Brokerage and financial services company Charles Schwab
SoundView specializes in 160 "technology" companies, offering sell-side research, investment banking, and venture capital management. It went public on June 4, 1999, with a split-adjusted first-day close of $74.37. The stock hit an all time-closing high of $179.37 a month later. As the losses piled up through 2001 and 2002, shares crashed to a $5.15 low last October and eventually were forced into a 1:5 reverse split this June. In one good sign, the company eked out earnings of $0.03 a share in the third quarter and its first year-over-year revenue gain after three quarters of double-digit percentage drops.
The announcement mentions only one aspect of SoundView's business: research. It appears that Schwab will merge SoundView into its capital markets subsidiary and use its research operations to drive revenue from "client-focused trade execution capabilities." (What a relief to know they aren't non-client focused.) The business model is to provide research to institutions with the proviso that if they act on it -- buy or sell large blocks -- they trade through Schwab and pay it the commissions. TheStreet.com
Does this mean that Schwab is killing the rest of SoundView -- or that investment banking is so controversial that it merits no mention? And more importantly, is this a good move for Schwab? Join those already talking about it on our Schwab discussion board!
