MF Global’s new CEO would have had a far harder time slashing costs this way at his last job. As Governor of New Jersey, Jon Corzine faced huge budget deficits, an unwieldy management structure and stagnant income – arguably far worse conditions than exist at the futures and options trading brokerage he is running now.
While it might be nasty, if not cynical, to suggest he was happy about putting up to 15 percent of his workforce out on the street, he would have certainly enjoyed an immediately satisfying impact. “We are weeding out low-performing businesses,” he said on a conference call with investors, enjoying the power of voters being shareholders rather than employees. MF is also freezing new hiring, reducing compensation, and eliminating or postponing initiatives that are not central to the company’s direction.
MF Global could see net benefits of $59 million to $75 million, or 22 cents to 28 cents per share, from cost-cutting in 2011, according to an analyst note from Ticonderoga Securities. The stock was up by late morning, reversing a sharp early loss and defying the gravity of a sharp retreat in the overall market. Even if it took traders an hour or two to decide the decisive action outweighed surprising news of a first-quarter loss, at least he didn’t have to wait for a poll.