Staff Reporter

Gary Winnick is no longer the richest man in Los Angeles. And three of his colleagues may have fallen out of the top 50.

Less than four months after being so anointed by the Business Journal, the man who came out of nowhere to claim the title of wealthiest Angeleno has seen his fortune cut by almost two-thirds in the wake of the precipitous drop in the share price of his company, Global Crossing Ltd.

Since hitting a record high of $64.25 on May 13, the company's share price has cratered. Shares last week were trading as low as $20.31 apiece before rebounding to close at $23.94 on Sept. 9, following the news of its deal with Microsoft Corp. and Japan's Softbank Corp. to build an advanced Asian telecommunications network.

As a result, Winnick, who owns about 20 percent of Global Crossing's outstanding shares, is now worth an estimated $2.5 billion.

That's hardly poverty-stricken, but it is well below the $6.2 billion he was worth on paper in May, and puts him in third place in the ranks of the city's richest residents, behind oil and real estate baron Marvin Davis (with an estimated worth of $4.7 billion in May) and real estate/finance entrepreneur Eli Broad (worth approximately $4.3 billion in May).

If anything, Davis has seen his wealth rise since May, given the rebound in petroleum prices.

Broad, with much of his wealth tied up in the stock of American International Group, is probably worth about the same as he was in May, because the performance of AIG's stock has been essentially flat since then.

The dramatic shrinkage in the net worth of Winnick, who was unavailable for comment last week, points up the volatile nature of today's wealth, especially among the principals of high-flying technology companies.

Global Crossing's business of laying fiber-optic cable across the Atlantic Ocean for high-speed data transmission grabbed Wall Street's interest at a time when high-tech stocks were all the rage, even if those companies weren't making much money. But the stock and Winnick's fortune were battered by the collapse of the proposed acquisition of US West Inc., which investors never really embraced, and complications over its ongoing attempt to buy Frontier Corp.

(Further fueling the Global Crossing stock decline has been a general selloff of the entire technology sector on Wall Street recently.)

Winnick's company originally offered to buy Frontier for about $11.2 billion in stock at $63 a share, but the fall in Global Crossing's stock price has forced it to renegotiate the deal.

"Clearly, Wall Street overdid it when (Global Crossing) was valued at $60 a share," said Ted Levy, who follows the telecommunications sector as an equity strategist for McDonald Investments in Rochester, N.Y. "You were talking about a market capitalization of $25 billion for a company that was only doing $200 million a quarter in revenue."

That sharp early rise in Global Crossing's share price suddenly catapulted four of the company's executives into the ranks of the 50 wealthiest Angelenos. And three of those executives had been less recognizable than Winnick.

President David Lee (ranked No. 12 in May, with a net worth of $1.4 billion), Senior Vice President Barry Porter (No. 15 with $1.5 billion) and Senior Vice President Abbott Brown (No. 22 with $820 million) have all seen their paper wealth plummet.

All, however, were able to partially cash out some of their holdings prior to the share-price meltdown, as part of Global Crossing's now-scuttled merger with US West. As a result of that deal falling through, US West ended up with a 9 percent stake in Global Crossing, under terms of a settlement agreement. (Qwest Communications International Inc. ultimately ended up acquiring US West.)

While the unraveling of that massive acquisition must clearly have been disappointing for the Global Cross principals, the divestitures triggered by the deal likely provided some consolation. On June 29, in the midst of negotiations, Winnick sold 3.75 million shares to US West for $62.75 a share, or about $235 million, well above where the stock was trading at the time. His investment firm, Pacific Capital Group, sold a similar number of shares for the same price.

Lee (who as a managing director at Pacific Capital came up with the idea that ultimately led to the creation of Global Crossing) sold 1.2 million shares, less than 10 percent of his stake, for the same amount.

Porter, who distinguished himself in May as the youngest of the city's richest persons, sold just over 1 million shares. Brown let go of just under 800,000 shares.

Lee's stake in the company is now about 4 percent and worth around $335 million. Add to that the $77 million netted from his June stock sale and his estimated worth is somewhere north of $400 million. Porter's stake of just below 4 percent, plus the $75 million or so from the stock sale, puts his worth just around $400 million. Brown netted about $50 million from his June divestiture and now owns about 2 percent of Global Crossing, putting his wealth at around $220 million.

Since the cutoff for the 50 wealthiest Angelenos as of May was $540 million, none of Global Crossing gang except Winnick would qualify for the list anymore.

As part of the pending Frontier deal, all of the Global Crossing executives have agreed to maintain their current equity stakes until April 2000. Once that deal is finalized, Global Crossing's stock is likely to benefit.

Global Chief Executive Bob Annunziata is respected for his telecommunications expertise, and Frontier will provide the company with a much-needed customer base for its fiber-optic lines. The deal with Microsoft was also viewed as a vote of confidence in Global Crossing's ability to build the kind of network needed to handle the anticipated explosion in demand for high-speed data transmission.

"The strategic vision is solid, but there's lots of work to be done," analyst Levy said. "Once the Frontier deal is done, the arbitrage going on on Wall Street will subside, and the stock may well go up. A lot of analysts think the stock is undervalued."

That sentiment is likely to hearten Winnick, and boost his chances for reclaiming his spot atop the list of the city's wealthiest people.

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