Aetna Shares Tumble After Layoffs

NEW YORK (TheStreet) -- Shares of Aetna have fallen 2.4% in morning trading, following an announcement of immediate job cuts by the company.

Aetna(AET Quote) says it will axe 625 jobs immediately as it braces for the potential impact of health-care reform, reducing its workforce by 2%. The move, according to Aetna, is also a sign that the economy is not yet out of the woods.

"The economic downturn has had a significant impact on our customers. In addition, we must prepare for the impact that health care reform and regulatory changes may have on our business," said chairman and CEO Ronald A. Williams.

Aetna says it foresees a possible dent in profit margins if Congress decides to pass a health-care bill that will cover more uninsured people. It warns of another round of similar job cuts by the end of the first quarter of 2010.

The company is also trying to lower real-estate costs by consolidating certain regional offices, though it doesn't expect to exit any of its markets. Aetna will incur a restructuring charge of $40 million as a result of the job cuts and real estate consolidation.

The company made the announcement after Wednesday's market close. Shortly thereafter, its shares slid 5 cents to $29.16 in after-market trading.

-- Reported by Andrea Tse in New York

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