Financial World Reels From Terrorist Attacks

Electronic News, Sept 17, 2001 by Bernard Levine, Tom Murphy

Many leading Wall Street investment companies have suffered physical damage and possible loss of life from last week's terrorist attacks.

Morgan Stanley Dean Witter had major facilities inside the World Trade Center, where it was a leading tenant. On its Web site, Philip Purcell, Morgan Stanley chairman, noted, "The shocking events of this week at the World Trade Center have not posed a financial problem for Morgan Stanley but a deeply human one. What dominates our concerns are those people who may not have escaped the explosion and fires as the twin towers collapsed. We can report that we have been in touch with most of the people who worked for us at the World Trade Center complex. But a number are still unaccounted for, and it is clear that we have lost friends and colleagues. Our thoughts and prayers are with the families and friends of those who died or are still missing, and these people remain the immediate focus of the firm."

He added that, "fortunately, the U.S. and global financial systems are highly resilient, and this firm is resilient as well. In the last two days, people in our firm, like so many in the city, have demonstrated great character and courage, even heroism. We are deeply grateful to all those who have risen in the face of these challenges to give the best of themselves, and we appreciate their efforts to get on with the demands of their daily lives despite grievous challenges. Markets have been relatively quiet and subdued in the wake of the disaster. We want our clients to know today that in spite of the tragedies, all of our businesses are functioning and will continue to function. We will resume full operations as exchanges and markets reopen. All our clients should rest assured that their assets are safe and our financial advisors are hard at work contacting our individual investors to answer questions and address their concerns."

Merrill Lynch has major operations adjacent to the World Trade Center towers. In a message on its Web site, David H. Komansky, chairman and chief executive officer, and E. Stanley O'Neal, president and chief operating officer, noted, "Our most important priority continues to be the human toll from the tragic events."

They added that they are "extremely thankful that virtually all of our 9,000 colleagues in the World Financial Center and other offices in lower Manhattan were safely evacuated. However, we have some indications that a few of our people may have been in harm's way. We are trying to account for everyone, and unfortunately, that may take a while. Any loss of life under these circumstances is particularly painful. All of us are shocked and saddened by the enormous loss of human life that has occurred--people working in the area as well as the brave police and firefighters who gave their own lives in an attempt to save others. Our thoughts and prayers are with everyone affected by this terrible tragedy."

Discussing the status of Merrill Lynch's World Financial Center buildings, they noted, "Our people have been able to gain limited access to both the North and South Towers. The North Tower appears to be in good structural shape. The South Tower has suffered substantial damage to its facade and will require further structural examination. As of now, we are unable to estimate when we might be able to resume some limited, critical activities in these buildings, and we continue to implement our contingency plans at alternative locations. These plans will enable us to operate outside of the World Financial Center for an extended period, if required. Through the extraordinary efforts of many Merrill Lynch colleagues, we've been able to establish alternative trading sites, mainly in New Jersey."

They also added that "our research experts have been assessing the market environment in the wake of Tuesday's attacks. One primary message is that investors should not make emotional decisions based on events but should take a more measured, long-term view. Observation, judgment and attention to fundamentals are what is called for. For the near term, these events could contribute to softness in the economy and markets. However, the Federal Reserve Board, already in an easing cycle, will continue to be accommodative and ready to provide liquidity, if needed, to the financial markets. Looking beyond the next few months, this event does not change our expectation for a meaningful economic recovery and stronger markets in 2002."

Semiconductor industry analysts echoed those sentiments. The semiconductor industry outlook also remains relatively unchanged from expectations prior to last week's events. Joe Osha, semiconductor analyst with brokerage house Merrill Lynch of New York, said the suspension of air travel will curtail shipments of chips for a few days. "Before these events, the semiconductor industry was experiencing some decelerating demand," Osha said. "I think that will continue when the markets open up again and it may even be amplified." However, Osha is advising semiconductor investor to take a wait-and-see approach to the stock markets when they reopen. He said it is important not to make snap decisions or overreact.