Google Inc is adding Garmin Ltd and TomTom to its growing list of rivals as the Internet search giant weaves technology for driving directions into new versions of its smartphone software.
Google said its new Google Maps Navigation product will provide real-time, turn-by-turn directions directly within cell phones that are based on the new version of its Android software.
The navigation product, which features speech recognition and a visual display that incorporates Google’s online archive of street photographs, marks the latest step by Google to challenge Apple Inc’s iPhone and Microsoft Corp’s Windows Mobile software with its Android smartphone software.
It also represents a direct competitive threat to companies like Garmin and TomTom which sell specialized hardware navigation devices. TomTom also makes a software navigation app for the iPhone that sells for $99.99 in the U.S.
Google executives told reporters at a press briefing on Tuesday ahead of the announcement that the company decided to offer turn-by-turn driving directions in its four-year-old maps product because it was the most requested feature by users.
CEO Eric Schmidt said that expanding into a new market with new competitors was not a part of Google’s motivation.
“Those are tactical problems that occur after the strategic goal which is to offer something which is sort of magical on mobile devices using the cloud,” Schmidt said.
The new navigation service will work with Google’s forthcoming Android 2.0 software, the next version of the smartphone operating system developed by Google. The company announced development tools for Android 2.0 on Tuesday, but a spokeswoman said specific details about when Android 2.0 will be available should be directed to phone-makers and wireless carriers savings account payday advance.
Google said the product, which will initially be limited to driving directions in the U.S., will be free for consumers.
Executives said the company was not currently serving ads on the navigation product, though they said Google is constantly looking at innovative ways to advertise in Google maps.
Google Engineering Vice President Vic Gundotra said the company hoped to eventually make versions of the navigation product for non-Android smartphones, but noted that the software has “stringent” hardware requirements.
He would not comment on whether Apple’s iPhone, which offers Google mapping software as part of its standard menu of built-in applications, would offer the new navigation features. He said, in response to a question, that the latest version of the iPhone, the iPhone 3GS, has the horsepower to support the navigation product.
The new navigation product taps into various existing Google products and technology, including Google’s flagship Internet search capability to find the addresses for a particular destination, as well as Google satellite images and Google Street View, for more realistic views of a route.
The product also uses voice-recognition technology, making it well-suited for use while driving, Google said. And the navigation software can display live traffic data that Google collects from various sources, including data it collects on the speed and distance that users of Google mobile maps are traveling.
Gundotra said the company does not collect any personally identifiable information in the Google mobile maps and the navigation products.
(Reporting by Alexei Oreskovic; Editing Bernard Orr)
Hewlett-Packard Co may get acquisitive again despite its recent absence from the technology sector’s M&A scene, analysts said, and Brocade Communications Systems Inc may a prime target.
Brocade is putting itself up for sale, and HP has looked at the company’s assets but has not made a formal bid, sources told Reuters. Brocade and HP declined to comment.
Brocade makes routers and switches for blade servers, as well as software to help companies manage data efficiently. It has been expanding its partnerships and already sells equipment to HP, International Business Machines Corp and Dell Inc.
Analysts say HP’s sprawling portfolio has cushioned it against the shock of the IT spending downturn, but that investors now want to see the world’s largest computer company move to ramp up growth. Some say one way to do that is through acquisitions.
Stifel Nicolaus analyst Aaron Rakers said HP is likely looking to acquire in areas such as software and networking, to complement its ProCurve networking product.
HP has been relatively quiet on the M&A front, Rakers said, given that the company is still working through last year’s blockbuster $13 billion acquisition of EDS.
“As we roll out into the next couple of quarters, I wouldn’t be surprised to see them do something,” he said.
Kaufman Bros analyst Shaw Wu said HP and its rivals are focused on offering customers an end-to-end suite of products. Cisco recently began selling computer servers targeted at data centers, pitting the company against HP and IBM.
“It makes sense for HP to add to its portfolio in two areas: one is networking, the other is software,” Wu said. “The more software and the more networking that they do, the better the margins.”
