MarketWatch's Calandra Wrinkle Comes As Co Expands
online.wsj.com JANET WHITMAN
Of DOW JONES NEWSWIRES
NEW YORK -- The resignation of MarketWatch.com Inc.'s (MKTW) chief commentator amid a probe into his stock trading comes as the financial-information provider tries to expand into new revenue streams.
Thom Calandra , one of the San Francisco company's founders and writer of The Calandra Report, a stock-picking subscription newsletter, stepped down Thursday.
Shares of MarketWatch plunged on the news, ending the session at $9.90 a share, down 9.4%, or $1.03.
Calandra's popular newsletter, launched nine months ago, was terminated and the subscription fee will be refunded on a prorated basis to the newsletter's subscribers, MarketWatch said.
The newsletter was part of an effort by MarketWatch, which operates a free financial-news Web site, to expand into paid services. The company publishes three other newsletters, including two it launched last year and Hulbert Financial Digest, which it acquired last year.
The Securities and Exchange Commission is conducting an informal inquiry into Calandra's trading activities dating back to October 2002, MarketWatch said in a news release.
"I've worked hard for the past eight years helping to build MarketWatch and for the last year I've worked hard creating The Calandra Report," Calandra told CBS MarketWatch.com. "While it's been tremendously rewarding professionally, it has also been stressful. And the SEC's informal inquiry adds to this stress. So I've decided to take this time off to focus on my family, whom I adore. I look forward to the conclusion of the SEC's inquiry."
Also as part of its expansion, MarketWatch recently closed a $103 million deal to acquire Pinnacor Inc. (PCOR), a provider of financial information and analysis tools.
In a bid to woo institutional customers, MarketWatch last year formed an alliance with France's AFX News Ltd. and China's Xinhua Financial Networks to market financial news.
With the alliance, which operates under the name World Business News, MarketWatch hopes its less expensive financial news will help it snag institutional clients from larger, more established providers of financial information. Most of MarketWatch's customers are individual investors.
MarketWatch Chairman and Chief Executive Larry Kramer said in an interview that Calandra's resignation "isn't a great thing to happen, obviously."
But he played down the potential impact on the company's reputation and possible damage to the company's expansion effort, despite Calandra's high-profile position.
"It hit our stock price today, but the business isn't being charged with anything," he said. "We're cooperating fully with the SEC investigation."
He likened Calandra's departure to the resignations of other journalists following scandals, such as Janet Cooke, whose Pultizer Prize-winning story in the Washington Post about a young heroin addict turned out to be made up, and Wall Street Journal reporter R. Foster Winans, who was fired for taking bribes from a stockbroker in return for advance information on the columns he wrote. The Journal is published by Dow Jones & Co., also publisher of this newswire.
"When Winans happened, I don't think people blamed The Wall Street Journal," said Kramer. "If someone circumvents the rules, ultimately, I don't think people think it's the institution's fault."
Kramer said MarketWatch will soon introduce tougher stock-trading rules for its journalists. He added that the company began working on the rules a few months before it learned in December of the Securities and Exchange Commission's investigation into Calandra's stock trades.
Viacom Inc.'s (VIA, VIAB) CBS and Pearson PLC (PSO) each own a roughly 25% stake in MarketWatch.
-By Janet Whitman, Dow Jones Newswires; 201-938-5248; janet.whitman@dowjones.com
Updated January 22, 2004 8:21 p.m. |
