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Kit Menkin’s Leasing News www.leasingnews.org Thursday, April 25, 2002 Accurate, fair and unbiased news for the equipment Leasing Industry Headlines---- ELA Chairman Joe Lane to Leave IBM DVI---Tell Me True Economy—“It Just Goes to Show You....” What You or Your Employees Would Pay for Rent in California Immelt says GE remains on track to increase earnings Data suggest recession delivered blow to incomes---huh? ELA Chicago Funding Exhibition Reaction Equipment Leasing Recruiting Debate
Business Travel to Decline Further in 2002 Laptop Sales/Who Uses Laptops CFNB Reports Third Quarter 2002 EPS of $0.34 MB Financial Reports 41% Increase in 1st Quarter Planning Ahead Starbucks Stirs Up Summer with New Sipping Sensations
(John Kruse’s Coffee “Leasing Wallbanger”
to be featured )
#### Denotes Press Release
ELA Chairman Joe Lane to Leave IBM Equipment Leasing Association Chairman Joe Lane and IBM have announced that he will be leaving the company at the end of April, according to ELT News. Reportedly no additional announcement has been made. ELT News states Mr. Lane will continue to serve as ELA Chairman. June of last year Robert J. Merritt, Group CEO, CIT Equipment, announced his retirement, and relinquished his role as incoming ELA chairman. It is rumored that long time president Mike Fleming has been planning retirement, but executive changes may be postponing this event. Look for some major changes, perhaps as early as next year. ----------------------------------------------------------------------------------- DVI---Tell Me True Two DVI VP's told me yesterday that 50% of their staff is spending 75% of their time either starting new rumors or passing the old ones around. There has been no company announcement, but both say they believe that an announcement of some kind will be made as early as Monday, April 29th. They feel that DVI has to say "yes we have been bought" or "no we have not been bought" so people can get back to work. ( name withheld) A very good contact at DVI has told me at least one possible buyer recently completed due diligence, but this has happened before so they have learned to ignore it. They did not know the name of the possible buyer. Their rumor mill says GE for what it is worth. You could probably run this as two "reliable sources at DVI" without mentioning my name ( name withheld ) Check out the big jump in DVI stock price. Rumor has it GE has taken a run at them and although the initial offer was rejected, DVI has countered and a deal is imminent. ( name withheld )
I heard today that GE offered to buy DVI. That DVI turned the offer down, but there are rumors of a counter offer by DVI that includes keeping the sales people a minimum of 30 days after the closing. ( name with held ) My friends at DVI think they are “sold.” Can you substantiate that? Have you heard anything similar? This was a reliable source and I am checking on it as well. Anonymous please. ( name withheld ) ( Sorry, we haven’t been able to get the skinny on Cit Tyco. The rumor has always been GE Capital is buying everything. It is almost like they are playing the game of Monopoly. Remember that: buy every property you land on, if you want to win. editor ) Recovery Mixed--- Fed Finds Job Market “Sluggish,” Rents soft; Durable-Goods Orders Fall “Wobbly” (Note: Associated Press Headlines their view: “Economy on Track.” You be the judge as whether it should be “on track” or “wobbly”. Or as Rosanne Rosanna Danna would say, “ It just goes to show you, if it isn’t on track, it’s wobbly. If it’s not one thing, it’s another. ” editor) By John M. Berry Washington Post Staff Writer
The U.S. economy continued to expand in March and early April, but there are concerns in several parts of the country that the recovery may be slowing, according to the Federal Reserve's latest survey of nationwide economic conditions that was released yesterday. "Almost all Federal Reserve districts reported signs of improvement or actual increases in economic activity since the last survey" in December and early January, the summary said. "The sole exception was Boston, which described economic activity as mixed. "While the overall tone was positive, a few districts expressed qualifications about the pace of the recovery or the strength of their regional economies." The Cleveland Federal Reserve Bank, one of the 12 that conduct the survey eight times a year, said "its economy continued to improve but cited concerns that the rate of improvement had slowed considerably from earlier in the year," the summary said. "Despite the increases in economic activity reported in many districts, labor markets remained slack, and wage and price pressures generally stayed in check," the summary continued. "Demand for labor showed signs of firming in several districts but was still reported as weak in others." The survey findings are consistent with a number of recent economic statistics that suggest that after a surge early in the year, the economy's rebound from last year's recession has eased off. Many forecasters are