By Jonathan Spicer
NEW YORK, June 8 (Reuters) - Investment research firm Morningstar Inc will write profiles on some 3,600 companies listed on the Nasdaq Stock Market and the European exchanges operated by market operator Nasdaq OMX, the companies said on Monday.
Morningstar, which has benefited this decade by attracting analysts displaced from big banks, will publish 'profile reports' with basic research on the companies. Nasdaq OMX, which is battling hard for new listings, will cover the costs.
The growing ranks of companies with little or no research has worsened in the current financial crisis, and Nasdaq OMX sees the deal as way to boost its listings' profiles amid volatile markets, said Bruce Aust, an executive vice president at the company.
'We do think that there is fundamentally a dwindling of analysts in the market,' Aust said in an interview.
'The number of companies that have zero analyst coverage, they're really going to benefit from this,' he said. 'They'll have a basic, full report out there from Morningstar.'
The first reports, written by Morningstar analysts, will be published in the third quarter. They will include a company profile, industry data, and will be updated regularly. They will not include a stock rating or investment recommendation.
The companies did not reveal the terms of the agreement. New York-based Nasdaq OMX said it prefers to partner with listed companies, such as Chicago-based Morningstar.
The amount of analyst research has dwindled since 2002, when major Wall Street firms settled an investigation spearheaded by then-New York Attorney General Eliot Spitzer, accusing them of issuing inflated research in order to win investment banking fees.
Big banks, humbled by the credit crisis, have made more analyst cuts in the last year in order to lower costs.
Meanwhile, Nasdaq OMX is engaged in an aggressive battle with U.S. rival NYSE Euronext for new and current listings. The New York Stock Exchange hosted five initial public offerings so far this year and has two more set to price within weeks, compared to Nasdaq's two IPOs and one on deck.
The deal 'adds to the full package of being a Nasdaq-listed company,' Aust said.
Services for listed companies accounted for 21 percent of Nasdaq OMX's total revenue in the last quarter. It has become more important as rivals eat into Nasdaq OMX's market share and drive down prices, pinching traditional trading revenues.
(Reporting by Jonathan Spicer; Editing by Gary Hill) Keywords: NASDAQ MORNINGSTAR/RESEARCH (jonathan.spicer@thomsonreuters.com; +1-646-223-6253; Reuters Messaging: jonathan.spicer.reuters.com@reuters.net) COPYRIGHT Copyright Thomson Reuters 2009. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
NEW YORK, June 8 (Reuters) - Investment research firm Morningstar Inc will write profiles on some 3,600 companies listed on the Nasdaq Stock Market and the European exchanges operated by market operator Nasdaq OMX, the companies said on Monday.
Morningstar, which has benefited this decade by attracting analysts displaced from big banks, will publish 'profile reports' with basic research on the companies. Nasdaq OMX, which is battling hard for new listings, will cover the costs.
The growing ranks of companies with little or no research has worsened in the current financial crisis, and Nasdaq OMX sees the deal as way to boost its listings' profiles amid volatile markets, said Bruce Aust, an executive vice president at the company.
'We do think that there is fundamentally a dwindling of analysts in the market,' Aust said in an interview.
'The number of companies that have zero analyst coverage, they're really going to benefit from this,' he said. 'They'll have a basic, full report out there from Morningstar.'
The first reports, written by Morningstar analysts, will be published in the third quarter. They will include a company profile, industry data, and will be updated regularly. They will not include a stock rating or investment recommendation.
The companies did not reveal the terms of the agreement. New York-based Nasdaq OMX said it prefers to partner with listed companies, such as Chicago-based Morningstar.
The amount of analyst research has dwindled since 2002, when major Wall Street firms settled an investigation spearheaded by then-New York Attorney General Eliot Spitzer, accusing them of issuing inflated research in order to win investment banking fees.
Big banks, humbled by the credit crisis, have made more analyst cuts in the last year in order to lower costs.
Meanwhile, Nasdaq OMX is engaged in an aggressive battle with U.S. rival NYSE Euronext for new and current listings. The New York Stock Exchange hosted five initial public offerings so far this year and has two more set to price within weeks, compared to Nasdaq's two IPOs and one on deck.
The deal 'adds to the full package of being a Nasdaq-listed company,' Aust said.
Services for listed companies accounted for 21 percent of Nasdaq OMX's total revenue in the last quarter. It has become more important as rivals eat into Nasdaq OMX's market share and drive down prices, pinching traditional trading revenues.
(Reporting by Jonathan Spicer; Editing by Gary Hill) Keywords: NASDAQ MORNINGSTAR/RESEARCH (jonathan.spicer@thomsonreuters.com; +1-646-223-6253; Reuters Messaging: jonathan.spicer.reuters.com@reuters.net) COPYRIGHT Copyright Thomson Reuters 2009. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.