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CBOE Technology Deficient?


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CBOE Holdings Inc (Nasdaq: CBOE) reported Q4 results and investors popped the valuation upwards. Exchanges all over the world seem to be in play so why not? Just bid the price up for now!

But wait in the guidance they have a short blurb about spending on technology in the $30-35 million range. No comment about what they will try to do other than just enhance existing systems. Exchanges and platforms are technology products. Management is completely focused on the capital structure and does not even pay lip service to technology. Trojan horse in the making.

If $35 million a year is all you need there are lots of players who can eat your lunch. Watch for the Chinese to develop a competitive exchange. They have most of the buy side for commodities.

William J. Brodsky, CBOE Holdings Chairman and Chief Executive Officer is confident in the early success of C2 and feels new products will leverage off the platform. William for $35 million you do not hold enough cards for long-term success.

Disclosure: “George Gutowski” writes from a “caveat emptor perspective”. I hold no positions in stocks mentioned in this post. I have no plans to initiate new positions within the next 72 hours.