Wu said Brocade would be a good fit for HP, noting that an offer for Juniper Networks — another tie-up much speculated on in markets — the No. 2 networking equipment maker after Cisco, would be a bolder and more expensive move.
M&A HEATS UP
Juniper’s market capitalization of roughly $13.8 billion is more than three times that of Brocade. F5 Networks is another networking name that crops up in acquisition talk.
As the IT sector has stabilized, the economy steadies and credit looses, M&A has been picking up. Last week, Cisco agreed to acquire Norwegian videoconferencing company Tandberg for $3 billion, leading analysts to wonder whether HP would respond.
There were also major deals in an IT services sector that analysts say is ripe for consolidation: Dell’s $3.9 billion bid for Perot Systems Corp and Xerox Corp’s $5.5 billion play for Affiliated Computer Services.
HP has a formidable warchest of $13.7 billion in cash should it decide to deal. It has made more than 45 acquisitions since 2001.
Charlie Eickmeyer says he was a fan of Saturn vehicles years before he was able to drive. Today he’s in shock.
So were employees at Day Automotive Group in Pittsburgh when they read the news online that a deal to rescue Saturn had fallen through. And Mike Martin is left wondering how he can move the Saturns left on his lot or what to do with the employees at his Manassas, Va., dealership now that the brand is apparently doomed.
"It seemed like the deal was going through," said Eickmeyer, 34, who started following Saturn when he was 10 years old and now runs a website for enthusiasts of the brand. "I was really excited about the next chapter in Saturn’s history."
The chapter was supposed to be a future under former race car driver Roger Penske with the novel approach of filling dealerships with cars made overseas and rebranded as Saturns.
Instead, the collapse of talks between GM and Penske Automotive Group Inc. this week likely means the end of the nearly 25-year-old brand, sending Saturn dealers, including six dealerships in the St. Louis metro area, scrambling over what to do with their soon-to-be empty showrooms and leaving the company’s loyal owners mourning the apparent demise of a company that built its reputation on customer care.
GM said it will cease making Saturns at plants in Kansas, Mexico and Michigan almost immediately, but will continue to honor warranties after Saturn dealers stop selling cars. Saturn owners can still get their vehicles serviced at GM’s remaining dealerships once their Saturn dealer shuts down.
Lou Fusz Jr., whose family-operated automobile network includes five Saturn dealerships, said his company will continue selling the discontinued line through October 2010.
Fusz said Saturn has yet to notify dealers when to expect the final deliveries of the models.
"All I can tell you is that we’re still in business," Fusz said. "We’re not closing up."
When the time comes, he added, Fusz will sell and service other brands of vehicles in locations now occupied by Saturn.
Fusz said 200 people are employed at the five Saturn dealerships — four in the St. Louis metro area and the fifth in Columbia, Mo. — and could wind up working for "the other franchises we put in there."
A spokesperson for the two remaining local Saturn dealerships, which are run by Jim Butler, couldn’t be reached for comment.
Saturn’s future has been in doubt since GM said earlier this year that it planned to phase out the brand by 2011. GM was shrinking to four brands as part of a deep restructuring. Just five days after GM filed for bankruptcy, Penske emerged as a possible buyer for Saturn payday loan online. Wednesday, Penske backed out, unable to find another company to supply vehicles after GM stops making Saturns in two years.
So, more than 350 Saturn dealers expecting to hear about the closing of a deal instead are faced with shutting their showrooms if they don’t have a viable contingency plan. Thousands of jobs are in jeopardy. Dealers will have to figure out how to sell remaining vehicles to customers who may be skittish over the news that the brand will disappear. But they won’t close immediately — GM gave dealerships until October 2010 to wind down their operations.
Many Saturn dealers have already been through difficult times recently, hit by a combination of one of the worst downturns in auto sales in decades and the uncertainty about the brand’s future. In a clear sign of that pain, GM reported Thursday that Saturn sales were down 84 percent in September from a year ago. But about 13,000 jobs are still tied to Saturn, the vast majority of them at dealerships.
