Reno Gazette-Journal from Reno, Nevada • Page 53

CABLE QlHRECTU MARKET WRAP 2E Call for information! 1 Business OIRICT V. rAlllMW: INIilHk'IMT PAID ADVERTISEMENT SUNDAY, SEPTEMBER 17, 2000 RENO GAZETTE-JOURNAL PERSPECTIVE AND ANALYSIS OF BUSINESS NEWS PHONE: (775) 788-6417 FAX: (775)788-6458 PERSPECTIVE 4E INVESTING 3E, 5E STOCK GAME 5E WEEK IN rus Taking LyOgJ to the bank REHEIIff fix But jury still out on impact of banking consolidation By Dunstan Prial ASSOCIATED PRESS NEW YORK The biggest players in the financial services industry have been busy recently building one-stop shops, where consumers can fill all of their banking, investing and insurance needs. This past week's historic $35 billion merger between Chase Manhattan and J.P. Morgan is the most recent example. The companies say economies of scale will improve efficiency and produce savings for their cus And Chase, known primarily as a commercial bank, purchased investment bank J.P.

Morgan with an eye toward expanding its reach in the lucrative arena of stock underwriting and asset management for big businesses and wealthy clients. Analysts agree that the two companies match up well, given their complementary array of services. For example, J.P. Morgan has a strong foothold in the investment banking arena, especially in the lucrative area of underwriting initial public stock offer- llftltiiutili a JfiirJ A' MMim it 1 1 nit Wftiii'aMiilhjiW nil in mmt I'liihniii li i iir i i mi 1 1 nil iT ill ii i i ii 1 1 1 1 nil i til 1 1 Him a ni ton'wiHwtMmqw ii 1 'm 'V AT tomers. But it's not clear whether that will really happen.

Indeed, skeptics believe the opposite is true, and argue that a handful of dominant players will inevitably reduce competition in the banking industry and drive financial services fees higher. Bank merger activity has increased since last November, when Congress repealed key elements of the Depression era Glass-Steagall Act, which separated the services provided by commercial banks, investment banks and insurance companies. ings. Chase, meanwhile, set out a year ago to build up its investment banking business by purchasing San Francisco-based Hambrecht Quist, a boutique firm that specialized in the IPOs of technology companies. But that was merely a first step.

If the merger is completed, J.P. Morgan's broader investment banking expertise will now be blended with the newly 1 r-f Utility seeks rate hike SierraPacificPowerCo.onFridayfiledfora$25.7 million electricity rate hike to cover the rising costs of fuel and purchased power. The increase, if approved by the state Public Utilities Commission, would boost the typical Sierra Pacific residential customer's monthly bill by about $1.97. Washoe casinos win $110.1 million Washoe County casinos won 1 1 0. 1 million from gamblers in July, the most ever for any month, the state Gaming Control Board reported on Monday.

That was 10.6 percent more than July 1999. Other northern markets also showed gains: Stateline, up 5.5 percent to its best gaming win total since December 1994; Carson City-Carson Valley, up 6.3 percent; and Elko County, up 8.2 percent. All contributed to the state's 1 2.8-percent growth in gaming win. Businesses talk about Virginia Street Business and property owners on South Virginia Street between roughly California Avenue and Peck-ham Lane will be surveyed in the next few weeks on what kind of look they prefer for redeveloping the aging corridor. A group spearheading the revitaliza-tion efforts will use computer-generated images in the survey and hopes to have the results by their next meeting on Oct.

4. UPS upgrades Reno aircraft United Parcel Service responding to the Truc-kee Meadows' expanding and diversifying business community last week upgraded the size of its aircraft serving Reno and extended the time companies have to make overnight shipments to the East. UPS dedicated a Boeing 757 to fly nonstop between Reno and Louisville, instead of first going to Sacramento, and it replaced a Boeing 727 that flies to Sacramento and then Ontario, with a 757. Vendor hits RSCVA with lawsuit The Reno-Sparks Convention Visitors Authority has been hit with a lawsuit by the owner of a jerky company who says his business was damaged after he began the company to sell his product at RSC A's Reno Livestock Events Center and then was barred from the center about two years later. Dale Hall, owner of the Jerky Station, filed the suit in Washoe District Court and seeks a preliminary injunction against RSCVA to regain sales opportunities at the center until a full trial can be held on the case.

