Sallie Mae Lost $104 Million
Sallie Mae, the Reston, Va., based student loan company, has lost $104 million in one quarter. The company has been suffering from financial problems since last year and a reshuffling of its top management as well as a failed buyout.
According to Democratic Underground, Sallie Mae has eliminated about 1,000 jobs over the past six months which represents about nine percent of its workforce.
In January, the company said it was becoming more selective about student loans and was stressing the importance of graduation to predict students’ likelihood of repaying their debts. The layoffs are part of Sallie Mae’s continuing effort to cope with cuts in federal subsidies, the collapse of a planned sale of the company and an upheaval in the financial markets that has made it costlier for lenders to fund their business.
The New York Times reports that Sallie Mae’s shares have dropped from a peak of $58 last summer to close at $16.26 on Wednesday.
That is in contrast to a profit of $116 million, or 26 cents a share, a year earlier. Sallie Mae set aside $137 million for losses on student loans. Sallie Mae’s profit on a “core” basis was 34 cents a share in the first three months of the year. Analysts polled by Thomson Financial had expected 40 cents a share on that basis, which excludes the impact of student loans bundled together as securities.
Albert L. Lord, the chief executive of Sallie Mae, is quoted commenting on the financial difficulties the company has been facing recently.
“Today’s environment is the most difficult we have seen in our 35-year history of student lending.”
Photo: © cafemama
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