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Levy Leaving Lehman

Lehman Brothers' top telecom analyst, Steve Levy, is leaving his post after nearly 20 years in the business of analyzing telecom companies on Wall Street, Light Reading has confirmed. And, according to Light Reading sources, Levy's departure is more his employer's wish than his own.

In an email note to colleagues and clients, Levy wrote: "As of September 2, and after more than 19 years on Wall Street researching the communications technologies market, I am going to be officially taking some time off… Just as the telecommunications environment has proven itself to be cyclical in nature, my career is now entering a new phase of its own cycle. And even though I have not yet decided what my next career move is going to be, I feel fortunate to have many alternatives to pursue."

Sources say that between the lines of Levy's note, there's a subtle hint that Levy was asked to leave. To wit, Levy writes that he's got no idea what he'll do next, and he never explicitly states that he's retiring or pursuing other interests. The only thing he does say for sure is that he's leaving -- fast.

Some say it's just part of industry-wide research streamlining. It's not entirely surprising to Levy's peers in the analyst world. "This is a shoe that's been waiting to drop for a long time," says one Wall Street telecom analyst, who asked not to be named. "Lehman has been oversupplied on the communications analyst side for a while."

One hedge-fund source, asking not to be named, said Levy's departure comes as part of a larger trend of investment banks downshifting their research efforts. This trend was set in motion by the crackdown on ties between research and investment banking led by New York State Attorney General Eliot Spitzer. (See Wall Street Settles, SEC, NY Settle With the Banks, Salomon Slammed in Settlement, and Grubman Was Right!.)

Adding to the intrigue is the fact that Levy -- a frequent public speaker and someone often quoted by the press -- appears to be suddenly quashing all media inquiries.

When Light Reading requested an interview with Levy on Tuesday, Tracy Doka, a representative of Lehman's compliance department replied: "A lot of analysts here just unilaterally reject interviews, and Steve is one of those, so, unfortunately, he will not be granting any interviews."

Calls to Levy's office at Lehman Brothers weren't returned. But a source close to Levy's family, who asked not to be named, offered this: "Steve's not going to work anywhere for a few months, but afterwards, he's going to do some consulting, sit on some corporate boards, and just generally keep his options open."

Levy had been at Lehman Brothers since July 1998. Prior to that, he held top telecom research posts at Salomon Brothers, Oppenheimer & Co., and Hambrecht & Quist. He worked at (NYSE: T) for six years before beginning his career on Wall Street. In December 2004, Levy was a featured speaker at Light Reading's Telecom Investment Conference (see From MeBay to Quadruple Play).

Levy's become quite a telecom equipment bull in the past two years, but it wasn't always so (see Lehman Says Capex Trend Has Turned). He was one of the first sell-side analysts to go negative on (NYSE: LU) during the deflating of the bubble, and he later had many unkind words for Ciena Corp. (Nasdaq: CIEN). (See Lehman Evaluates Lucent and Ciena Hit on Lehman Note.) When Patricia Russo was named CEO of Lucent, Levy pointed out that she wasn't exactly the outsider that many folks were looking for to turn the company around (see Lucent Stands Pat). More recently, though, Levy has given Russo good reviews for her efforts (see Lucent's Revenue, Losses Shrink ) .

Whatever the circumstances of his departure, some point out that Levy was a fixture in the industry who'll be missed. "He's one of the class acts in the business," says CIBC World Markets analyst Stephen Kamman. "I'm certainly not happy to lose him. He has always added to the debate." — Phil Harvey, News Editor, Light Reading

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Scott Raynovich 12/5/2012 | 3:04:08 AM
re: Levy Leaving Lehman anybody have any thoughts on the future of sell-side research? I know one investment bank that has gone from 12 analysts to 1 in its communications group. Lehman is obviously cutting back. Where does it end?
paolo.franzoi 12/5/2012 | 3:04:07 AM
re: Levy Leaving Lehman
I would like to think sell side analysts will be completely gone in 10 years or less.

I have met VERY few good ones. Most are kids or blithering fools. If your good at being an analyst, you end up on the buy side.

Let me put it this way, would you rather take advice on what is important from Drew Lanza or Rich Church? (Apologies to Drew for putting him in the same sentence with Rich Church).

Honestly 12/5/2012 | 3:04:03 AM
re: Levy Leaving Lehman Steve Kamman has it so right, Levy is really a class act and a fine guy. Any question of his ethics, or integrity is out of mind. Lehman research, with exception of Levy has been considered lightweight, and it just got a ton lighter.