GalleryRow purchases magazine GalleryKow.com, an online art company based in Reno, has purchased Art Connoisseur magazine and was scheduled Saturday to turn a new page by launching a website to link the 100-billion-a-year art and framing industries via ArtWorldCommunity.com. GalleryRow now runs Art Connoisseur on-line in addition to the hard-copy version. Bank offices acquired 1 Alabama-based Colonial BancGroup, which operates 10 branches of Colonial Bank in Nevada, said Thursday the company has signed an agreement to acquire two sites, in Stateline and Carson City, from First Security Bank of Nevada as part of First Security's merger with Wells Fargo. The merger called for First Security to divest itself of 1 0 branches statewide, and the other seven branch offices, all in the Las Vegas area, were bought by Bank of the West. Scolari's opens new Fernley store Sparks-basea Scolari's Food Drug.

Co. opened a bigger, state-of-the-art supermarket Friday next to its former location on U.S. 95A in Fernley, offering 46,000 square feet of food and hon-food shopping for the fast-growing area 35 miles east of Reno. A grand opening will be held on Saturday. Guinn may reconsider deregulation Top Democratic legislative leaders, all from southern Nevada, on Tuesday urged Gov.

Kenny Guinn not to set electricity deregulation in motion unless safeguards are in place for residential customers. Guinn, through his spokesman, said he's keeping residents' interests in mind and is expected decide by month's end on starting deregulation. named Chase expertise with technology companies. "The idea is to be able to offer more products to more people, so these companies are expanding their customer bases and expanding their product diversity," said Arielle Latulippe, a banking industry analyst at Raymond James Associates. Latulippe said consumers will benefit from the emergence of huge financial services conglomerates because it will enable them to conduct all of their financial needs under one roof.

"The way to win in this business is to get big and layer on additional products," added John Moore, a senior vice See CHASE on 7E But the belief that bigger is better has been a dominant theme in the industry throughout the past decade, as commercial behemoths such as Bank of America, Bank One and Wells Fargo scooped up smaller regional banks, adding customers and building assets. In the past year, juggernauts like Citigroup and Chase Manhattan have taken a broader approach, adding components in areas where they lacked strong footholds. Forexample, Citigroup, already dominant in the areas of insurance and commercial and investment banking, bought consumer finance powerhouse Associates First Capital earlier this month for $30 billion, seeking to raise its presence in the area of global retail lending. photos by the Associated Press BANKING: A man walks by Chase Manhattan headquarters in New York. To the right, J.P Morgan headquarters in New York.

Nevada businesses must go out of state for investment banking "Any company worth going public can do so regardless of where the investment West, notably in San Francisco and Los Angeles. But in the high-stakes game of initial public offerings, prestige weighs heavy and snaring a New York investment banker can be impressive, Gallo said. "Those are firms that will only take the best ment banker is," said Robb Smith, manag-ingprincipal at Millennium Three Venture Group in Reno, which helps fund start-up 3, companies in the eark-' er stages of the initial public offering process. "You can go anywhere to find an investment banker. Having to travel to a money center like San bankers, all from San Francisco, to help raise $60 million, of which the investment bankers got 7.5 percent in fees.

One, Hambrecht Quist, was bought by Chase Manhattan last year, and the merger" with J.P. Morgan will only benefit iGo, Hawk said. "It's great for us. They do a great job," he said. "Analysts who cover us will have a lot more power." Nevada is simply too small to play in the investment banking arena, but the state's universities could offer more in the way of finance education, said Tom Cargill, a UNR economics professor.

"There is no master's program in finance," he said. "There is a lot of money here, the area is ripe. But Nevada is never going to be an area where investment banking is a big deal. Except for casinos, there are no big players. We tend to go outside the state." By Bill O'Driscoll RENO GAZETTE-JOURNAL The merger of J.P.

Morgan and Chase Manhattan Corp. could strengthen the new company's stature in the lucrative world of investment banking, where fees on stock underwriting can far surpass traditional bank revenues. Neither bank has a presence in Nevada; nor is there an investment bank to be found anywhere in the state. That makes Nevada a virtual non-entity in the big-money world of financing initial public offerings. "Investment banks tend to be concentrated in large cities, and New York is the financial center of the world.

That's where the money is," said John Gallo, an associate professor of managerial sciences at the University ofNevada, Reno. Investment banks can be found in the 1 -t: UU11AW iJ. utaia, lie aaiu, llLliig such highly held firms as Robb Smith J.P. Morgan and others. But in no way does that Francisco or New York isn't a hindrance," he said.

