Magazine article American Banker

Latest Putnam Layoffs Take on a More Serious Cast

Magazine article American Banker

Latest Putnam Layoffs Take on a More Serious Cast

Article excerpt

Putnam Investments' layoffs last week of 256 employees -- its second round in less than a month -- signal pessimism about the markets and may lead other fund companies to follow suit, analysts said.

In a memo circulated to employees Wednesday, president and chief executive officer Lawrence J. Lasser announced the new layoffs -- equal to 4% of Putnam's work force -- and said they were prompted by depressed equity markets.

"We have concluded that Putnam's size and expense levels should be brought closer to what they were before last year's growth spurt," the memo said.

If further cuts are necessary, the memo said, they will come through "normal attrition."

The Boston company cut a few dozen jobs late last month.

Michael Paisan, who covers Putnam's parent company, Marsh & McLennan Cos., for Keefe, Bruyette & Woods Inc. in New York, said the layoffs would let Putnam "regain some of the profit margin it lost" in the market's recent slide.

Putnam's stock, bond, and money fund assets fell 7.3% from yearend to Feb. 28, to $247.8 billion, according to Lipper Analytical Services.

Last week's layoffs included five portfolio managers. Fund companies rarely fire portfolio managers, and Putnam's doing so suggests that it is committed to maintaining profits, Mr. Paisan said.

Portfolio managers are generally the last to go at fund companies -- and even then, they are cut very selectively, he said. "You don't want to cut a Peter Lynch-type superstar. …

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