Marrion said Paine Webber has the resources to compete with the giants of the financial services industry and is trying to carve out a distinctive place. That holding was sold to McGraw Hill in 1979 for $103 million. He is also the co-founder, with economist Otto Eckstein, of Data Resources Inc., a leading economic data firm. Marron became the new firm's chief executive officer in 1980, and a year later its chairman. In 1977, Mitchell Hutchins merged with Paine Webber Inc. seven years laater, and wound up as president of Mitchell Hutchins in 1969. Marron & Co., with Mitchell Hutchins & Co. He merged an investment banking firm he founded in 1958, D.B. On the other hand, Marron, who has become a multimillionaire (last year he earned about $990,000 in salary and incentive payments), has demonstrated a certain skill at trading up. "Securities firms really have no assets other than people, so I don't think they can be bought unless Marron and company want to be taken over," says Perrin Long, an analyst specializing in the brokerage business at Lipper Analytical Services Inc. Marron said recently he isn't interested in selling the firm, and hostile takeovers of brokerage houses are considered senseless because without the old management, the acquiring firm loses what made the target valuable. Cigna holds about 23 percent of Paine Webber, although about 17 percent of that is pledged to convertible securities that Cigna offered last year. Only Cigna Corp., the giant insurance firm, and Reliance hold more Paine Webber stock than Marron, who controls, individually and through a partnership, almost 6 percent of the firm's outstanding common stock. Steinberg said the Paine Webber securities, worth more than $40 million, were being held for investment purposes only. Recently it was revealed that Reliance had raised its 5.7 percent stake in Paine Webber to 7.85 percent. One sign of its new allure is the increasing interest in the firm by Reliance Financial Services Corp. Meanwhile, like other brokerage houses, its stock has taken off and is up more than 100 percent since 1981 - compared with a gain for Merrill Lynch, for instance of 82 percent.
31, its profits rose to $28.1 million from $7 million in the same period a year earlier. (In fiscal 1980, it showed a loss of $6.9 million.)
In fiscal 1982, its earnings more than doubled to more than $35 million from $15.8 million the previous year. Paine Webber has just reported the best two quarters in its history.
Its earnings reports and the rise in its stock price also are measures of its turnaround. Since its rebound, the firm has attracted investors in brokerage houses and haw become Wall Street's most appealing takeover target. "If the SEC hadn't blinked, we might have been forced to shut down," said one source at the firm.Ī combination of management changes, updating of inadequate computer technology, and Marron's insistence that the firm abandon what he called a "paternalistic" culture that was "not as focused on productivity and profits as you'd like" helped bring Paine Webber back from the brink.Īlthough analysts say Paine Webber's back office still is not quite the equal of others on Wall Street, Marron is given credit for helping seet a new competitive tone in both the investment banking and brokerage operations. The Securities and Exchange Commission did not seek penalties, but said the firm should have disclosed its difficulties. Paine Webber was censured by the New York Stock Exchange, which fined iit $300,000 because of its back-office problems. The firm's losses mounted, until it came within an eyelash of falling below federal regulators' minimum capital requirements. Paine Webber's bookkeeping, which still relied on paper and ink rather than on computers, couldn't keep up as a result, the firm was late in collecting debt from its customers. The merger with Blythe Eastman, one of the most active firms in its field, put an additional burden on a firm that lagged in introducing advanced technology at a time when stock trading was surging. It was Paine Webber's ill-managed consolidation in 1980 with Blythe Eastman Dillon & Co., the investment banking firm, that left its operations in shambles. But Paine Webber chief executive Donald Marron seems to be charting an independent course after turning around a firm that was headed for disaster. Nowhere on Wall Street are the risks and rewards of the evolution in the investment industry as clear as they are at Paine Webber Inc.īrokerage houses and otther financial firms are eager for merger partners that can widen the services they offer.
0 kommentar(er)
