Thursday, January 05, 2006

The Whirling Windbags Are At It Again

Catalysts for damaging investors such as Sandler O'Neil's Dick Reppetto (read: "repeat-o"), are babbling again. This time our ole pal, Aaron Lucchetti's holding the microphone. If ever there's a need to perceive a glass as half-empty, these are the clowns to go to. To be sure, they've been wrong with their insight for years.

Literally, since the 4/20/05 announcement, these bozos started in with negatives -- inking prose about Langone and dissident NYSE members who would thwart what may become known as the most revolutionary deal to ever occur in the US equity market structure. They babbled for months leading up to the 12/06/2005 vote (which passed by a landslide and left pie all over Lucchetti's face [and consequently, WSJ's]). Maybe the new chief of Dow Jones will examine Lucchetti's nonsense, and realize that they guy is suited to write cartoons -- nothing serious like articles in the WSJ. Not to get off track, but honestly, Lucchetti has been consistantly wrong for a long time. Why does Dow Jones bother giving him space?

Also consistantly wrong, are Reppetto, Chamberlain, and Herr (to name a few misguided analysts that've lost mega bucks for their firms customers due to their bone-headed mosaics. I'll get back on track in a second. If you listen to the conf. call from the 3rd quarter, you'll here an analyst (who I'm reasonably sure was Repetto) ask Jerry Putnam for guidance on how to look at AX and for meaningful metrics to help with his analysis. If that doesn't scream, "I'm baffled," I don't know what does.

I've listened to many earnings calls, but have never heard an analyst ask the CEO for that kind of information. He basically asked Putnam to do his job. Ok, getting back.

Let's look at Lucchetti's latest babble. In today's WSJ he takes his usual pessimistic vantage point. Lucchetti writes, "While the exchange sold more trading rights than it had anticipated, the price was an 18% discount from the $60,000 that nonmember traders had been paying to lease a seat for a year."
(quick clarification on Lucchetti's pessimistic nonsense: ArcaNews spoke with the NYSE this afternoon to clarify the actual number of seats that were active. NYSE said that the number of active seats was between 1100 - 1150; Lucchetti The Pessimist, of course, goes with the 1150 number to make the 1274 seats sold appear fewer. Why not use 1100 - a much rounder number?)

Well here are factual numbers. No spin, no hidden agenda, just the fact-jack!

$60,000 x 1100 memberships =

Actual selling price/seat =

Actual number of seats sold =

Actual revenue realized =
49,290 X 1274 = $62,795,460

Net Difference between revenue from old license fees and latest license fees =
$66,000,000 - $62,795,460 = $4,978,290 or 4.8%

Repetto, Chamberlain, Herr, Lucchetti in a different profession =

A tremendously different picture emerges with the aforementioned factual data. Stating that there was an 18% discount, is nothing more than spinning things to make a bearish case -- what a bunch of "bearcrap."

One more thing to clarify: Dick Repetto is quoted in Lucchetti's article as saying,"This [the difference between membership revenue from old structure to new structure] is not an optimistic omen for making money on the floor."

What in the world is he talking about? Getting more customers (read: seat holders) is absolutely optimistic. If they had sold fewer licenses than seats, that might not be an optimistic omen. Thing is, that's not what happened. The NYSE sold more licenses than they had active seats. This clearly means that the NYX has more active customers now than the NYSE did just a month ago. Dick, isn't that optimistic? Lucchetti?

More customers means greater liquidity and order flow. That translates to increased revenue, and expanded gross margin percentages (assuming costs stay flat while revenue increases).

Lucchetti and Repetto's heads are so far up their proverbial keesters, that they think their crap is worth sharing with others. If you're gonna keep your head up your keester, keep it to yourself, nobody else cares about your crap.

And, for goodness sakes, please stick to the facts.


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