The dark ages 

General Putnam the Quintessential Entrepeneur!

Putnam is an awesome businessman. And I've never seen "Ivy League Schools for Dummies." He's obviously a very smart man. The alleged character flaws being banterred about in the NYX bleachers (i.e. Y! Finance message boards) are without merit.

Honestly, the executive management team at the NYX is unrivaled. No other exchange has the caliber of generals that NYS does.

As for personal attacks and accusations against Mr. P -- they're really not appropriate! It sounds like sour grapes and jealousy. Speaking of sour grapes:
Q: What happens when you step on a grape?
A: It lets out a little w(h)ine.

I think someone slipped goofy pills in my coffee this morning. Sorry for the jokes, but I hope you can use them.

WSJ's Blunderful Lucchetti

Today, WSJ reporter Aaron Lucchetti has drafted an article about the NDAQ acquisition of Shareholder.com. The only message that this article conveys is that Lucchetti's agenda involves taking aim at the NYX.

My favorite part of today's dose of bearcrap, is in his last paragraph. Here he writes, "The Nasdaq moves may help counter the NYSE's advantage with executives curious about their why their company's stock price is moving."

Could this be evidence that Lucchetti somehow bypasses the WSJ editorial team? To be sure, ArcaNews has its share of typos, but ArcaNews is certainly no Wall Street Journal. As a WSJ subscriber, at the very least, I expect cohesive sentences!

Lets not get hung up on that stuff though. The reason for this post is simply to point out how Lucchetti, again, tries to conjure up some story based on trivial news items. First, he tirelessly scribed articles about one dissident shareholder that never amounted to anything. Now he turns his attention to a meaningless acquisition by NDAQ.

Today's announcement from NDAQ about their purchase of Shareholder.com highlights NDAQ's relatively weak management team. What does NDAQ forecast their ROI to be with this acquisition?

Meantime, another metaphoric coat of paint has been laid. As we watch the final coat of paint dry, silly little stories like the one Lucchetti whipped up this morning, are merely sideshows.

Seems like we should be hearing shortly about plans regarding the anticipated AX-to-NYX ticker change, and the implicit IPO of the NYSE that this change represents. There truly aren't many more hurdles left in this obstacle course. . .

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 =
$66,000,000

Actual selling price/seat =
$49,290

Actual number of seats sold =
1274

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 =
PRICELESS

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.

NYSE Seats Sell For $49k/Year

The NYSE announced this morning that they've sold 1,274 trading licenses at an annual price of $49,290. This represents annual recurring revenue in excess of $60mm. And the deal hasn't even closed yet!

To put that recurring revenue in context, it helps to look at NDAQ's income statement. In 2004, the NDAQ had revenue of $540mm. This means that the first transaction that the NYX has completed will result in ~11% of NDAQ's 2004 total revenue. That $60mm also represents ~65% of NDAQ's free cash flow.

This is awesome by any measure. .