GM had a midday conference call with dealers to discuss the closures. Dealers said executives expressed shock and disappointment that the Penske deal fell through, but didn’t provide much detail on the specifics.
The mood was grim Thursday at dealerships, where owners said they were blindsided by the news.
"This is nothing short of the bride running away at the altar," said Lou Gonzales, president and owner of the Saturn of Antelope Valley dealership in Palmdale, Calif., about 60 miles north of Los Angeles. "The millions of Saturn customers across the United States, I’m sure are disappointed. But they will not be left out in the lurch."
GM spokesman John M. McDonald said GM estimates it will take 4 months to sell the existing inventory of 12,000 Saturns. Dealers believe it could take longer, worried they will have difficulty selling a lame-duck brand to customers.
Martin was weighing whether to run his lot as a used car business or shift his employees over to the Chevrolet dealership he also operates nearby. He has only about 25 Saturns left on his lot after the popular cash for clunkers program, but said he hoped GM would offer some generous incentive programs to help dealers sell out the cars that remained.
There are no plans to offer any special incentives to help sell remaining vehicles, McDonald said. Other brands that are winding down like Pontiac are still selling well without any extras.
Steve Giegerich of the Post-Dispatch contributed to this report.
President Barack Obama’s “pay czar” said on Friday he will not cap compensation for the top employees at bailed-out companies, and will not reveal names, when he releases the first wave of decisions within a few weeks.
“We don’t want specific names next to dollars,” said Kenneth Feinberg, who was appointed in June to decide compensation packages for the highest-paid personnel at companies that received U.S. government bailouts.
The rules do not call for capping pay, Feinberg told a conference here, adding he is faced with setting compensation that discourages excessive risk-taking and that relates pay to performance.
Feinberg said he has the “daunting task of actually determining the compensation,” adding, “avoiding excessive risk means different things to different people in different situations.”
Feinberg, a Washington lawyer, is reviewing companies bailed out in the U.S. Treasury’s Troubled Asset Relief Program (TARP) — a job he has acknowledged comes with enormous political pressures on the heels of the crippling financial and economic crisis that spread around the world.
For the past month, Feinberg and his team have been reviewing the appropriateness of pay packages proposed by seven companies that received extraordinary assistance from the U.S. Treasury: Citigroup Inc, Bank of America Corp, American International Group Inc, Chrysler Financial, Chrysler Group LLC, General Motors Co and GMAC Inc.
Feinberg said there are 15 people on his team, and that he has hired outside consultants. The team is preparing to issue initial determinations, he said at the New York conference hosted by Labaton Sucharow LLP.
The government has laid out general principles that will guide Feinberg’s decisions, such as ensuring the contracts do not encourage excessive risk-taking, that they have an appropriate balance of short-term and long-term pay, and that pay is tied to performance.
The pay plans should also be generous enough that the companies can retain top people and become profitable enough to repay taxpayer investments, Treasury has said.
The model, report, and formulas Feinberg is using will be made public, he said on Friday, adding the rules could be a model for other regulators or institutions.
Feinberg, who previously oversaw payouts to families of victims of the September 11 attacks, has a great deal of latitude in making his determinations and can even claw back pay that employees have received if he finds that it was paid out unfairly.
After Feinberg makes his initial determination about whether to approve or disapprove pay contracts, the companies have 30 days to ask him to reconsider, after which Feinberg has 30 days to make a final determination.
The final determinations are binding, Treasury has said. Feinberg has been verifying the submissions since they were due in to Treasury on August 14.
Andrew Hall, a Citigroup energy trader on track to make about $100 million this year, has recently become a target for accusations of excessive pay at bailed-out companies.
After Feinberg finishes his review of pay packages for the companies’ top 25 employees, he will have to approve broader compensation structures for the 75 next-highest-paid employees.
(Additional writing by Jonathan Spicer; Editing by Steve Orlofsky, Dave Zimmerman)
Chinese housing prices have surged since March, but they will soon lose momentum and even start to fall around the end of the year, boding well for a more sustained contribution to overall economic growth.
