PhillyDeals: Stock market optimism lifts its timid head

As the big stock market benchmarks jumped 10 percent yesterday,

Michael P. Ryan

, head of research at

UBS Financial Services Inc.

, of New York, sat in his firm's Philadelphia branch, talking stocks and bonds with its 120 local reps and their clients via conference call.

"I'm not saying the market has hit bottom," Ryan told me in branch manager Peter Tedesco's office overlooking City Hall. "I am saying, for the first time in 11 months, that values do exist and that the market might - it may - be higher in six to nine months."

There was some actual good news for the day - companies are able to raise money by selling commercial paper again, the dollar is stronger, the Federal Reserve may cut interest rates.

But housing is still down, unemployment is still up, and bank lenders still face rising losses.

Ryan isn't predicting "a comeback." He's just saying there are some "solid companies" at bargain prices.

He titled his last report, on Monday, "Picking Through the Rubble."

The Boston Globe reported yesterday that mutual fund giant

Fidelity Investments

may cut 4,000 jobs in response to the weak investment markets. Local fund families, including

Turner Investment Partners Inc.

, of Berwyn, are also cutting marketing and sales staff.

Last time Fidelity and other big investment companies had to cut thousands of jobs, in 2001-03, Malvern-based mutual fund giant Vanguard Group Inc. said it wouldn't resort to layoffs. But Vanguard employees I talked to at the time said some supervisors felt pressure to cut people "for cause" to reduce payrolls.

Vanguard denied there was any kind of quota, but employment fell several hundred as the company left vacant jobs open.

Similarly, this time there are "no plans" to lay off crew, says Vanguard spokeswoman Amy Chain. "While this is a challenging time in the financial markets," she told me, "we continue to experience positive net cash flows into our funds," with a net $67 billion in new money this year through Sept. 30.

Vanguard is the largest employer in Chester County, with about 9,000 workers.

Meanwhile, there's a hiring freeze at software-maker SAP AG, whose Americas headquarters and about 2,000 workers are based in Newtown Square.

SAP co-CEO Henning Kagermann said Oct. 6 that the company had imposed "a hiring freeze that includes not replacing employees that leave the company and a reduction in the use of temporary employees." Yesterday, SAP said that software sales were up, but that it was concerned that small and midsize clients were having trouble financing new purchases.

In a conference call, Citigroup Inc. analyst Sarah Friar pressed co-CEO Leo Apotheker: "Would you consider actual head-count reduction as we think about 2009?"

"We first of all want to finish 2008," Apotheker said. "Let's see what that brings."

Vitae Pharmaceuticals Inc.

, which employs 50 at its Fort Washington headquarters, says it has borrowed $13 million from

Silicon Valley Bank's

Philadelphia- area office and

Sumitomo Corp.'s Oxford Finance Corp.

for work on two new drugs.

The money will pay for work on Vitae's renin inhibitors, which fight high blood pressure, as well as "ongoing discovery research" on Bace (beta secretase), a treatment for Alzheimer's disease, said chief financial officer Tina Fiumenero.

She said the money would keep Vitae going into 2010 - "and substantially beyond that" if Vitae's 11-beta HSD1 diabetes partnership with Boehringer Ingelheim Pharmaceuticals Inc. meets its targets in the meantime. Boehringer invested $36.5 million up-front last year and committed up to $300 million more.

Borrowing money is a shift for Vitae, whose past investors include venture capitalists Prospect Venture Partners, Venrock Associates, New Enterprise Associates and Atlas Venture, as well as industry investors GlaxoSmithKline P.L.C., Wellcome Trust, Intel Capital and Allergan Corp.

"They saw this as an opportunity to get significant capital" without diluting Vitae's current owners, said Tom Gordon of Silicon Valley. He said the banks charged "a little north" of 10 percent interest.

Let's find a deal? Optimism reappears on Wall Street, and investors hear values do exist. PhillyDeals, C3.

Out of the basement? Bargain-hunters fuel the market to a gain of nearly 900 points, the Dow's second-largest ever. A1.