The First Marblehead Corporation
announced it has reduced its full-time employee population by approximately 24% in a continued effort to reduce costs. According to a company press release, this represents another phase in the cost reduction plan and it will eliminate Boston jobs
, where it is headquartered, as well as a processing center in Medford, Massachusetts.
First Marblehead is in the student loan business, helping “meet the growing demand for private education loans by offering national and regional financial institutions and educational institutions an integrated suite of design, implementation and capital markets services for student loan programs,” notes the company website.
The announcement is the third hit the company has taken this year. According to the Boston Globe
, the company eliminated 500 positions – more than half of its workforce – in May. While in August, the company replaced its Chief Executive Officer with its original founder, who had years earlier resigned over questions of excessive spending.
First Marblehead Corporation announced that its total revenues for the first quarter of fiscal 2009 were $84.9 million, down from $380.0 million for the same period last year. The net loss for the first quarter of fiscal 2009 was $92.9 million, a decrease from net income of $168.8 million for the same period last year.
In August 2008, the company received $132.7 million in gross proceeds from the sale of shares of preferred stock to affiliates of GS Capital Partners.
Daniel Meyers, First Marblehead's Chief Executive Officer and President, said, "The illiquidity of the capital markets continues to negatively impact our financial results. We have scaled back expenditures significantly to reduce our operating costs. We are focusing our efforts on our core businesses -- the design, origination, financing and risk management of private student loan products and services. The completion of the GS Capital Partners investment adds to our financial strength and flexibility as the company closed the quarter with $222 million in cash, cash equivalents and investments on the balance sheet."
Meyers added, "Challenging economic times such as these create opportunities that well positioned firms can take advantage of through knowledge, hard work and industry expertise. The strategic realignment and management changes we have undertaken are positioning the company to lead the next product cycle and compete in the newly emerging private student loan marketplace."
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