When Arianna Huffington walked into Stephen Schwarzman at Davos, she found his manner poles apart from that of the other financial attendees: ?You are walking with your head high!? He disavowed, ?I?m walking with my head still on.? Indeed, his penthouse at 740 Park Avenue, the New York home of America?s wealthiest families, still looks very secure. This is where John D Rockefeller lived right up to his death, and where Jackie Kennedy Onassis grew up. But the financial meltdown has taken a toll on Schwarzman?s fortunes. The Blackstone group went public at the top of the market in June 2007. In the 19 months since, its share value has declined from $31 to less than $6, a dip in excess of 80%. Schwarzman has been trying to pump his base, arguing that this is an absolutely wonderful time for private equity, telling his investors: ?We?ll find a bottom, and we?ll be buying on the way up.? But, for most analysts, that bottom still appears distant. For example, the group has been downgraded by both Barclays Capital and Morgan Stanley analysts.
Meanwhile, there is a titanic battle brewing on an unexpected front. The Financial Times has sued Blackstone for copyright infringement and violation of the Computer Fraud and Abuse Act. Filed in a New York district court on Jan 28, this suit alleges that, beginning in 2002, an individual online subscription to FT.com was being misused for unauthorised access by several Blackstone employees, ?John Does 1 through 100?. Some commentators have been surprised at the paper picking on the kind of high-profile firm that forms the core of its subscriber base. But, in these revenue-challenged times, the whole push for online sites (not an inexpensive enterprise in the first place) has come from the promise of new monies. And, as compared to an annual $179-299 individual subscription, the corporate usage of the sort Blackstone exploited would allegedly have cost it over $5,000 a year.
Add on the SEC recently charging Blackstone?s then VP Ramesh Chakrapani for insider trading in 2006, and you wonder if Schwarzman should begin counting his days at 740 Park Avenue.
?renuka.bisht@expressindia.com
