Nasdaq dials out to clients to fend off downturn
By Nicole Maestri
NEW YORK, Aug 20 (Reuters) - From his desk on the 49th floor of the Nasdaq Stock Market offices in lower Manhattan, Richard Keary has a view of the city that extends as far north as the haze of the summer afternoon will allow. ADVERTISEMENT
But when Keary tilts his gaze downward, he is staring at three flat-screen monitors blinking incessantly with stock prices, graphs, charts, analyst notes and news flashes. The screens provide any and all information a chief executive could possibly want to know about his own stock or the stocks of his peers.
At least that's what the Nasdaq Stock Market is hoping.
The No. 2 U.S. stock market, hard hit by the technology rout that forced it to delist numerous companies, is trying to move away from its technology-laden image. It is pushing new products and services to attract a variety of new listings as well as retain the ones it has as its number of listed companies fell in July to the lowest level in nearly 19 years.
Keary, a former market maker, is one of 22 Nasdaq employees toiling at its 2-month-old market intelligence desk, which is touted as a "pioneering" approach to customer service.
The desk allows executives from Nasdaq-listed firms to phone in on a dedicated 800 number and inquire about their stock movement. The desk also alerts the firms to unusual trading activity, the latest news, analyst comments -- anything that could affect their shares.
Keary monitors the stock of 60 technology companies like Network Appliance Inc.(NasdaqNM:NTAP - News) and Sun Microsystems (NasdaqNM:SUNW - News).
Network Appliance has used Keary to help track the sources of rumors that frequently affect its share price, said Rod Mathews, director of investor relations at the company.
"The thing we've run into with our stock is that there are a large number of rumors around it and a lot of the hedge funds and short (sellers) have used those rumors as a vehicle for trading," Mathews said.
The desk has helped the storage equipment maker track who is trading its stock when those rumors appear and what it can do to reduce volatility in its share price.
"Our goal is to make every CEO in the world want to be totally in touch with us," said Robert Power, who runs the market intelligence desk at Nasdaq.
NASDAQ VS. THE NYSE
The younger Nasdaq has always competed with its main rival, the 210-year-old New York Stock Exchange, to attract and retain listings. When technology stocks soared to record highs in the late 1990s, the Nasdaq's electronic marketplace seemed to outshine the staid and traditional NYSE, which still required its floor traders to wear suits and ties.
But the Nasdaq brilliance diminished as the technology rout forced it to delist Wall Street darlings such as online grocer Webvan Group Inc. and online retailer Pets.com Inc.
Some technology firms have moved to distance themselves. Online brokerage E*Trade Group Inc. (NYSE:ET - News), BMC Software Inc. (NYSE:BMC - News) and database and software firm Sybase Inc. (NYSE:SY - News) all jumped ship and went to the NYSE last year.
As of July, Nasdaq had 3,843 listed companies -- the lowest number since November of 1983 and 31 percent below its peak of 5,556 in 1996. Meanwhile, the NYSE had 2,794 listed companies at the end of July, down only 4 percent from 1996.
The decrease has hit Nasdaq's bottom line, as it relies on listing fees to pump up its revenue. Nasdaq posted a 55 percent drop in second-quarter earnings as it dealt with the prolonged market slump and charges related to its Japanese investment.
Friday, the Nasdaq said it would cease its money-losing Japan operations, marking a setback in its plans to build a 24-hour global stock market.
NASDAQ FIGHTS BACK
The Nasdaq is working feverishly to change its image.
"We're putting on a bit of an offense," said Nasdaq Vice Chairman David Weild IV, who oversees Nasdaq's efforts to secure and maintain listings.
The "technology-laden" reference is a bad rap, Weild said, explaining that Nasdaq seeks to attract visionary companies across all sectors. He cited its listing of Starbucks Corp. (NasdaqNM:SBUX - News), Staples Inc. (NasdaqNM:SPLS - News) and Costco Wholesale Corp. (NasdaqNM:COST - News) as perfect examples.
"Nasdaq obviously is now big business and trying to get bigger," said Junius Peake, a former NASD board member and current finance professor at the University of Northern Colorado. "They are there with Microsoft and Intel ... so you can't just say it's a junior training ground."
Nasdaq is talking to NYSE-listed firms to figure out how it can better compete with its rival, Weild said.
Last year, 30 firms left Nasdaq for the NYSE, up from 24 who did the same in 2000, according to the NYSE. The trend has slowed from the mid-1990s, when 96 jumped in 1996 and 91 in 1997.
"Until recently, the Nasdaq was always seen as a second-tier marketplace people would turn to to do an IPO, and then, eventually, once they mature and their balance sheet becomes a little stronger, they tend to jump over to the New York Stock Exchange," said Sang Lee, an analyst with Celent Communications.
The technology revolution changed that perception somewhat, but Nasdaq is a different marketplace from the NYSE, Lee said.
The Big Board has tougher financial qualifying standards, and the fees are higher, with a maximum initial listing fee of $250,000 compared with $150,000 at the Nasdaq.
The NYSE also tends to attract larger, more mature companies. The Nasdaq has surpassed the NYSE this year in the number of initial public offerings, but the $2.9 billion value of its 31 IPOs is a fraction of the NYSE's 24 deals worth $18 billion, according to industry tracker Dealogic LLP.
"The NYSE has long had the cachet of being the equivalent of the Good Housekeeping seal of approval," Peake said.
Catherine Kinney, president and co-chief operating officer of the NYSE, said companies come to the NYSE for its market quality, higher listing standards and well-established brand.
The NYSE is pushing onto Nasdaq's turf as well, trying to make its brand more appealing to technology companies.
"We have more than 90 percent market share in every other industry," Kinney said. "We need to continue to be successful in the tech sector, and I'm looking forward to bringing some of those companies here."
The Big Board keeps the ticker symbols M, O and I reserved, but Kinney would not comment on long-held speculation that they are being held for Microsoft Corp. (NasdaqNM:MSFT - News), Oracle Corp. (NasdaqNM:ORCL - News) and Intel Corp. (NasdaqNM:INTC - News).
PUSHING PRODUCTS, SERVICES
As it launches new services and products, Nasdaq is also awaiting regulatory approval to begin trading securities in SuperMontage, its new $100 million trading order display and execution system, in an effort to recapture lost market share.
It has rolled out the services of the market intelligence desk to 1,400 Nasdaq firms, with the remaining 1,600 set to have access by mid-September.
Right now, the desk gets about 100 calls a day and makes about 100 calls, Power said. He expects those numbers to jump as the service grows and companies become more familiar with it.
The Nasdaq will not disclose how much money it has spent to develop the service, but it expects the investment will pay off with satisfied customers that maintain their listings.
"We are going to be so good at customer service ... that anyone that lists here is never going to leave," Weild said. "It's just going to take a while to get there." |
