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Non-Tech : BANK ONE -- Ignore unavailable to you. Want to Upgrade?

To: Neil H who wrote (234)	12/22/1999 6:22:00 PM
From: LakesideTrader	Read Replies (1) \| Respond to of 466

Hi Neil, Have you ventured in on ONE? Or are you thinking about C? Still watching, but ready when and if! Have a wonderful Christmas. It's been a blessed year. Pat

To: Neil H who wrote (234)	12/23/1999 12:47:00 AM
From: Esway	Respond to of 466

December 22, 1999 What Now for Bank One? By Megan E. Lundin BANK ONE'S SLIDE Data from 12/26/97 through 12/21/99 Source: DJNR BANK ONE (ONE) stock moved ever so slightly higher ? extending Tuesday's 10% rally ? as Wall Street continued to cheer the early resignation of John McCoy, the bank's longtime chairman and CEO. But even as they applauded the change, several analysts sounded the warning that it will take more than new management to fix the ailing bank. "The immediate market reaction to McCoy's retirement probably overestimates the chances of a near-term solution to the company's weak credit-card earnings," says David Hilder, an analyst at Morgan Stanley Dean Witter. Hilder contends that fixing Bank One's credit-card problem will require major structural changes and that will have to wait until the board can find a new CEO (a formal search began Tuesday). Susan Roth, a Wall Street Journal All-Star analyst at Donaldson, Lufkin & Jenrette, also thinks near-term earnings will continue to lag. But she chose to look on the bright side Wednesday morning. If Bank One could attract a candidate the caliber of Jamie Dimon (the former protege of Citigroup's (C) Sandy Weill) or Marc Shapiro (Chase Manhattan's (CMB) vice chairman of finance, risk management and administration), Roth thinks it would be a big boost for the stock. Playing the name game, though, isn't going to help much now. The entire Bank One episode is a sad comeuppance for John McCoy, 56, who used to be a hot ticket on Wall Street. With a brash, well-timed acquisition strategy, McCoy and his father built the bank from a small Columbus, Ohio, operation into the nation's third-largest banking company based on market value. They created the country's largest credit-card operation with the acquisition of First USA. But as banking consolidation ran its course, growth was harder to come by. And continued troubles in the massive credit-card operation plundered earnings all year (read more about "John McCoy's Growing Credibility Gap"). Now the task of appeasing Wall Street ? at least on an interim basis ? falls to Bank One president Verne Istock, who has been named acting CEO. John Hall, an outside board member since 1987 and the newly elected nonexecutive chairman of the board, is leading the search for new blood. The company said it would consider candidates both inside and outside of the organization. Some analysts hope Bank One's board will now jettison the credit-card business or perhaps sell out the entire company. "There is limited upside potential in the absence of a takeover," says analyst Brad Vander Ploeg at First Union Securities. The credit-card problems are one thing, he says, but Bank One is also suffering ongoing sluggishness from the integration of its 1998 merger with First Chicago. Vander Ploeg puts a sale price of $45 a share on the company and names as potential buyers Citigroup, Bank of America (BAC), Chase and Wells Fargo (WFC). The analyst thinks Wells Fargo would be the most willing and able acquirer. He also thinks there would be plenty of buyers for the credit-card business. Indeed, he says Citigroup's primary motivation in acquiring Bank One would be to get at First USA ? long a Citi rival. Bank of America would simply want to expand its geographical presence and Chase would most likely be attracted by Bank One's commercial-lending operation. Lori Appelbaum, a Wall Street Journal All-Star analyst at Goldman Sachs, and Merrill Lynch's Hilder are a little lonely in their belief that the bank will give new management a chance to fix things before selling out. But their reasoning makes sense. First of all, why go through the charade of a search if all you want to do is sell. Second, Bank One is currently trading at fire-sale prices ? 9.6 times projected 2000 earnings. Selling now might be a disservice to shareholders. Fourth-quarter results should be announced by Jan. 18. And the bank is expected to hold an analyst meeting in January (no date set yet) to explain how it plans to deal with the First USA problem.