Nasdaq---Anthony
Focus on acquisitions
Interview: Sea Cliff Capital---Ellman, James---Managing Director / Partner (slow)
>> now, let’s check the nasdaq numbers, getting you caught up on trading today. nasdaq higher on the day by 17 points on very low volume, however. only about 1.5 billion shares traded on the day. anthony massucci is standing by in times square at nasdaq market site.he can tell us what happened down there today. anthony?
>> the nasdaq looked like it might go lower toward the end of the day but closed the day higher, up 17 points. nasdaq 100 which touched negative territories about 20 minutes before the close but also managed to rally at the end closing up seven points. we have been talking mergers all day. technology shares rose 13% today. the company agreed to be bought by symantec. they sell internet security software. on technology and symantec getting together. merger news on the nasdaq. ask jeeves falling 7% after mentioned in barron’s saying competition could hurt the stock going forward from here. google, yahoo and microsoft in the internet search business. could hurt ask jeeves at this point. the stock fell on the day. isis closed up 6.2k% i believe. mobius management systems a big mover, up 20% on the nasdaq. barron’s reporting that one analyst recommended shares of mobius. he says software sales could continue. they make software that allows companies to keep track of documents. we saw internet and networking stocks give the nasdaq a boost. biotechs a bit of a drag. nasdaq closing higher after closing down monday, thursday and friday of last week. back to you, michael.
>> anthony massucci. continuinging our coverage of today’s top story, earlier today bank of america’s chief executive officer, kenneth lewis said their acquisition of fleetboston makes his bank truly the bank of america. is financial manifest destiny worth $47 billion? maybe not says our next guest. james is president and fund manager of seacliff capital that trades financial stocks . he joins us from our san francisco bureau. welcome, sir.
>> thank you.
>> all right. we’ll pose the question to you. is it worth $47 billion? there was a lot of talk on wall street that bank of america may have overpaid.
>> well, i live here in san francisco and my parents live in boston. i like to visit them. now i will have an a.t.m. card to use here and there. that’s nice as a customer. but i’m not worth it was worth the $10 billion in market capitalization that disappeared from bank of america.
>> how did it change the landscape for both the banks and what is the risk to bank of america? we saw a financial merger a couple of years ago with j.p. morgan chase, a high premium and criticism at the time. how does this compare to that?
>> there are several major risks. fleet, of course, has a specialist on the new york stock exchange. could be negative news flow there. they have a large asset manager. all the other banks of new england will try to go after fleet’s customers now and try to poach the customers away as the acquisition takes place. i think mr. lewis has his work cut out for him. with that said, i expect that two years from now we’ll think it was a pretty good merger.
>> is this going to set up another wave of mergers in the financial industry. is it like mr. lewis said the only way to go if you are going to continue to compete?
>> i’m not so sure. c.e.o.’s of other banks will look at this deal today and see the 10% drop in bank of america’s share price and they’re going to wonder do we want to do a deal that will dilute to next year’s earnings and lose 10% of our share price just to get bigger over time, maybe we should try to grow organically instead.
>> is this a possibility growth for bank of america with this or will they have a problem consolidating and have to sit there for a while?
>> i think we’ll see growth in bank of america over time. as the economy picks up, we’ll see loans to big corporations start to pick up. the bank will start to see some growth. but i think you’re not going to see too much growth out of fleet’s franchise for a while. that’s because you will see erosion in market share in the fleet network area as some other competitors take off market share.
>> that’s what happened to morgan & chase.
>> it tends to happen wherever banks take over or acquisitions take place. it particularly takes place when there are acquisitions of retail branch networks because when you change the name, you change the a.t.m.’s and checks, you can irritate enough of your consumer customers that they go across the street to another bank.
>> what does this mean for the entire financial landscape? are we starting to see a big wave of m&a coming on?
>> certainly i think we’ll see more m&a over the next 12 months. that is because target company stock prices are up significantly from the bottom that we saw earlier this year. so many of the board of directors will be more willing to sell out at a slight premium to the current price. i don’t think we’ll see a wave of mergers like the end of the 1990’s.
>> thank you very much, sir. james ellman is the president and fund manager of seacliff capital. three members of the dow reported earnings today. procter & gamble said profits rose last quarter. we’ll have all the details on the “world financial report.”
