WIRELESS FINANCE - Bum Wap?

As a senior executive of Reuters Group in New York, Devin Wenig is what you would call totally wired. But there is one particular data connection that he holds dear - literally.

As a senior executive of Reuters Group in New York, Devin Wenig is what you would call totally wired. But there is one particular data connection that he holds dear - literally.

By Jeffrey Kutler
September 2001
Institutional Investor Magazine

It is a handheld BlackBerry personal digital assistant, which Wenig, president of the technology unit known as Reuters Information, places prominently on his desk and carries with him when he leaves his office in the company’s spanking new Times Square headquarters building.

The PDA is “always on,” receiving a steady stream of information from Reuters’ wireless news and market data service known as MarketClip. Occasionally, the device buzzes or vibrates, alerting Wenig to an event or stock movement that he particularly wants to follow. The same palm-size, keyboard-equipped PDA is capable of displaying charts, sending e-mails, even executing trades.

“We’re untethering people from their desks,” declares Wenig, who views the service as proof that the promise of a wireless Internet wasn’t all overblown hype.

Not that wireless anything is an easy sell these days. Wenig is swimming against an overwhelming tide of market negativity - a backlash against all that hype about how people would soon be ordering groceries, checking e-mails and trading stocks while they stroll.

At mobile equipment suppliers Nokia Corp., L.M. Ericsson Telefonaktiebolaget and Motorola, business has slowed, and stock prices have suffered. The shares of Owings Mills, Maryland-based Aether Systems, which is part-owned by Reuters and which developed the MarketClip software, have fallen more than 90 percent from their peak. An Aether rival, Toronto-based 724 Solutions, had a similar experience.

Research in Motion, the Canadian maker of BlackBerry, saw its stock fall from $156 in March 2000 to $15.50 this past April. And RIM is making money - $3.8 million on $77 million of revenue in the three months through June 2 - which accounted for a subsequent bounce in its shares above $20.

Technologies that were supposed to hasten the wireless Web - the 3G, or third-generation, specification for high-speed connectivity and the WAP, or wireless application protocol, data transmission standard - have run into repeated delays and been dismissed by some critics as total busts.

Even high-tech cheerleaders have turned sour. George Colony, chairman and CEO of Forrester Research in Cambridge, Massachusetts, criticizes financial companies for making major commitments to wireless services despite a near total lack of customer interest. These firms, he says, are “low in Internet IQ.”

But to keepers of the wireless faith, there’s no need to wait for improved devices, 3G or something better than WAP. They tend to be people like Wenig who are more interested in selling to institutions than to mainstream consumer investors. “The few people who scan the markets wirelessly still end up calling their brokers,” notes Deloitte & Touche financial services partner George Simeone.

By contrast, wireless devices are becoming standard issue at the New York Stock Exchange: Some 25 to 30 percent of floor brokers have them, and that will approach 100 percent in a year, Simeone estimates.

On the institutional front, Merrill Lynch & Co. is preparing to introduce a service in Europe. Chief technology officer John McKinley Jr. won’t be specific about timing but says that it will target buy-side institutional customers.

Dresdner Kleinwort Wasserstein began working with Dublin- based Macalla Software last year to deliver wireless trade order entries, posttrade analyses, indications of interest and the like to bankers and clients on three continents. “Times are tough in our industry, but wireless is flying in finance,” says Ian Rosarius, head of Macalla’s U.K. subsidiary, which did the deal with DKW.

To Wenig, today’s bearishness is as overdone as was the hype: “We’ve been through this before. New technology comes along and people say it will cure all the ills of mankind. When it doesn’t, people say it’s useless. Then they realize it has applications, but it’s hard to make them work.”

He adds: “This isn’t a gimmick anymore, not when you are able to do institutional trades. In five years we’ll see it for what it is - a serious professional tool.”

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