Hard-Pressed Shearson to Cut 2,000 Workers : Wall Street: Nation’s No. 2 stockbroker says move is designed to save about $400 million a year.

NEW YORK —  Shearson Lehman Hutton Holdings Inc., a major Wall Street firm hit by turmoil in recent weeks, said today it will cut its work force by about 2,000 during the first quarter in a cost-cutting move designed to save about $400 million a year.

Shearson also said it is undertaking a comprehensive strategic review of its operations that could drastically reshape the nation’s No. 2 stockbroker.

Shearson said it may shrink or get out of some existing businesses, enter partnerships in some markets or grow in some market areas in which it is already strong.

The company said the cost-cutting plan and the review will entail “significant” charges and it expects a negative impact on first quarter profit.

But the firm said it remained optimistic about its outlook. “Despite the current severe slowdown in the industry, the long-term prospects for the firm remain excellent,” it said in a statement.

It said the strategic review will start immediately and is needed to position Shearson for long-term success in the decade ahead.

Shearson, the nation’s largest brokerage firm after Merrill Lynch & Co. Inc., has been under profit pressure since the 1987 stock market crash and its acquisition of E. F. Hutton & Co. several months later.

Shearson’s majority owner, American Express Co., said Monday that it plans to pump $750 million into Shearson Lehman Hutton Holdings Inc., lifting its capital support for the brokerage affiliate to $1 billion since December.

The capital infusion followed the scuttling of a major stock offering and the resignation of chief executive Peter Cohen late last month. Cohen was the architect of the Shearson’s expansion into a leading Wall Street house with the Hutton buyout, and he is now blamed by many for the firm’s current problems.

Shearson said it has financial flexibility for its restructuring plan due to the recent capital injection from American Express.

American Express, one of the world’s largest financial services firms, holds 70% of Shearson. Last year it announced plans to reduce its holdings to 45% but said market conditions were too unsettled for a planned offering of Shearson shares.

Wall Street brokerage firms in general have been slumping ever since the 1987 stock market crash, cutting back on highly paid staff, selling units and closing operations.

The most dramatic example of Wall Street’s woes appeared earlier this month when Drexel Burnham Lambert Inc., once the most profitable brokerage firm, filed for Chapter 11 bankruptcy and began to dismember its business.