eChapman's loss grows to 4 cents a share

`The market went down

we went down with it'

November 16, 2001|By Bill Atkinson | Bill Atkinson,SUN STAFF

eChapman.com Inc., the struggling Baltimore brokerage and money management firm, said its loss widened in the third quarter and revenue fell more than 12 percent in the face of a weak stock market and bad economy.

The company lost $503,000, or 4 cents per share, in the quarter that ended Sept. 30, compared with a loss of $332,000, or 3 cents per share, in the corresponding period a year earlier.

During the first nine months of the year, eChapman's loss increased 69 percent to $2.7 million, or 21 cents per share, compared with a loss of $1.6 million, or 12 cents per share, a year earlier.

The company released the quarterly numbers to the Securities and Exchange Commission Wednesday evening.

"The third quarter is a bad quarter, there is no doubt about that," said Nathan A. Chapman Jr., president and chairman of eChapman.

He blamed the poor performance on $150,000 spent ramping up for the acquisition in August of NetNoir Inc., an Internet company, and a write-off of $315,000 for goodwill.

The loss was largely driven by sharply reduced investment management fees, which fell 37.5 percent in the quarter to $866,000, down from $1.4 million a year earlier.

For the nine months, investment management fees sank 27 percent to about $3 million. The firm also lost $96,000 on trading, according to the quarterly report.

"The market went down; we went down with it," Chapman said. "But now the market has come back ... investment management fees are coming back with the market."

He noted that revenue from commissions rose 31 percent to $970,000 in the quarter.

eChapman is a combination of three financial companies started by Chapman - Chapman Holdings Inc., Chapman Capital Management Holdings Inc. and Chapman Insurance Holdings Inc.

Its goal has been to become a one-stop financial company, selling stocks, mutual funds, insurance and other products, while attracting large numbers of African-Americans to investing.

Chapman, who is chairman of the University System of Maryland's Board of Regents, took eChapman public in June 2000, at $13 a share. Its stock closed at 55 cents per share on Wednesday and did not trade yesterday.

The withered stock price recently aroused concerns of State Retirement Agency officials. eChapman's subsidiary, Chapman Capital Management, managed $189.7 million in state pension funds as of June 30.

The officials wanted Chapman to explain "whether he's still a viable concern."

"A decline in our stock price does not affect ... any of our companies," Chapman wrote in a Nov. 8, letter to the retirement officials.

Chapman said the company is cutting expenses and its outlook should brighten as the market recovers and the goodwill is written off. He expects the company to post a profit sometime next year.

He also is considering taking the company private or spinning off one of its units in a public offering.

"We have a lot of options and we are exploring them," Chapman said.

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