A burst of lending in the first six months helped fuel a wave of pent-up end-user buying and speculative purchases, driving up prices for some projects in major cities by 20-30 percent and creating concerns about dangerous bubbles.
Speculative transactions are subsiding now; at the same time, a fresh round of property investments will increase supply.
The resulting moderation in prices, far from signaling the next phase of a boom-bust cycle, will probably pave the way for steadier demand from owner-occupiers, providing a valuable prop for an economy adjusting to a slump in exports, analysts say.
“First we see transactions fall, then prices will decline,” said Ge Haifeng, deputy head of data research at the Beijing-based China Real Estate Index System, which is affiliated with SouFun.com, China’s biggest property website.
Transaction volumes in Beijing, for instance, fell 5.6 percent in August compared with July, the second straight fall after a four-month streak of gains, according to the city’s housing management bureau. In the eastern port city of Ningbo, they were down 37 percent.
That has not been by chance.
Worried by the spike in house prices, authorities in Beijing, Shanghai and other major cities attempted to curb speculation by introducing measures in July to make it harder for people to apply for second mortgages.
Such moves will increase the cost of buying a home and push down prices, said Fan Jianjun, a senior researcher at the Development Research Center, a government think tank.
TWEAKS, NOT WHOLESALE CLAMPDOWN
The drop in new bank lending — to an average of 383 billion yuan ($56 billion) in July and August compared with a monthly average of over 1.2 trillion yuan in the first half — will also pull down transactions in the coming months, said Gao Shanwen, chief economist at Essence Securities.
Policy tweaks and slower lending will probably be enough for now, analysts say, allowing Beijing to stop short of declaring a full-fledged campaign to stamp out property speculation similar to one in 2007.
Ge projected that housing prices would drop toward the end of 2009 or early next year, by about 10 percent, much less than a 20-30 percent fall witnessed last year.
Song Li, a senior analyst at Centaline Property Research Center in Shanghai, gave an even bolder forecast: “We expect prices to peak in September.”
Andy Rothman with brokerage CLSA in Shanghai disagreed that the recent burst of buying and price increases made the sector vulnerable to a setback. He said the market was growing at a healthy, sustainable pace, driven by fundamental demand.
Wealthy U.S. individuals with hidden offshore bank accounts will get an extra three weeks to participate in an amnesty program that could help them avoid criminal prosecution, U.S. tax officials said on Monday.
The Internal Revenue Service extended the program to October 15, citing pleas from tax professionals who say they could not handle the numbers rushing to take part.
The IRS began the offer in March, soon after giant Swiss bank UBS AG turned over the names of some account holders as part of a $780 million criminal settlement with the U.S. government. It is part of a broader crackdown on tax evaders as countries hunt for revenue in the global recession.
IRS officials and lawyers have been saying for months that the response to the voluntary disclosure program has been unprecedented. More than 3,000 taxpayers have come forward, compared with fewer than 100 for all of last year.
“By extending the deadline for a short period of time, the IRS is providing relief for those who had intended to come forward prior to the deadline, but face logistical and administrative challenges in meeting it,” the agency said.
The IRS said there would be no further extensions. The prior deadline was September 23.
In exchange for coming clean by the deadline, individuals would pay back taxes and a reduced fine, while generally avoiding criminal prosecution.
After months of tortuous negotiations that involved the Swiss government and challenged that country’s tradition of banking secrecy, UBS agreed in August to disclose the names of 4,450 American holders of secret accounts at the bank, ending a civil lawsuit allstate insurance company.
The first batch of UBS account holders began to get letters from the bank last week, warning them that their names could be turned over to U.S. tax authorities.
“There is a hazard that when you do this, you are bending to the interests of people who are trying to find out if their names will be disclosed,” said Washington-based lawyer George Clarke of Miller Chevalier, who said his clients were pleased.
The UBS warning letter said that both direct numbered accounts and accounts set up though offshore entities would be targeted by the IRS as part of the UBS settlement.
That surprised some, as the first group would include people who inherited accounts long ago, including some whose relatives perished in the Holocaust.
