For those who believe Wall Street is too unforgiving, consider the case of KeyCorp, whose years-long term in the investor doghouse ended in a flash last week.

It helped that the company, finally, found itself a high-profile buyer. Not the takeover kind, though rumors of a possible bid were drifting around Wall Street on Friday. In this case it was a relatively modest purchase of about 155,000 shares by Warren Buffett, who last dabbled in KeyCorp stock in 1996.

Since then, KeyCorp shares have gone a long way to no purpose - running up to double in value in two years only to give it all back in the next two - leaving bank analysts likely to offer up the name only when asked for a list of stocks to avoid.

But during a dizzying week for the financials, marked by several post-Labor Day deals that in turn sparked a full-fledged round of merger buzz where old rumors were dusted off - J.P. Morgan & Co. and Deutsche Bank, for example - and new ones helped lift castoffs life Key.

Midweek, CIBC Worldmarkets analyst Thomas McCandless fueled the fire, lifting his rating on the company to "strong buy" from "hold." But the reasoning behind the rating action, Mr. McCandless said, actually undermines the case for buying up Key in anticipation that another financial company might be coming along to acquire the entire operation. Instead, Mr. McCandless argued, KeyCorp, after years of trying to get itself moving forward, will in the next couple of weeks take the wraps off of its plans for a sweeping reengineering. If the effort succeeds, he said, Key would be close to reaping the long-awaited cost and revenue benefits of strategic efforts like its acquisition of the brokerage McDonald & Co.

KeyCorp let analysts know around the time of its second-quarter earnings report that it would be releasing the results of a companywide review late this month, plans that remain on track, said Key spokesman John Fuller. He said details of that presentation are still being finalized and declined to give any specifics on it, or for that matter on Mr. Buffett's renewed interest in the stock.

CIBC's Mr. McCandless is expecting major changes, figuring the plan could mean as much as 30 to 35 cents in additional per-share earnings over the next 12 to 18 months, some in 2001 and the rest in 2002. Analysts expect Key to earn $2.50 per share in 2001, so realizing just half those gains in the first year would provide a solid pop to profits.

The downside for traders looking to score the next takeover is that all the reviewing and planning work means that, of the bank stocks swept up in takeover rumors, Key is probably the bank least inclined to entertain an offer. Mr. Fuller declined to comment on those rumors as a matter of policy.

Which brings us back to J.P. Morgan, which with Lehman Brothers has emerged as the financial companies most likely to be absorbed in the next round of global consolidation.

By week's end, a healthy dose of cold water had been tossed on the Deutsche-Morgan rumors, but not before several people familiar with the history between the two companies recalled how Morgan rebuffed an overture from the German bank, which then opted to rescue Bankers Trust Corp.

In the words of one then-executive, "Morgan was absolutely their No. 1 pick" but "turned up its nose and pulled up the gate."

Deutsche's desire to capture the franchise may not have waned over the intervening years, although neither may have J.P. Morgan's attitude regarding an acquisition by what it might consider to be a lesser name. Still, say some who remember how a weakened Bankers Trust was forced into the hands of an international partner, Morgan too may find that the next offer, from whomever it comes, may be harder to refuse.

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