This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

LaBranche on a Limb

The setback is nothing new for shareholders. For years, specialists like LaBranche have taken heat from Wall Street. The demand for their services -- matching buyers and sellers on an exchange and smoothing out fluctuations in stock prices -- is declining as electronic trading takes hold.

LaBranche's stock price has fallen as its services become less relevant, and shares now fetch just a third of their 2002 price.

"If you were a LaBranche bear, you would say that their operations are so tied to the floor of the NYSE, that they go away with the floor," says Jamie Selway, a former Archipelago official who now is managing director at White Cap Trading in New York.

"Bulls say that LaBranche will get a productivity boost as the NYSE rolls out the hybrid platform," Selway adds, referring to the electronic trading that Archipelago specialized in. "Still, I don't see how hybrid holds back the tide."

Holding NYSE shares was certainly good to LaBranche and some of its rivals back in the first quarter, when the firm booked some $100 million in profit on the appreciation of its NYSE stake. But while NYSE shares remain above their secondary offering price, their second-quarter drop saddled LaBranche with the big writedown.

The writedown is far from LaBranche's only problem, of course. In the earnings warning, the firm said second-quarter principal trading revenue totaled about $20 million, down $47 million from the second quarter of 2005.

"I would say I'm as concerned about the specialist future as anyone," says Rich Repetto, equity analyst at Sandler O'Neill. "The results are just as volatile as they were in the past. The NYSE could even prosper while LaBranche doesn't. There are so many moving parts in their business, so it's pretty difficult to say."
2 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
NYX $0.00 0.00%
NDAQ $58.87 0.00%
AAPL $117.81 0.00%
FB $105.45 0.00%
GOOG $750.26 0.00%


Chart of I:DJI
DOW 17,798.49 -14.90 -0.08%
S&P 500 2,090.11 +1.24 0.06%
NASDAQ 5,127.5250 +11.3820 0.22%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs