November 6, 2008 / 11:46 AM / in 9 years

UPDATE 2-Canaccord posts loss, suspends div; stock falls

* Q2 loss of C$0.11/shr vs expectation of profit

* Q2 total revenue down 30 pct to C$110.8 mln

* Temporarily suspends quarterly dividend

* Shares fall 13.4 pct to C$5.50

(Adds details, comments from conference call, share price)

By Lynne Olver

TORONTO, Nov 6 (Reuters) - Investment dealer Canaccord Capital Inc CCI.TO said on Thursday it swung to a quarterly loss and that it had suspended its dividend as fallout from the credit crisis hurt its investment banking and private client businesses.

The company also detailed several charges that will hurt results in the next quarter.

Canaccord shares fell 13.4 percent to C$5.50 in early trading on the Toronto Stock Exchange.

The company, which announced 170 layoffs last week, or about 10 percent of its staff, said it lost C$5.4 million ($4.61 million), or 11 Canadian cents a share, in its second quarter ended Sept. 30. That compared with profit of C$12.4 million, or 26 Canadian cents a share, in the year-earlier period.

Analysts had expected a profit of 9 Canadian cents before items, according to Reuters Estimates.

The company plans to take charges for the staff cuts, a reserve against unsecured exposure to client losses, and other items totalling 22 Canadian cents a share in its financial third quarter, which will end Dec. 31.

The business outlook is not sunny, Chief Executive Paul Reynolds said on a conference call, adding that the company is braced for a downturn that could last 12 to 24 months.

Canaccord is suspending its dividend, and it will evaluate the dividend policy quarterly “as we monitor the market environment and our business activity,” Reynolds said.

Vancouver, British Columbia-based Canaccord has operations in Canada, Britain and the United States.

Reducing its workforce was the most important move the company took to cut costs, Reynolds said.

“Like most in our industry, Canaccord’s business was scaled for a much higher volume of business and we must adjust our staffing for what looks to be a prolonged period of lower activity,” Reynolds said.

Canaccord is also curbing discretionary spending, suspending some capital expenditures and deferring projects, and reducing some support and information technology costs.

These measures plus the staff cuts should save C$12 million, he said.

In the latest quarter, revenue from the company’s private client services group fell 24 percent, while revenue from investment banking plunged 54 percent.

A dozen private client advisory teams left the firm over the summer, and it subsequently hired four new teams, Reynolds said. A new executive in charge of the private client division, John Rothwell, will have the task of “aggressively growing” the business.

Canaccord and competitor GMP Capital Trust GMP_u.TO have both been hammered by poor capital market conditions since mid-year. Both firms focus on advising small to medium-sized resource companies, which investors shunned as commodity prices and equity markets plunged in recent months.

Its shares are down about 64 percent so far this year.

$1=1.17 Canadian Reporting by Lynne Olver in Toronto and Sweta Singh in Bangalore; Editing by Peter Galloway

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