Thomas Weisel Partners Group Inc. underestimated its loss for the first three quarters of last year, raising doubts about the securities firm's pending initial public offering.
The 8-year-old San Francisco-based firm said Tuesday that its loss in the first nine months of 2005 was $14.2 million, 8% wider than it reported a month ago in IPO documents filed with regulators. Goldman Sachs Group Inc. dropped out as a manager of the stock sale this month, and Weisel replaced the firm with Fox-Pitt, Kelton Ltd.
"These aren't good signs," said David Martin, a former director of the Securities and Exchange Commission's corporate finance division and now a partner at Washington-based law firm Covington & Burling. "At the minimum it's a timing complication and at the maximum it could postpone the offering."
Weisel, started by former Montgomery Securities Chief Executive Thomas Weisel, is struggling to make money as Wall Street competitors reap record profits. The firm, which specializes in advising technology, healthcare and consumer companies, said it planned to use proceeds from the IPO to help fund an expansion of its investment banking and brokerage business and to retain employees.
Weisel's profit peaked at $118 million in 2000, and the firm posted a loss in 2002. By contrast, Wall Street firms including Goldman and Lehman Bros. Holdings Inc. had record profits for the last two years.
Weisel said it made "errors" in calculating investment-banking revenue and the value of investments in unspecified partnerships. Revenue fell 16% to $177 million, compared with the $178 million the company reported earlier, Weisel said.
The firm got about 59% of its revenue from brokerage, 27% from investment banking and 15% from money management, according to Tuesday's filing.
"Errors had been made associated with the accounting for changes in fair value of investments in partnerships," the firm said in its filing. "In addition, the firm determined that the estimated underwriting and corporate finance revenue and the related receivable were overstated as of and for the nine-month period ended Sept. 30, 2005."
Weisel spokeswoman Ann Akichika said the firm could not comment in the so-called quiet period required of companies before they issue stock.
The firm said it would sell 5.75 million shares for $13 to $15, or as much as $86.3 million. That includes 750,000 more shares that the underwriters may buy at the offering price after trading starts.
Weisel said in December that it would sell shares worth as much as $65 million.
Weisel shares would trade on Nasdaq under the symbol TWPG.