More Cuts At Quotron As Sales Head Flees ... And Citi Nixes Trading Technology

Quotron's head of sales and marketing, Alan Weiss, handed in his resignation Aug. 27 to work for a small defense contractor. On the same day, another 30 percent of the employees -- or some 30 staff -- in his sales and marketing organization were given their walking papers.

Quotron will not replace Weiss. Instead, it will divide what's left of its sales and marketing department into four, with their heads reporting directly to Quotron's chief operating officer and executive vice president, R. Max Gould.

On the day of Weiss's resignation, parent Citicorp told the vendor that it was rejecting Quotron's bid to supply Citi's 425 traders in New York with its Trading Support System (TSS) local data distribution software. The cumulative effect of the day's events has been to set the industry astir with talk that the vendor is adopting a strategy to wind down its operations.

"We're no stranger to tough market conditions," says Quotron president Tom Cirillo. "Our plan is to continue to serve our customers for many years to come. We are focusing on regional retail and institutional business and the recent restructuring is designed to support that effort."

Quotron sources indicate that the development organization will be the next to go under the knife. As if in preparation, the latest changes at Quotron include a consolidation of control of the entire development organization under vice president Don Rome, who also reports to Gould. In a memo to staff explaining the latest changes, Gould notes that managers will continue to "refine details of the plan."

"In keeping with our parent company Citicorp's strategy, we too are looking at ways to reduce expenses and at what our resource needs are," says a Quotron spokesperson. "We're looking at the whole company." The spokesperson further denies that the latest moves are in preparation for a shutdown, and says that Citi's rejection of TSS is unrelated to the parent's continuing support -- which is not in question, she says.

A spokesperson for Citicorp echoes the sentiment, saying "Citicorp remains committed to supporting Quotron's customers and strategy."

The decision to reject Quotron's TSS was made exclusively by Citi's trading technology group, which was given "latitude to pick and choose its vendors," the Citi spokesperson says. He adds that "no senior official at Citicorp was consulted by this [technology] group within Citibank."

Nevertheless, the loss of potential business at Citi -- a surprise and disappointment to many at Quotron -- came within days of the vendor's rejection by Goldman Sachs & Co. for a 450- position fixed-income trading-room contract (Trading Systems Technology, Sept. 8). Among those cut in the layoffs was the technical support manager assigned to Goldman.

The Quotron spokesperson denies that the cuts were sparked by these particular losses, but cites the need to streamline operations generally following recent loss of customers in retail national accounts.

Jobs heavily targeted in the latest bout of cuts include marketing and sales support -- with technical support and sales assistants hardest hit. Sources say most staff were offered 60 days' pay with severance packages equaling three months' salary.

As has been the norm in layoffs at Quotron -- and is mandated under Citicorp policy -- those at a higher salary level were offered severance of six months' salary, plus the 60-day pay including salary, commission and bonus compensation.

Some sales managers were also laid off, among them Quotron's sales executive to A.G. Edwards & Co., now the vendor's second- largest committed customer. A new sales representative will be assigned to the account as part of the new organization, according to the spokesperson.

The organizational changes leave four sales and marketing units in place. Regional Sales, headed by vice president Tony Sepp; National Account and Institutional Marketing, under vice president Ed Berlin; Retail Marketing, led by vice president Phil Becker; and Relationship Management and Support, which will provide sales and support to existing Quotron customers, under vice president Steve Christiansen.

As a sign of their changing mission, sources say that members of the Relationship Management and Support staff will no longer be paid commissions on sales to their customers. The Quotron spokesperson declines to comment on employee compensation practices.

Quotron's Chicago office now has a staff of three, while San Francisco -- home to Charles Schwab & Co., now Quotron's fourth- largest but not fully committed customer (see related story) -- has all but disappeared, with two employees remaining. Former Western region sales head Mike Naughton, promoted just months ago by Weiss from the role of sales representative (IMD, May 11), has been named head of sales for Quotron's back-office processing subsidiary, Securities Industry Software Corp. (SIS).

Changes to the development organization were announced at the same time as the sales and marketing cuts. George Festa, previously in charge of new systems development and answering directly to Gould, is now reporting to Rome.

Janine Stern, former head of Professional Services, Quotron's custom development group, has been put in charge of a series of newly formed task forces, charged with the mission of increasing efficiency and reducing costs.

Professional Services, which unlike the rest of Quotron's development organization is based in New York, was left without a manager of its own, sparking talk that it is likely to be eliminated. Because the group's main task is to develop customized software and integrate systems for Quotron's now small number of large customers, its relevance could come under scrutiny. For the moment, the group will be led by Rome, from his base in Los Angeles.

Citi and Quotron spokespeople issue statements of firm intentions to remain together and in business. But sources say Quotron's losses continue to hover at approximately $5 million monthly. According to Cirillo, Quotron's performance on an operating basis has improved in calendar year 1992. News of financial problems at Citi, meanwhile, continues to make headlines in the daily press, adding pressure on each unit to make contributions to the bottom line.

Although whispering by Quotron sources of a shutdown show no signs of abating, outstanding commitments to customers ensure that service cannot simply be shut off. In conversations last year with Dean Witter Reynolds Inc., sources say, Quotron told the concerned prospective customer that IBM had agreed to continue maintaining its network and to service systems in the event of a wind-down of Quotron's business.

In recent contract renewal discussions with Merrill Lynch & Co., the vendor was unable to provide the guarantee from Citicorp that Merrill was seeking and negotiations were forced to proceed without it.

Citicorp continues to issue official messages of support for its beleaguered unit. But with the latest signal that the bank's own trading unit it doesn't want Quotron's technology for its own use, deals remain tough to close indeed.