Although the IRS said tax professionals had been overwhelmed, many believe the agency itself could use more time to process the applications and might also be making a bet that it could reel in bigger fish.
“Those with more sophisticated means will continue to conceal their assets, and in theory, be the last holdouts,” said William Sharp, an attorney with Sharp Kemm in Tampa who is counseling clients taking part in the amnesty program.
After the August civil settlement between UBS and the U.S. government, for example, clients with bigger portfolios starting walking in his door, Sharp said.
(Additional reporting by Pascal Fletcher in Miami and Jonathan Stempel in New York; Editing by Lisa Von Ahn and Gerald E. McCormick)
Frontier Airlines will resume nonstop flights from Lambert-St. Louis International Airport to Cancun beginning in December.
The Denver-based carrier, which is in the process of being acquired by Republic Airways Holdings, announced the new roundtrip Saturday flight this week along with other flight additions. Flights to Cancun International Airport begin on Dec. 19. Frontier previously offered service between Lambert and Cancun through April 2008.
Frontier spokesman Steve Snyder said the acquisition by Republic will give the carrier an opportunity to look at growth get a free credit report.
"We are able to take a look at some routes that make sense," Snyder said. "We believe that the St. Louis-to-Cancun route does that right now."
After bungling five probes that should have uncovered Bernard Madoff’s $65 billion fraud, regulators must learn to aggressively investigate tips and complaints to catch wrongdoers, the U.S. Securities and Exchange Commission’s internal watchdog said on Thursday.
A scathing report issued last week by SEC Inspector General David Kotz found that the agency missed numerous red flags, did not properly follow up on leads and dismissed tips and complaints that might have uncovered Madoff’s investment sham.
At a congressional hearing to examine the SEC’s shortcomings, Kotz outlined dozens of recommendations to improve SEC procedures for handling tips and examining individuals and companies.
He urged the SEC to make sure that complaints were properly vetted, saying tips and complaints had to be reviewed by staff who had related experience.
Kotz’s report detailed, for example, how three staffers discounted a detailed 2005 complaint about Madoff by Harry Markopolos because he was a competitor rather than a Madoff employee or investor.
The three staffers — two of which were relatively senior employees — had never investigated a Ponzi scheme, where initial investors are paid with money from newer investors.
SEC Chairman Mary Schapiro has already asked Congress to give the agency authority to compensate whistleblowers.
Schapiro and her new director of enforcement, Robert Khuzami, have instituted changes to speed up the pace of enforcement, such as making it easier for staff attorneys to negotiate penalties and use subpoenas. Khuzami has also cut the number of managers at the SEC and plans to create specialized teams to investigate cases.
Some lawmakers are seeking more money for the SEC, which is understaffed and underfunded when compared to banking regulators.
New York Senator Charles Schumer, a senior member of the Banking Committee, supports a bigger budget for the agency and says the SEC should keep all the feeds it collects.
Madoff pleaded guilty in March to orchestrating a Ponzi scheme and is now serving a 150-year prison term.
(Reporting by Rachelle Younglai; Editing by Neil Stempleman)
This week’s indictment of a hacker believed to be responsible for the biggest retail-store data breaches in U.S. history doesn’t necessarily make shoppers safer from having their credit card numbers plundered.
Accomplices are believed to be on the loose in Russia or other countries where U.S. authorities are less likely to get them. And the underlying security holes mined by the hackers still exist in many payment networks.
Albert Gonzalez, a Miami hacker who once worked as a government mole tracking down identity thieves, is accused of playing a critical role in all the largest credit card heists on record.
With Monday’s indictment of Gonzalez on conspiracy charges in U.S. District Court in New Jersey, the Justice Department says he helped steal 130 million card numbers from payment processor Heartland Payment Systems, 4.2 million from East Coast grocery chain Hannaford Bros., and an undetermined number from 7-Eleven. He previously was charged in other computer break-ins, most notably at TJX Cos., the chain that owns retailers T.J. Maxx and Marshalls, in which as many as 100 million accounts were lifted.
Gonzalez is in jail and awaiting trial next month in New York for allegedly helping to hack the computer network of the Dave and Buster’s restaurant chain.