Ken Hawk knows. His Reno-based company, iGo an online electronics accessories retailer, went public last fall after securing three investment mean Nevada businesses get shorted in their quest to hit the stock markets, others say. "Any company worthy of going public can do so regardless of where the invest- COMMENTARY Kings Inn 's days as royal blight hopefully numbered JOHN STEARNS Crude oil reaches record high Crude oil surged almost 5 percent Monday, reaching a 10-year high of $35.85 a barrel, on speculation that OPEC didn't boost its output targets enough at a weekend meeting to supply growing demand from world markets. OPEC agreed to boost quotas by 800,000 barrels a day, or 3.2 percent, to meet rising demand in Asia and replenish low supplies in developed nations. Some traders bet that OPEC was merely acknowledging previous overproduction, rather than raising output, and that producers needed to boost their targets even more to stem oil's rally.

U.S. prices fall, factories slow U.S. consumer prices fell in August for the first time in 14 years and factory production put in the slowest two months in a year and a half, giving the Federal Reserve room to refrain from further interest-rate increases for the rest of the year. The consumer price index, the most closely watched gauge pf U.S. inflation, fell 0.

1 percent last month the iirst drop since April 1986, the Labor Department said. Factory production rose 0. 1 percent for the second month in a row the slowest two months for manufacturing since December 1998 and January 1999. to secure unwarranted privileges. In a Keene sidelight, it was recently learned that Keene replaced the furniture in the fourth floor corner office of the National Bowling Stadium when he took over the office following the departure of former stadium director Jack Cook.

Apparently, Keene had different tastes than Cook. Keene spent $12,000 of RSCVA's money at Forever Yours to buy file and curio cabinets, a coffee table, leather love seat and sofa, computer desk, office desk and chairs. RSCVA made the down pay-mentinAugust 1999and paidoff the furniture in December, about three months before Keene stepped down over the credit card incident for which he was later fired. Heck, he hardly had time to break in the leather. John Stearns covers gaming, tourism and tbeairhnes.

Contact him at 788-6217 or The case remains in the DA's office and nothing is happening with it. It has been set aside because District Attorney Richard Gam-mick, who is recovering from heart surgery, is making all the decisions on the case and is not expected to return to the office full-time until perhaps November, according to Cheryl Hier-Johnson, the deputy DA working Keene's file for Gammick. "I don't expect anything to happen soon on Keene," Hier-Johnson said. Reno police conducted a criminal investigation on Keene and gave their findings to the DA's office in May, after which police were asked to provide more information. Gammick will determine if charges are warranted after he gets a chance to review the case.

Separately, Keene faces a state ethics complaint hearing next month on allegations that his credit card use benefited his personal and financial interest and that he used his RSCVA position ing the project, for which he hopes to get approvals by the end of the year and begin and conclude construction next year. But "talk is cheap" until a deal is done, he says. Reno has had more than its share of talkers who turned out not to be doers. But if there is a site needing some doing, it's the Kings Inn. It's one of the biggest eyesores in downtown Reno perhaps the biggest eyesore and the sooner it can be transformed, the better for downtown and the impression that it casts.

Hopefully, Diaz-Hoffman can give the current Kings Inn a royal flush and turn it into an appealing and lively full house. Wondering what's happening with Phil Keene? His case was handed to the Washoe County district attorney's office after he was fired in May as the chief of the Reno-Sparks Convention Visitors Authority for using agency credit cards for personal expenses and taking up to six months to pay RSCVA back. Ever wonder what's going on with the derelict Kings Inn hotel-casino? It was bought in April with assurances from the buyer that he was studying rehabilitation alternatives and hoped to have a decision in two months. Never fear, Karl Diaz-Hoffman is still here. He's the president of Nationwide Capital Services LLC of Oakland, which bought the long-closed eyesore on Third and West streets across from the Sands Regency Casino and Hotel.

He says he's waiting to see how pending changes in city codes will affect his plans; fortunately, the proposed code changes look positive for his project. "I think it's a major improvement for Reno in general and for downtown in particular to entice developers (and others) to come into Reno and focus on the downtown," he says of changes that include smaller parking requirements. Diaz-Hoffman isn't revealing specifics of his project, but says it will include housing on the upper floors and public restaurant and shop spaces on the ground level with outdoor seating. He says it won't necessarily be senior housing, which he once proposed for the former Mapes Hotel. He plans to rehabilitate the building, not raze it, and knows that it will take a major investment.

No gambling is planned. Heenvisionsorientingthepro-ject south, where people can sit outside under umbrellas and move freely in and out of the first-floor area. The hotel-casino, closed for business since 1986, has 1 59 rooms, 109 subterranean parking spaces and more than 60,000 square feet "It looks very promising," Diaz-Hoffman says of complet Tuesday: AAA Nevada is scheduled to release its monthly gasoline price survey for Nevada, Reno, Carson City and Las Vegas as well as northern California locations..