Genuity, which is cutting seven per cent of its workforce and writing down the value of its business assets.

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As a result, Canaccord (TSX:CF) is recording a $346.4 million net loss for its fiscal third quarter, or $3.91 per share.

The company -- which has its principle offices in Vancouver and Toronto -- says the staff reduction affects 125 people in Canada, the United Kingdom and the United States. The company also closed an office in Barbados during the quarter.

The workforce cuts are part of $4.3 million in restructuring expenses during the third quarter that ended Dec. 31. An additional $14 million of restructuring costs will be recorded in Canaccord's fourth quarter, which ends March 31.

Canaccord also took a $4 million writedown of its investment in Canadian First Financial, which offers mortgage and other financial services to retail customers.

The biggest portion of Canaccord's third quarter loss is a $321 million writedown of the value of its capital markets division, which provides research, advisory, trading and corporate finance services to institutional and corporate clients.

"Due to the combined effect of weak equity market conditions globally and in each of our principal operating regions, these reporting units have experienced declines in business activity, revenue and profitability," Canaccord said.

Revenue for the three months ended Dec. 31 was $181.8 million, up nine per cent or $15.4 million from a year earlier.

But expenses grew even more, rising by $20.1 million to $204.2 million without the usual items. Including the significant special items, expenses grew by $340.5 million to $532.5 million.



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