The fact that hundreds of millions of card numbers could be stolen from retailers illustrates the flaws in a payment system built more for speed than security, as an Associated Press investigation found this year. For instance, credit and debit card numbers are not always encrypted as they move from retail stores to banks for approval.
Consumers don’t directly pay the costs of most fraud. Banks and retailers eat those charges. But consumers bear it indirectly, in the form of higher prices.
According to prosecutors, Gonzalez and his associates exploited vulnerabilities that remain widespread. Among them: flaws in the way retailers’ computers handle requests in the so-called Structured Query Language, which is used to manage data — such as credit card information — stored in databases low cost car insurance. Hackers who detect these holes can trick databases into coughing up more information than they should.
Security experts also noted that Gonzalez’s latest indictment charges two unnamed co-conspirators who live "in or near Russia."
Dan Clements, president of CardCops, which tracks stolen credit card data online, called it a "cleverly written indictment" that suggests the government might be trying to squeeze its former informant for more information about Hacker 1 and Hacker 2. However, extraditing those suspects is unlikely, Clements added.
"We are not safe," he said. Gonzalez is "here on U.S. soil. That was his big flaw. If he were anywhere else, he’s not going to jail."
Ori Eisen, founder of Scottsdale, Ariz.-based security firm 41st Parameter and previously worldwide fraud director for American Express, added that Gonzalez is "most likely not the kingpin. The kingpin would not risk being in the United States. They operate out of the Ukraine or Russia, and they’re former militants or ex-KGB who know their way around just enough not to get caught."
Consumers don’t have many options for monitoring whether the stores they frequent are good at protecting their card numbers. Stores aren’t given public grades on their computer security. The best advice: Regularly check your credit report, and set free fraud alerts with the credit-reporting agencies.
In this case, the thieves might have failed by being too successful. It’s hard to unload hundreds of millions of stolen credit card numbers on the black market.
Many of the numbers stolen in the breaches cited in the Gonzalez indictment already have been canceled and replaced.
The great crash of 2008 turned Wall Street into a financial disaster zone, as big firms tumbled and employees by the thousands found themselves out of work.
But when the going got tough, Ron Kruszewski went shopping.
Kruszewski is chief executive of Stifel Financial, parent of the Stifel Nicolaus & Co. brokerage. The firm, based in downtown St. Louis, is on a growth spurt at a time when much of the industry is shriveling up, selling out or dying off. The misery of its rivals gave Stifel a chance to pick up people and businesses on the cheap.
In May, Stifel picked up 320 stockbrokers and 54 offices from the struggling Swiss-based giant UBS. Last fall, it bought 23 offices in Ohio and Pennsylvania and hired 75 brokers from Butler Wick & Co. Last month, it hired Victor Nesi, Merrill Lynch’s former head of investment banking for the Americas.
Those moves continue a four-year run of acquisitions that is turning Stifel from an obscure Midwestern brokerage to a firm with national name recognition. Revenue more than tripled in four years to about $889 million.
"His target is pretty obvious — to become one of the big boys," said Juli Niemann, a Stifel analyst in the 1990s who now works at Smith Moore & Co.
Stifel was in the right place at the right moment, analysts say. It avoided bad investments that crippled Merrill Lynch, Wachovia and Citigroup and toppled Bear Stearns, AIG and Lehman Brothers.
When other firms held fire sales, and employees fled for the exits, Stifel’s Kruszewski was standing by with a checkbook.
"I don’t spend a lot of time trying to read the future," says Kruszewski. "I spend time reacting to what comes my way."
Stifel’s stock is up 42 percent since the recession began in December 2007. That’s the sharpest advance among 17 other large and mid-sized publicly traded investment firms.
While Stifel’s stock is up, its profits are down by 8 percent in the first quarter to $13.2 million. Investors seem to be betting that Stifel will come back stronger than the pack when good times finally return.
"Oh, it’s definitely a buy," says Michael Flanagan, an independent brokerage industry analyst in Philadelphia, who says he has no business connections with Stifel.
