Lehman, PaineWebber Hold Steady With Micrognosis Platforms

MANAGEMENT & STRATEGY

Following continuing reports of CSK's dramatic deemphasis of the trading room platform business of its Micrognosis unit (TST, November 25), two major Micrognosis users--Lehman Brothers and PaineWebber--say they plan to stick with the vendor's systems. CSK has gradually shifted the bulk of its trading room technology efforts to its newly renamed CSKSoftware Group--a company which now runs what remains of Micrognosis.

Lehman has for many years been a user of a wide range of Micrognosis technologies, including the Mips digital data distribution software and video switches. Lehman has also lately extended its reliance on Unix-based technologies from Quay Financial, the vendor which forms the basis of the aforementioned CSKSoftware. PaineWebber has long used the Mips digital data distribution platform.

Last month, CSK announced its new nomenclature, as well as an expected loss of $10.8 million in its earnings for the second half of the business year, ending March 31, 1997--due to the restructuring of its Micrognosis unit.

CSK Software president--and Micrognosis chief--Gerry Giblin maintains that while Micrognosis' operations are being deemphasized, the unit will not be shut down.

'FEW SWITCHES LEFT'

Nonetheless, changes at CSK are of little concern to the firms that are probably Micrognosis two largest remaining users in North America.

According to a Lehman executive, the firm has been scaling back its dependence on Micrognosis video switches for quite some time to the point that there are now very few left. "We don't have much to do with Micrognosis in terms of maintenance contracts because there are so few video switches left," the source says. This decline, he adds, is not a poor reflection on Micrognosis but simply due to the fact "the technology is becoming obsolete, be it Micrognosis' video switch or Rich's," he says--referring to that vendor's prior life as a video-switch vendor under the ownership of Reuters. "The Micrognosis video switch is a good product; it's just not as robust as a digital data delivery platform," he says.

He adds that Lehman is "very happy" with another CSK product, the Quay Invision Unix-based digital data distribution workstation, which Lehman began using three years ago (TST, November 15, 1993).

IN-HOUSE EXPERTISE

PaineWebber, which began supporting 700 traders with Micrognosis' Mips digital data delivery platform two years ago (TST, September 19, 1994), "hasn't made a decision yet" as to whether any wind-down of the Micrognosis business will result in PaineWebber's selection of another platform, according to a source at the firm.

However, PaineWebber probably will hold off on that decision for some time, the source says, because it has in-house staff who know how to maintain the Mips platform. Thus, the realignment at CSK/Micrognosis is of "no real concern" at present.

However, for other companies that rely on Micrognosis products that don't have the in-house expertise to maintain them, he adds, the realignment at CSK may prove more troublesome.

As for the layoffs at Micrognosis sales, marketing and development groups throughout the past year, Giblin claims such departures merely mirror the tendency towards a "high turnover of staff in the information services business.

"But more importantly," he adds, "there are more people working in the New York office for Micrognosis now than there were at the beginning of the year" and they have "the skills to sell the high-end, value-added trading systems" that CSK is now focusing on. "If you look at the CVs and skills of those people as opposed to those who they replaced, you will see a substantial upgrade in capability there. And that is reflected in the kind of feedback we have gotten from our customers," Giblin says.

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