Facing Restatements, eUniverse Turns to Venture Group Veteran

WALL STREET WEST

With a stock that's been suspended from trading for weeks and a looming restatement, eUniverse Inc. turned to former L.A. Venture Association President Lawrence Moreau to help sort out its finances.

Late last month, the formerly high-flying Internet company brought in Moreau to chair its audit committee, noting his "extensive business experience," including time spent at a predecessor to Deloitte & Touche.

Moreau is a well-known name in L.A.'s technology circles, having done various stints as a fundraiser for thinly capitalized tech firms and working as chief financial officer for companies such as the now-defunct e-marketer Antix Inc.

Currently, he runs Stone Mountain Financial Systems, an El Segundo-based startup that operates a money-transfer system called I Pay Kash.

But Moreau also has a few blemishes on his record.

One of his jobs was a two-year stint as chief financial officer of H.J. Meyers, a brokerage that was closed in 1996 after regulators said it didn't meet capital requirements. During his time there (which ended in 1987), the firm was fined by the National Association of Securities Dealers for technical violations.

Moreau, contacted several times, declined comment.

Two years ago, Moreau won a $500,000 judgment in a breach of contract suit against Direct Express LLC, where he served for 50 days as chief financial officer. For its part, Direct Express alleged that Moreau "falsely represented" himself as a certified public accountant even though his license had expired. Last November, the judgment was thrown out by the California Court of Appeals.

The president of eUniverse, Brett Brewer, promised to return a call to the Business Journal to discuss Moreau. Later, a company spokeswoman said there would be no comment.

Meanwhile, eUniverse on July 1 delayed further its restatement of financial results for the fiscal year ended March 31, after first delaying the report on May 6. The Nasdaq has moved to delist its stock, and the company is appealing.

RiShawn Biddle



Timing, Timing, Timing

Whatever his shortcomings, Maguire Properties Inc. founder and co-chief executive Rob Maguire has good timing.

His company, the owner of downtown Los Angeles trophy properties such as Library Tower and Gas Co. Tower, didn't exactly set the world on fire with its June 25 initial public offering. The issuance was delayed for months while Maguire waited out a sickly market, and when it did arrive, it was greeted with some skepticism in the investment community over access to the firm's details.

Nevertheless, after a slow start, the stock finished its first week of trading with a pop, closing at $19.73 a share on July 2, or 3.8 percent higher than its IPO price of $19.

Maguire had the good fortune to be among the first entrants in a recovering IPO market that raised more than $2 billion over a one-week period, according to Bloomberg News.

Joining L.A.-based Maguire was Long Beach-based Molina Healthcare Inc., which raised $115.5 million in its IPO on July 1.

While Maguire sold its shares at the low end of the expected price range, Molina's were priced at $17.50 each, near the high end of expectations. In its first day of trading July 2, Molina shares closed at $20 each, a 14.3 percent gain.

Renaissance Capital Corp. analyst Paul Bard expects at least 10 new share sales in the next two months, equaling the amount that hit the market in the first six months of the year.

More chief executives are considering equity financing, bolstered by the 23 percent rise in the Standard & Poor's 500 Index since March 11 and increased investor appetite for IPO shares.

"We're going to see more IPOs relative to the depressed levels of the first half," said Jay Ritter, a professor of finance at the University of Florida, who tracks initial sales.

"I still think it's going to be a long time before we get back to the levels of the 1980s or 1990s," he added.

Anthony Palazzo, with Bloomberg News



Counterpunch

Pasadena-based Overture Services Inc. fought back against naysayers and archrival Google Inc. last week with the launch of a new contextual advertising product.

The product, called Content Match, can place the company's paid search results on relevant content-based Web pages of customers such as MSN and Yahoo Inc., which is testing the service in certain parts of its site. Previously, Overture results only appeared in response to search queries.

After several setbacks this year, analysts were encouraged by the possibility of new revenue sources for Overture.

"It's an important milestone," said Richard Fetyko, a research analyst at Kaufman Bros., a New York-based investment bank, adding that the new service will help Overture fulfill Wall Street's expectations for further revenue growth.

Google beat Overture to the contextual advertising market with new product announcements several months ago. While Overture is playing catch-up, advertisers should find its product more flexible to use than Google's, Fetyko said.

Year to date, Overture's stock has fallen 29 percent, to a close of $19.26 on July 2.

Michael Thuresson



Driving Convertibles

Froley, Revy Investment Co., a Los Angeles manager of convertible securities, has been picked as a sub-advisor for two funds managed by Nuveen Institutional Advisory Corp. of Chicago.

The two closed-end funds, Nuveen Preferred and Convertible Income Funds 1 and 2, invest primarily in a blend of investment-grade preferred and convertible securities.

Convertible securities attempt to combine the best attributes of both stocks and bonds in one investment vehicle. Their hybrid nature allows investors to collect a fixed return, but cash in by converting into common stock if the price rises.

Froley Revy, a unit of First Republic Bank of San Francisco, will manage the $900 million portion of the $3 billion Nuveen 2 fund that is dedicated to convertible securities. The taxable preferred securities (60 percent of the fund) will be managed by Spectrum Asset Management, and the remaining 10 percent of high-yield debt will be managed by Nuveen.

Froley currently manages $675 million of the Nuveen 1 fund, which raised $1.5 billion in an initial offering on March 27.

Kate Berry

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