Earnings, What Earnings? Ambac Loses More Than Total Share Price (ABK)

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Ambac Financial Group Inc. (NYSE: ABK) saw yet another huge loss today, and as this is still key for system-wide "counterparty risk" concerns this is a drag on the market.

On an operational basis, Ambac’s losses came to -$6.93 EPS; First Call was at -$1.51. 

For the first quarter, Ambac lost $1.66 billion or a whopping $11.69 per share.  It posted $1.73 billion in losses on a book of contracts promising to cover missed payments on complex investments backed by home loans.  It has also set aside $1 billion preparing to pay claims on defaulted mortgage debt. 

About the only positive thing is that Ambac has access to about $16 billion in cash to pay potential claims.  The sad thing is that the company might need all of it.

When you see losses like this that get larger than a company’s actual share price, your best bet is in more senior securities than the common stock.

Ambac shares are down over 18% at $4.90 in pre-market trading.  While the low over the last 52-weeks is $4.50, its high is $96.10.

Jon C. Ogg
April 23, 2008