(April 5 – 18:40 ET) – Brokers often jump before they are pushed when the market goes sour.

The Wall Street Journal reported that Morgan Stanley Dean Witter & Co. is planning to cut1,000 brokers. MSDW has denied the report, admitting that it will make some cuts and attempt to trim costs in the face of a market downturn, but it insists that it will not be hacking 1,000 brokers from its 14,000-broker sales force.

In an interview with theStreet.com, Ken Worthington, an equity analyst with CIBC World Markets, observes that brokers are rarely cut even when the market tanks and business dries up. “What the brokers try to do is refrain from laying off big producers. Those kinds of layoffs don’t make sense,” says Worthington.

“Instead, they’ll try to lay off people who are not producing, or because they are not line personnel. Or because they are under-performing. But when brokers under-produce, they quit themselves because they are not producing a living.”

The cuts are more likely to be in areas such as investment banking, especially in the high tech sectors. Worthington sees cuts there and in research. “Historically the most exposed are those in the back office, those who are not actually revenue producers. I don’t look at the layoffs as a big negative because the layoffs have been small thus far. Typically the firms are firing the personnel that are nonessential.”

Worthington says that these layoffs won’t necessarily help much in the short-term, and they hurt in the long run. “In the near term, they are trying to more closely align costs with revenues and it shouldn’t have a big effect on the stock price. Longer term, it’s typically bad for the brokers to do layoffs because they lose market share. If a broker is the only one to lay off people and the market rebounds, typically with the loss of those people comes market share, in some capacity or another. It’s OK as long as everyone is doing it.”