According to an internal memo issued by
), the company will be cutting 300 jobs - about 3% of the total
workforce as of Dec 31, 2012. At the same time, the company will
continue with its hiring activities and expects to end the year
with more employees than it had at the end of 2012.
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Some of the retrenched employees will depart now, while others
are expected to leave in the coming months. The job cuts are a
part of BlackRock's reorganization efforts that included
restructuring of its investment units. Moreover, the company is
focusing on organic growth via expansion through increasing
client assets, while giving less attention to buyouts.
Additionally, as per the internal memo, after acquiring Barclays
Global Investors (BGI) from Barclays Plc (BCS) in 2009, BlackRock
added nearly 1,500 employees. This is the first time that the
company announced job cuts that would enable high performing
employees enjoy greater responsibility.
Since the financial crisis, many banks and financial firms are
downsizing workforce to improve efficiency and bring down costs.
Among major banks,
JPMorgan Chase & Co.
) recently announced overall 19,000 job cuts by the end of 2014.
Bank of America Corp.
Goldman Sachs Group Inc.
) announced job cuts to improve overall competence.
We believe that BlackRock's announcement of job cuts and its
decision to mainly focus on organic growth would enable the
company to improve its market share. Further, many of the
company's exchange traded funds (
) are in huge demand. Additional emphasis on the growing ETF
market will augur well for BlackRock's growth story.
Currently, BlackRock retains a Zacks Rank #3 (Hold).