Capital One Boosts Guidance, Sets Layoffs

Credit card lender Capital One ( COF) reported a 42% rise in second-quarter profits, boosted its earnings guidance for the remainder of the year and announced it is laying off 1,400 workers.

In the quarter, the McLean, Va.-based company earned $407 million, or $1.65 a share, compared to $286 million, or $1.23 a share, in the year-earlier period. The company handily beat the Thomson First Call consensus estimate of $1.50 a share.

The card company also upped its full-year earnings estimate to between $5.60 and $5.90 a share. The First Call consensus had Capital One earning $5.84 a share. The company released its results after the market closed.

At the same time, the company said it would eliminate 1,400 jobs at call center offices in Florida, Texas and Virginia, with most of the layoffs occurring at Capital One's office in Tampa, Fla. The company said the job cuts are part of an "ongoing drive to achieve cost efficiencies and maintain the company's momentum for continued success."

Total revenue on a managed basis was $2.6 billion, a little below the consensus estimate of $2.7 billion.

Net interest income, the bulk of the revenue Capital One makes from its lending operation, was $1.59 billion on a managed basis, compared to $1.46 billion a year ago. The quarterly provision for loan losses declined to $732 million from $898 million.

Operating expenses rose 11% to $975 million, but marketing expenses held relatively steady at $254 million.

Shares of Capital One closed at $66, down 31 cents.

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