Texas brokerage Southwest Securities ( SWS) may find itself alone at the altar despite all the romancing going on among financial-services companies. More than four months after announcing that it hired Bear Stearns to search for a partner, factors are stacking up against a Southwest sale. And in the past 10 days, Southwest's stock has moved back to pretakeover talk levels. It's up 1.6% from Dec. 31's 27 1/8 close, well before the takeover talk started. For investors who bought the stock earlier this year in anticipation of a quick and easy sale, the process has been anything but. Systems problems angered some customers, and no bids were disclosed. Now there's more to worry about. Southwest will soon lose one of its largest customers, a daytrading firm that sends its orders to Southwest. In addition, the company surprised analysts and investors two weeks ago by announcing plans to buy a thrift -- its second this year -- which could muddy the picture for a potential acquirer. Beyond that there are the questions about whether Southwest monitors its network of independent broker-dealers closely enough. David Glatstein, Southwest's president and CEO, dismisses talk that the company's plans to partner up have changed, saying discussions are continuing and that the firm hopes to find a partner by the fall. If there's no deal by then, he says, the company will move on.
Riding the Online Broker WaveSouthwest first came to investors' attention in 1997 as online stock trading took off. The company started its own cyber broker MyDiscountBroker.com, which some investors hoped would make the firm the next E*Trade. Its stock began moving in lockstep with the then hot online-broker stocks, pushing up to a high of 69 27/64 on May 21, 1999. But the trading doldrums last summer soured investors and as the online-broker stocks fell out of favor, so too did Southwest. At the end of 1999, it was trading in the high 20s again.
|Blushing Bride? |
Shareholders may not be pleased with Southwest's performance since March.