J.P. Morgan Chase and FleetBoston Miss Estimates

A few banking heavyweights are feeling the pain of previous efforts to "diversify their revenue streams."

J.P. Morgan Chase (JPM Quote - Cramer on JPM - Stock Picks) and FleetBoston (FBF Quote - Cramer on FBF - Stock Picks) posted sharply lower results that missed estimates amid steep declines in investment-banking fees and venture-capital holdings.

J.P. Morgan Chase posted earnings of 33 cents a share, well below the year-ago 89 cents. The Thomson Financial/First Call consensus estimate, which doesn't account for venture capital losses, was for 65 cents. Excluding the results of J.P. Morgan Partners, the bank said it would have earned 64 cents a share. The poor results mark the third time in four quarters that the bank's venture capital arm, which invests in high-tech and emerging growth companies, has dragged down the company's earnings.

J.P. Morgan Chase, which also announced a $6 billion stock buyback, said its VC unit, J.P. Morgan Partners, contributed a hefty 31 cents to the overall decline in its per-share earnings. That compares with income of 10 cents a share in the unit in the year-ago quarter.

The private-equity arm had been a turbo-charged earner as the bank cashed in on the tech boom of recent years.

Meanwhile, the slump in tech and telecom valuations also weighed on FleetBoston's numbers, as the bank watched once-lucrative IPO and merger advisory fees all but disappear. Its private-equity unit also dragged down earnings. Fleet posted second-quarter earnings of $531 million, or 48 cents a share, far below the year-ago $971 million, or 87 cents a share. The consensus of 79 cents did not account for venture capital.

Fleet blamed the "pronounced fallout in the capital markets sector" for the 39-cent per share decline from the prior year. The bank said its primary capital markets unit, which includes principal investing, Robertson Stephens and Quick & Reilly, dropped by $500 million, or 46 cents. Fleet said more than 80% of the decline could be chalked up to private equity, where it took $290 million of after-tax writedowns against the carrying value of investments in its $4 billion portfolio, particularly in tech and telecom holdings.