All Done at B of A?
Has Ken Lewis finished the heavy lifting in his campaign to turn Bank of America Corp. into a company that grows internally, instead of through big acquisitions?
He thinks so. Mr. Lewis, who has been running the company for a year and a half and took over formally from former chairman and chief executive Hugh McColl Jr. in May, said as much during a conference call Wednesday.
"We're in the businesses we want to be in now," Mr. Lewis said, after announcing B of A was getting out of auto leasing and subprime lending. He said the moves leave the company with a better mix of high-growth, higher-profit businesses.
Now B of A will concentrate on looking for ways to boost revenues at its remaining businesses, according to Mr. Lewis. Though big deals are out, smaller ones could play a role in some areas, such as asset management, a division Mr. Lewis said he hopes eventually will contribute 15% of revenues, instead of 7%.
Wednesday's moves came after big job cuts during the past year, achieved by shutting other operations and signing major outsourcing deals, such as for human resources. But whether Mr. Lewis succeeds in lighting a fire under his troops may depend in part on the economy.
Chief financial officer Jim Hance said in Wednesday's conference call that he thinks the Charlotte, N.C., banking company is poised to grow quickly once the economy improves. "We want to be prepared to go full speed ahead when the economy improves in order to realize the premium potential in our franchise," he said. "And we believe our actions today help us reach that goal sooner."
Though most analysts liked the sound of Wednesday's announcement, at least one remains skeptical about whether the turnaround at B of A is complete.
Thomas Theurkauf of Keefe, Bruyette & Woods Inc. has been concerned about credit quality at the company and cut his 2001 earnings estimate by 30 cents, to $4.45 a share, citing expenses associated with quitting the two businesses. He maintained his "underperform" rating on the shares.
Suspect Sells Stock
Dale M. Gibbons, the former chief financial officer for Zions Bancorp, has continued to sell his stake in the company as he awaits hearings in the criminal case pending against him in Salt Lake District Court.
As of Aug. 10, he had sold 25,400 Zions shares with a total value of $1.5 million, according to filings with the Securities and Exchange Commission.
At the same time, Mr. Gibbons has hired some high-priced legal help to defend him against charges of drug possession and child endangerment, which forced him to resign from Zions in late June. Robert Shapiro, a Los Angeles-based partner at the firm Christensen, Miller, Fink, Jacobs, Glaser, Weil and Shapiro LLP who was a key player on the O.J. Simpson defense team has joined his colleague Sara L. Caplan in defending Mr. Gibbons. A hearing scheduled this Tuesday was postponed. Zions, meanwhile, is still looking for a permanent successor and has hired a national executive recruiting firm to help it.
A Shorter Commute
At least one J.P. Morgan Chase & Co. employee isn't fretting about his recent move from the old J.P. Morgan headquarters on 60 Wall St. to midtown now that the building is being bought by Deutsche Bank.
Michael Freudenstein, an analyst at J.P. Morgan Securities Inc., who apparently doesn't mind the hustle and bustle of midtown, is moving into offices in the Bear Stearns building on Park Ave. The sale to Deutsche Bank is due to close by mid-November, and the Morgan Chase staff is being housed at sites in and around the old Chase Manhattan campus in midtown.
Morgan moves uptown into Bear Stearns & Co. (at least those who are not absorbed at Chase sites). Bear Stearns, then, stays in midtown but in fashionable Madison Avenue offices it has built.
"I absolutely love it," said Mr. Freudenstein, who commutes into Grand Central Station in midtown. He said that after spending 16 years working literally at Wall Street, he enjoys the shorter commute. However, he will still be working on Wall Street, in a manner of speaking.
Deutsche will combine its divisions currently in the old Bankers Trust tower on Liberty Street downtown and its midtown domicile on 53d Street, and those staffers will have to get used to the environment downtown, which offers fewer restaurants. But at least the architecture should feel familiar, since the midtown minitower was built by the same architect as 60 Wall St.