"Stifel since 2004 has been the best in class."
BOND CONTROVERSY
There have been boos mixed with the applause for Stifel. Much of the booing comes from Missouri Secretary of State Robin Carnahan, the state’s main securities regulator. She blasts the company for refusing to immediately buy back $180 million in "auction rate" securities sold to small investors as a low-risk place to stash cash.
Those investments have been frozen since the auction rate market collapsed in February 2008.
A buyback would stick Stifel with bonds that can’t be sold except at a steep loss. The company says it plans to buy back the bonds over three years, which might be time enough to find a market for them. Carnahan calls that plan "drawn-out and inadequate."
While Carnahan and auction-rate customers complain, financial industry analysts are cheering.
They say Stifel sidestepped the mistakes that brought down the giants. It largely stayed out of the mortgage meltdown, but its saving grace was that it avoided heavy debt.
Wall Street investment firms inflated their balance sheets with borrowed money in the good years. Then, they made big bets on mortgage securities and other risky investments. When the economy slumped and the housing market crashed, those securities plummeted in value and big firms drowned in their debt.
Stifel has an assets-to-equity ratio of 3 car insurance quotes.2, compared with 30 at some larger firms before the crash.
"You have to credit Stifel management with using the most powerful word in business, which is ‘no,’" says Joe Stieven, who worked as a banking analyst for Stifel for 21 years before quitting to start his own firm. "They were disciplined enough to say no when others were jumping off the cliff."
Stifel’s growth began before the recession. In 2005, it bought Legg Mason Capital Markets from Citigroup. The firm, based in Baltimore, quadrupled Stifel’s investment-banking business and gave it a bigger presence in capital markets.
Retail brokerage — Stifel’s traditional bread and butter — dropped from three-quarters to about half of the company’s revenue.
Legg Mason also brought a big stock research operation, which Stifel lacked. The company now has 61 analysts, and Stifel analysts started popping up on CNBC and in the financial press.
STAYING LOCAL
After the Legg Mason purchase, Stifel had as many employees in Baltimore as in its St. Louis hometown. But Stifel opted not to move the headquarters from downtown St. Louis, where it’s been since 1890.
"St. Louis has a natural talent pool of people who know the business," says Kruszewski.
That stems from the large number of brokerage firms operating here, including two big national full-service firms in Edward Jones and Wells Fargo Advisors and national discount broker Scottrade. All those experienced people give brokerage firms a reason to stick around.
Stifel now has 900 employees in St. Louis, up from 480 in 2005.
"I don’t think I have the right to move a St. Louis institution somewhere else," said Kruszewski.
Stifel still plans to move to Ballpark Village, which is now an empty lot next to Busch Stadium. Despite repeated delays, Kruszewski is convinced the project will be built. "If we can’t get it built, we ought to push the city into the Mississippi and let it float to Memphis," he jokes.
Stifel held on to 320 of the 340 UBS brokers at offices it acquired. That 6 percent loss is below the 8 to 12 percent loss common in takeovers.
"They are able to hire excellent people off Wall Street. They come from firms that essentially imploded through the steroid of leverage," says analyst Stieven.
In 2007, Stifel bought tiny FirstService Bank in Crestwood. Stifel probably didn’t need a bank; brokerage houses had been getting along without them for decades.
But many banks were buying brokerage houses in an effort to become a one-stop shop for customers seeking investments, credit cards, bank accounts and loans. They have had only limited success at cross selling, but they keep trying.
"My competition thought they’d sell out to a bank," Kruszewski said. "I thought, ‘Why not buy a bank?’"
Meanwhile, Kruszewski says, he will continue to avoid heavy risk. For instance, he won’t set dollar goals for his employees out of worry that they will take too many chances.
"Once you set quantitative goals in financial services, you’re in trouble," he says.
By keeping the firm healthy, Kruszewski said, he will be ready when opportunity arrives, wherever it happens to come from.
"We’ll be a bigger, more influential firm in the market place," he predicts.
"How we’ll get there, I have not a clue."
Powered by WordPress -- XHTML 1.0