SEATTLE — Washington Mutual’s move to slash staff and launch a massive stock offering to shore up its finances may smack of desperation, analysts said Tuesday as the bank’s shares tumbled nearly 12 percent.
The stock price of the nation’s largest savings and loan fell sharply a day after it said it would close offices, lay off more than 3,000 workers, and cut its dividend. It also worried investors by saying it would set aside up to $1.6 billion for loan losses in the fourth quarter and sell $2.5 billion worth of convertible preferred stock.
WaMu has not yet priced its offering, but Friedman, Billings, Ramsey analyst Paul Miller wrote in a note to investors that he has heard it could yield 8 percent to 8.5 percent; Bear Stearns analyst David Hilder estimated the dividend rate closer to 10 percent.
“We believe that cost could wipe out all of WaMu’s 2008 earnings,” Hilder wrote, calling the stock offering and dividend cut “desperate measures.”
