TIME: Almanac 1993/TIME Almanac 1993.iso/time/100592/1005200.000

Text File | 1993-04-08 | 5.7 KB | 118 lines

                                                                                BUSINESS, Page 73

Street Fighter


Michael Bloomberg pushed his way into financial communications.
Now the big boys are striking back.

By THOMAS MCCARROLL


    Michael Bloomberg is a marked man. Dow Jones, the
110-year-old publisher of business news, has threatened to "get"
him. British media conglomerate Reuters recently launched a new
product it informally dubbed the "Bloomberg Killer." Bloomberg
also ranks No. 1 on the hit list of a powerful new joint venture
formed by Salomon Brothers, Morgan Stanley, First Boston,
Citibank, Lehman Brothers and Goldman Sachs.

    At 5 ft. 10 in., balding and a little paunchy, Bloomberg,
50, is no Arnold Schwarzenegger. But to his competitors, he has
seemed like the Wall Street version of the Terminator. With
fewer resources and less experience than its bigger rivals, his
upstart firm, Bloomberg Financial Markets, has managed to
overpower the competition in one market after another. Relying
on in-house technology and a shrewd low-cost pricing strategy,
Bloomberg broke industry leader Telerate's monopoly on the
market to supply prices of government bonds. He stunned global
giant Reuters in its own backyard by stealing the Bank of
England as a customer. His stock-quote service is beating the
pants off Quotron, whose name had been virtually synonymous with
electronic stock-price quotations. And though they are
outnumbered 7 to 1, his business news-wire reporters are giving
Dow Jones a run for its money. "Do we take Bloomberg seriously?"
asks Carl Valenti, president and publisher of Dow Jones
Information Services. "You're darn right!"

    Bloomberg may be the new kid on the block, but he is the
fastest-growing vendor in the $4 billion market for electronic
financial information. His firm distributes quotes on stocks,
bonds, currencies and other securities, plus up-to-the-minute
business news, to 20,000 desktop terminals worldwide. Although
his service ranks sixth in customers -- behind Reuters, Dow
Jones (including its Telerate division), Automatic Data
Processing, Quotron and Knight-Ridder -- Bloomberg is adding 625
new terminals each month. The firm is launching assaults on
other markets as well. In July it started a monthly financial
magazine, appropriately called Bloomberg. And last month it paid
$14 million for New York City radio station WNEW-AM, which it
plans to convert to an all-business news format. "The future
belongs to multimedia, not one-product companies," says
Bloomberg. "I'm going to make sure that we're one of those New
Age companies."

    Though it is 10 years old, Bloomberg Financial Markets
still operates on a no-frills basis out of its Manhattan
headquarters -- no secretaries, no job titles and no private
offices. Bloomberg, a hands-on manager who insists on signing
every invoice and nonpayroll check, relies heavily on hungry
college recruits to staff his 850-person firm. He pays straight
salary, no sales commission. But his real strength has been the
Bloomberg, his own terminal-and-software system that looks more
like a Nintendo game than a serious number cruncher. Unlike most
computer systems, which largely supply users with rigid rows of
numbers, the Bloomberg lets traders sort and manipulate incoming
data. It calculates the future value of bonds, for instance,
displays the price history of stocks, evaluates portfolios under
various interest rates, and more. Whereas competitors generally
charge $2,000 to $4,000 a month, Bloomberg sells his service for
$995 a month.

    While he has so far seemed unstoppable, Bloomberg may be
coming into a vulnerable period. The financial-data industry,
which grew at the breathtaking rate of 20% a year during the
bullish 1980s, has slowed down. Since the stock-market minicrash
in October 1989, demand for computerized business data has
grown a tame 5%. A subsequent shakeout has already claimed some
weaker firms, such as Bunker Ramo, GTE Financial and Pont
Systems, through mergers and failures. To remain viable,
survivors must invest heavily in the next generation of
information technology. That could spell trouble for small
outfits like Bloomberg, says Margaret Fischer, head of
electronic-information practices at the market-research firm
Link Resources. "The survivors will be those with deep pockets,
critical mass and strong stomachs."

    Bloomberg may need all three to prevail. Customers are
starting to move away from specialized terminals, like the
Bloomberg, that cannot be linked to standard PCs or run
off-the-shelf software. Some large vendors have already made the
investment to switch to "open" systems. Knight-Ridder has
developed a PC-based service using Microsoft's popular Windows
program. Reuters is teaming up with PC-maker Intel. And EJV
Partners, the joint venture of six Wall Street firms, is
building a system designed to run on personal computers. But
Bloomberg stubbornly rejects this approach. He fears that he
would lose his unique edge if he abandoned the Bloomberg.
However, says Robert Russel, senior vice president of marketing
at Reuters, "unless Bloomberg opens up, he'll be an island alone
against the rest of the industry."

    Still, the man for whom the machine is named isn't worried
about EJV, Dow Jones or Reuters. They can be outfoxed, he
insists. While they are spending heavily to develop futuristic
products that incorporate audio with full-motion video, for
instance, he plans to introduce this year a lower-cost system
using sound and still images. "What frightens me," he says, "is
the little guy in the garage I don't even know about right now."
In other words, the only thing that scares Bloomberg is the next
Michael Bloomberg.