Technology lost in attacks on US may cost US$3.2bn

Replacing securities firms' computer systems destroyed in the World Trade Center attacks may cost an estimated US$3.2 billion, according to the TowerGroup, a financial services technology research company.

The seven buildings destroyed at the World Trade Center contained an estimated 30,000 trading posts at firms such as Morgan Stanley Dean Witter & Co and Cantor Fitzgerald LP Buildings that were damaged nearby, such as the World Financial Center and One Liberty Plaza, contained another 15,000 to 20,000 desks, according to TowerGroup.

The terrorist attacks will probably result in the biggest-ever losses for insurers, an estimated US$20 billion to US$30 billion, analysts said. That would exceed the US$19 billion lost by the industry in Hurricane Andrew in 1992.

"Securities guys are the most tech-centric of the tech-centric, and they are all concentrated in one place," said Larry Tabb, vice president of securities and investment research for the Needham, Massachusetts firm. The entire industry spent US$25 billion on technology in 2000, he said.

Of the US$3.2 billion in technology costs, US$1.7 billion will be for hardware -- computers, monitors, printers, keyboards, servers, switches and hubs -- and US$1.5 billion for the services and software needed to install and connect the hardware and networks, Tabb said.

"I think there are going to be a few places that unfortunately gain from it, including disaster recovery, technology consulting and makers of hardware," he said.

Hardware destroyed included 16,000 trading desks. Also damaged were multiline phone consoles called turrets and multiple workstations outfitted with flat screen displays, costing US$52,000 each, as well as 34,000 PC workstations at US$5,000 each, he said, for a loss of about US$1 billion.

Also destroyed were US$370 million of servers, including 8,000 Intel-based boxes and 5,000 Unix servers, and another US$300 million for printers, hubs, switches, data storage and other networking hardware.

Tabb said the replacement effort is expected to last 12 to 24 months.

The securities industry can regain its footing more quickly than otherwise because of offsite primary and backup data centers, including the New York Stock Exchange's Brooklyn site and NASDAQ's in Connecticut, said Tabb.

"If they wanted to, they could have been trading Wednesday," he said. Damaged and destroyed phone lines linking trading firms and exchanges are "probably the biggest issues for them."