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Non-Tech : CSFB Direct(DIR)

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To: Henry Niman who wrote (391)8/31/2000 4:09:57 PM
From: Rob C.   of 406
=DJ POINT OF VIEW: Is Renaming DLJdirect Counterproductive?

31 Aug 13:49

By Gene Colter
A Dow Jones Newswires Column

NEW YORK (Dow Jones)--Imagine you have a young but high-profile business with
nearly 1 million customers.

Now figure that you spent roughly $250 to lure each of those customers for a
total of $250 million. A lot of that figure represents advertising campaigns to
get your name out there so that people remember it.

What's your next move? Why, change your name, of course.

Sound odd? That's what the new owner of DLJdirect Inc. (DIR) may be planning,
though the parent appears to be debating the rechristening of the online

Credit Suisse Group (Z.CSG) Chairman and Chief Executive Lukas Muhlemann sent
a letter to shareholders Thursday saying DLJdirect will become CSFBDirect as
part of the $11.5 billion transaction in which Credit Suisse will acquire
Donaldson, Lufkin & Jenrette Inc. (DLJ). But Muhlemann later said in a
conference call that the unit wouldn't be rebranded. Credit Suisse' Chief
Financial Officer Richard Thornburgh further muddied the issue by saying
there's a "high likelihood" of rebranding but later adding Credit Suisse would
ultimately do "what is in the best interest of shareholders," according to a
report by Dow Jones Newswires' Cheryl Winokur Munk.

Herewith, some advice to Credit Suisse on the matter.

As everyone on Wall Street knows, CSFB stands for Credit Suisse First Boston,
the investment-banking business created when First Boston merged with Credit
Suisse back in the late 1980s.

But Wall Streeters know just as well the history of DLJ, a venerable name
that had begun to gain some recognition on Main Street, too, in the guise of
DLJdirect. (The example at the top of this column is at least somewhat based on
real numbers: By the latest reckoning, the Web broker has about a million
accounts worldwide. In the first quarter, the firm spent an average of around
$262 to capture each new account, according to a Salomon Smith Barney analyst.)
Wall Street may grumble, but it can adapt.

No disrespect to Main Street, but the average consumer doesn't do as well
with change, and you have to figure that hanging a new sign on DLJ's brokerage
business will at least lead to confusion in the minds of some customers and
potential customers.

To be sure, the alternative - keeping the DLJdirect name - might look odd
when you consider that Credit Suisse has its name on most everything else in
its empire. Indeed, the new CSFB/DLJ operation will be called simply Credit
Suisse First Boston.

But, though the image managers and spin doctors might have you believe
otherwise, there's still a difference between the way institutions and end
customers accept some kinds of change.

Many companies with a consumer brand acknowledge this when renaming after a
takeover or merger. For example, Germany's Daimler made sure to keep the word
"Chrysler" after it bought the company. It did so because it knew the average
customer would take more readily to DaimlerChrysler than Daimler-Benz and
associate (hopefully) good feelings about the Chrysler product with the new

No one is suggesting that DLJdirect is anywhere near the brand that one of
the Big Three automakers is. In fact, those million accounts rank it only as
No. 7 in the online brokers field, according to Salomon Smith Barney estimates.

But building a brand means sticking with the name or coming up with a
powerful catalyst to establish the new handle in the public's mind.

And sometimes that catalyst isn't always a happy one. Just ask Verizon
Communications (VZ), whose creation from the merger of GTE and Bell Atlantic
was something of a mystery - sorry, James Earl Jones - before its labor
problems made headlines.

Meantime, back on Wall Street, investors who own any of the 12% of DLJdirect
tracking stock that DLJ offered in May 1999 have their own problems, but not
because of any potential name change.

Their stocks got left out of the CSFB/DLJ deal and will continue to trade
separately. Shares of DLJdirect debuted at $20, hit a high $40 and now trade at
less than $9. The only thing these holders may get is a new ticker symbol.

-By Gene Colter, Dow Jones Newswires 201.938.2068
01:49 PM

Copyright 2000 Dow Jones & Company, Inc.
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