Robertson Stephens Follows Dot-Coms to Demise

Robertson Stephens, an investment bank that helped take Webvan, eToys, Palm (Nasdaq: PALM), eMachines, Buy.com and a score of other Internet and tech companies public in the dot-com heyday, will be closed after attempts to find a buyer failed.

Boston, Massachusetts-based parent company FleetBoston Financial (NYSE: FBF) said the decision to close the San Francisco-based firm, which was founded in the late 1970s, is part of a larger strategy to focus on the company's core operations.

"In recent weeks, Fleet and the Robertson Stephens management group were unable to structure an agreement for an employee buyout of the firm," said Eugene McQuade, FleetBoston vice chairman and chief financial officer. "We have decided a wind-down is in the best interests of our shareholders."

Layoffs Inevitable

About 950 employees, including salespeople, stock analysts and portfolio managers, are out of a job as a result of the decision, although it could take several weeks to wind down some of the company's money management operations, FleetBoston spokesperson James E. Mahoney told the E-Commerce Times.

"It was a difficult decision and one we had hoped to avoid," Mahoney said. He added that Fleet still hopes to sell some of the firm's assets after operations cease. "Negotiations on a buyout were definitely serious, and they went on for some time. They just didn't have the intended result."

Lawsuits Pending

Robertson Stephens has been named in several shareholder lawsuits stemming from disputed IPOs. In most of those actions, shareholders claimed that underwriters intentionally underpriced stock in exchange for the right to buy more shares when the price rose upon the company's public debut.

Investors who bought shares of Buy.com, Expedia, Webvan, Goto.com and CRM software firm Firepond are among those who have sued Robertson Stephens in the past 18 months.

Cruel Reminders

This news is just the latest reminder of how far the tech economy has fallen since the late 1990s, when startups were being taken public almost every day.

Another reminder came Monday when a Florida firm said it had bought the assets of medical information site DrKoop.com for less than US$200,000. DrKoop staged an $84 million IPO in 1999 and at one point had a $1 billion market capitalization.

Beyond the Bubble

But the scope of the Robertson Stephens decision extends beyond the dot-com bubble. The investment bank was founded in 1978 and built a solid reputation in Silicon Valley -- where it was known as Robbie Stephens. In 1998, BankBoston plunked down $800 million to take it over from Bank of America (NYSE: BAC).

Robertson Stephens' founder, Sandy Robertson, clearly seemed to believe in the tech bubble, investing personally in the ill-fated E*Offering online investment bank set up by E*Trade (NYSE: ET) in 1999.

The investment house last made a major deal in April, when it helped arrange the acquisition of Elantec Semiconductor (Nasdaq: ELNT) by Intersil for $1.44 billion.

Ironically, the bank's Web site still has a link to career opportunities, where it states: "At Robertson Stephens we don't just define the Growth Economy. We lead it."