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Table: Rough Going


Finance: MUTUAL FUNDS

TABLE: Rough Going

Initially heralded as a dream deal, the Mellon-Dreyfus merger has encountered

some troublesome snags

The Mellon bean-counting culture is colliding head-on with Dreyfus' informal

management style. Some Dreyfus executives question Mellon's emphasis on expense

reduction rather than business promotion.

In a departure from the original game plan, longtime Dreyfus President

Joseph DiMartino has resigned to head the Dreyfus fund boards. He is expected

to be replaced by Mellon Vice-Chairman Keith Smith.

Dreyfus chief marketing strategist Jay DeMartine has quit to take the top

marketing job at Strong Funds. His departure follows the resignations of

numerous other key staffers.

The Dreyfus funds' market share has declined significantly since the merger

announcement. That has caused fees to drop, forcing deeper cost-cutting and

slowing progress on certain key projects, sources say.

Troubles at Mellon's Boston Co., notably a $130 million write-off on

derivatives holdings, has thrown an additional wrench into the deal, adding to

pressure on earnings and distracting Mellon executives.

DATA: BUSINESS WEEK

MARK BOLSTER


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