Sounds like Lehman is cheaping out.

I too worked with Steve on behalf of clients.

Good luck Steve, silly Lehman.

2nd tier they are now for sure.
Honestly 12/5/2012 | 3:04:03 AM
re: Levy Leaving Lehman Steve Kamman has it so right, Levy is really a class act and a fine guy. Any question of his ethics, or integrity is out of mind. Lehman research, with exception of Levy has been considered lightweight, and it just got a ton lighter.

Sounds like Lehman is cheaping out.

I too worked with Steve on behalf of clients.

Good luck Steve, silly Lehman.

2nd tier they are now for sure.
jeff matros 12/5/2012 | 3:04:02 AM
re: Levy Leaving Lehman Whereas I prefer not to pontificate about the future of research analysts, I have strong feelings about Steve Levy in specific. Steve is (was) in rarified air. For the past 15 years I can only think of two other analysts who belong in SteveGĒÖs class GĒō Mary Henry (Goldman Sachs, retired), and Nikos Theodosopoulos, UBS (still at it). What separates all three from their peers was their unique combination of hands-on industry experience and their objective, fair, candid, analysis. Granted that they all had to succumb to corporate pressures to push investment banking business. But we all knew that from the get-go. It was part of the game. These three did it with class, and tried desperately to minimize the inherent conflict in their business.

In the recent era of telecom corporate scandals, bankruptcies, and criminal activities, Steve stood out as honest, sincere, and proactively candid. Although I am sure Steve will do just fine, thank you, he will be sorely missed. Godspeed Mr. Levy.
OSXman 12/5/2012 | 3:04:02 AM
re: Levy Leaving Lehman by golly, i've got a few thoughts...

on the economics of sell side research:

sell side research was never a money maker in and of itself. at 5 cents a share (commission), you had to do a lot of business to pay for all the overhead. the real reason sell side research existed was to facilitate investment banking business. analysts who became well known in their field could attract both buy side clients and corporations wanting that analyst's coverage and imprimatur. the basic business of research was a loss leader for the real business of doing investment banking business. taken to its logical next step, the sell side analyst became not so much an analyst valued for his objectivity but a whore for bankers' wishes. taken a step further, we have a situation where frank quattrone had analysts reporting to him as head of investment banking.

but things have changed, for better or worse. today, with the pervasiveness of electronic trading and execution, i can trade for 1 cent a share through a machine. so if i'm going to pay someone 4-5 cents a share for research, it better be damn good research and there's not much of that going around. thanks to elliot spitzer, research has a lot more integrity, but where's the money in it? if analysts can't be whores for the bankers, they have to earn their own keep, and for the most part that's not going to happen. analysts pay is going down at the same time the hedge funds, who really care about performance and calling it right, are getting more and more power and money. the good analysts will go to the buy side where they can put their money where the mouth is instead of the other way around.

as for steve levy, i have been reasonably impressed with his work in the last few years. but i also remember his work from 15 years ago when he was whoring for a company called digital microwave.
douggreen 12/5/2012 | 3:04:00 AM
re: Levy Leaving Lehman A few thoughts related to sell side research.

1.Fear of lawsuits.. If an analyst offers too strong an opinoin and the stock tanks, the exposure is huge. Strong opinions offered to the masses will be toned down before release. If opinions are to be moderated, why pay big bucks to someone with a strong opinion?

2.ETFs are beginnig to become a significant driver of individual stock prices. As the trend to invest in ETFs continues, sector analysis trumps individual stock analysis, and this type of analysis takes fewer people.

3.There will always be detailed analysis on individual stocks, but IMO it will be created for use by brokers dealing with "high net worth" individuals. The average investor will be directed to invest in ETFs to avoid individual stock risk.

4. I am probably wrong :)
Toad680 12/5/2012 | 3:03:58 AM
re: Levy Leaving Lehman What's with all the fruit?
Toad680 12/5/2012 | 3:03:58 AM
re: Levy Leaving Lehman Agreed that there has been an exodus to the buyside. But at the end of the day, research is still effectively the distribution arm of banking. You can't keep paying sell side analysts less and less and think that you are going to have the infrastructure in place to win the best deals. Something's gotta change. Were I a new guy and agnostic about the buyside/sellside lifestyles, I'd be starting on the sellside.
infojunkie 12/5/2012 | 3:03:54 AM
re: Levy Leaving Lehman the buy side will have to beef up their resources, not the sell side.
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