Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : Cents and Sensibility - Kimberly and Friends' Consortium -- Ignore unavailable to you. Want to Upgrade?

To: Marshall001 who wrote (21441)	11/1/1999 8:47:00 AM
From: swisstrader	Respond to of 108040

Marshall,,,this is on everyone's radar this a.m.: November 1, 1999 Online Brokerage Firm Wit to Buy SoundView to Improve Research By REBECCA BUCKMAN Staff Reporter of THE WALL STREET JOURNAL Online securities brokerage firm Wit Capital Group Inc., in an effort to quickly ratchet up its research and investment-banking capabilities, is buying SoundView Technology Group Inc., a technology banking boutique, people close to the deal said. The deal is expected to be announced Monday. Wit, the New York firm best known for distributing shares of stock deals to investors over the Internet, will pay about $325 million in stock for the closely held SoundView, based on Wit's closing share price Friday of $17.5625, these people said. SoundView is based in Stamford, Conn. Founded three years ago by ex-lawyer and beer-company entrepreneur Andrew Klein, Wit offers its online-brokerage customers access to deals online; the investors sign up and receive limited shares on a first-come, first-served basis. The firm has been slowly hiring investment bankers and research analysts to become a bigger player in the still-clubby world of stock underwriting. But like other new online banks -- outfits such as E*Offering and W.R. Hambrecht & Co. -- the company has had a hard time competing with established Wall Street firms, which can offer top-notch research coverage and trading support once a new stock goes public. Online underwritings still account for only a tiny percentage of all deals. The acquisition of SoundView, with its team of 21 technology-focused research analysts and a sales and trading staff catering to big, institutional clients, could help Wit stand out from the pack -- though it moves the firm away from its original, narrow focus on individual investors. Most important, the added firepower could help Wit get larger slices of hot initial-public offerings to distribute to its small base of around 53,000 online-brokerage customers. Wit, which had third-quarter revenue of $12.4 million and a net loss of $5.1 million, often serves as a secondary co-manager of deals underwritten by larger firms, such as Goldman Sachs Group Inc. and Morgan Stanley Dean Witter & Co. Wit officials have long said they don't aspire to serve as a lead underwriter, preferring to parcel out shares of higher-quality deals to their clients. Similarly, SoundView has lead-managed only a handful of stock deals this year. So far this year, Wit has gotten a piece of 94 deals, co-managing 45 of them. The company is also setting up a network of other online brokers to receive shares of initial public offerings and other deals in which Wit is involved. The hordes of increasingly sophisticated individual investors moving onto the Internet has created new demand for hot IPOs, which are usually hard to come by even for favored institutional brokerage customers. IPOs can rocket on their first day of trading, making them a sought-after investment for investors who want to quickly "flip" the shares for a profit. And though many online-brokerage firms now offer access to IPOs through links to traditional investment banks -- and new firms like Wit are specializing in Web-based, IPO distribution -- many online investors still grouse that it is difficult to get any shares of popular deals. Some firms also reserve the right to participate in IPOs as a perk only for their best clients.