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Tech Industry

WR Hambrecht trims staff by 20 percent

The online financial services company confirms that it cut its work force by about 45 workers, a day before its founder was to be inducted into a business hall of fame.

WR Hambrecht confirmed Thursday that it cut its work force by 20 percent, a day before its founder was to receive an honor for his business acumen.

The San Francisco-based online financial services company laid off about 45 workers Wednesday, with the deepest cuts coming in its securities trading operations, said Sharon Smith, a WR Hambrecht spokeswoman.

Smith said the move by the Nasdaq Stock Market to adopt decimal trading has cut into commissions.

"Spreads are down," she said. "Since we're small, we just don't have the market share to make it up."

William Hambrecht, the company's founder, notified employees of the layoffs at a company meeting Wednesday afternoon. Later Thursday, the (San Francisco) Bay Area Council is expected to induct Hambrecht into the Bay Area Business Hall of Fame for "advancing Bay Area-based businesses to positions of national and international prominence."

WR Hambrecht, launched in February 1999, was among the first to sell IPO shares to consumers via an electronic, auction-based method. Hambrecht also co-founded Hambrecht & Quist, an investment banking company specializing in technology companies that was later bought by Chase.

The layoffs at WR Hambrecht come as the IPO market has evaporated. A little more than a year ago, the company was riding the wave of the much sought after tech IPOs, which investors have since shunned.

To make up for the lost revenue in their underwriting operations, investment banks are looking for other revenue sources as well as ways to cut costs.

Larger banks felt the pain first, with FleetBoston Financial's Robertson Stephens and Charles Schwab being among the first to cut staff earlier this year.

In April, a group of boutique banks, which included WR Hambrecht and Epoch Partners, declared that they were prepared to ride out the IPO drought.

Last month, however, Goldman Sachs acquired Epoch, in what could be one of the first signs that a consolidation among the boutique banks has begun.