predicting that economic growth will be noticeably slower in the current quarter than it was in the first three months of the year. The Commerce Department will report its advance estimate for first-quarter gross domestic product tomorrow, and most analysts expect it to show an annualized growth rate of at least 5 percent with a possibility that it could exceed 6 percent. In contrast, expectations for the April-June period center on growth at an annual rate of 3 percent to 4 percent. Yesterday, Commerce reported that new orders for durable goods fell 0.6 percent last month, a weaker number than analysts expected, while shipments of such long-lasting items were unchanged. Excluding new orders for defense capital goods and civilian aircraft and parts, the remaining industries' orders fell 1.3 percent last month following a 1.7 percent drop in February. For the first time, all of the figures were reported without semiconductor orders because Intel Corp., the world's largest manufacturer of chips, stopped providing information to Commerce about its orders, shipments and inventories. Intel said it regards its orders numbers as unreliable because its customers can cancel them shipments. Analysts said the overall numbers that were reported were an improvement over the large declines that began in the latter part of 2000 and continued throughout much of last year. However, they do not point, as yet, to a sustained rise in business investment, the analysts cautioned. In contrast, orders for defense goods jumped 17.8 percent last month and shipments rose by 8.6 percent, taking up some of the slack left by the weak state of business spending on new equipment. The latter point was noted in the summary of the Fed survey, which said, "Manufacturers' capital spending plans . . . remained limited," even though all the Fed districts found stable or improve manufacturing conditions. On the other hand, the survey found that residential real estate activity "remained robust. Housing markets were reported to be strong in most districts, with both home sales and new construction showing continued gains," the summary said. Again, that result was mirrored by the Commerce Department report yesterday that although new home sales dropped 3.1 percent in March to an annual rate of 878,000, that level is still relatively high historically. The housing market, helped by relatively low mortgage interest rates remained strong last year despite the deterioration in overall economic conditions – and it appears to be staying that way this year, analysts said. ( As Leasing News quoted the UCLA think team last month, the “economy is still wobbly.” editor ) ------------------------------------------------------------------------------------ What You or Your Employees Would Pay for Rent in California By Michael Liedtke ASSOCIATED PRESS SAN FRANCISCO – Depressed by the prolonged high-technology slump, San Francisco Bay Area apartment rents sagged to two-year lows during the first quarter while rents in other major Western markets rose slightly, according to a study to be released today. At the end of March, the average apartment rent in Santa Clara County – the heart of the Silicon Valley – stood at $1,451, a 26 percent decrease from an average of $1,951 at the same time last year, according to RealFacts, a Novato-based real estate research firm. RealFacts surveyed 6,000 apartment complexes in 19 major markets west of the Mississippi River. Most major Western metropolitan areas saw slim average rent increases of between 1 percent and 3 percent. In San Diego, the average apartment rate climbed 5 percent to $1,092, while in Orange County the rate rose 3 percent to $1,209. The average Los Angeles apartment rate stood at $1,233, a 4 percent increase from $1,185 a year ago, RealFacts said. The Silicon Valley rent represented the lowest average since landlords charged $1,444 per month in March 2000, RealFacts said. Squeezed by similar economic pressures, San Francisco apartment rents fell for the fifth consecutive quarter to an average of $1,691 in March, 16 percent below the prior year's levels. San Francisco rents are now back to where they were in September 1999 when the average stood at $1,692 per month, RealFacts said. Propelled by the Internet business craze that brought thousands of well-paid workers to the city, San Francisco apartment rents peaked at $2,036 per month in December 2000, according to RealFacts. The erosion in the San Francisco Bay Area contrasted with slightly higher rents in most other markets surveyed by RealFacts throughout California and the West. The biggest increases occurred in two of California's fastest growing regions, the Sacramento area in the northern part of the state and Riverside and San Bernardino counties at the southern end of the state. Apartment rents in the Sacramento metropolitan area averaged $847 in March, a 7 percent increase from $810 in the prior year. That was the biggest annual rent increase in the markets surveyed by RealFacts. Average rents climbed 6 percent to $840 per month in Riverside and San Bernardino counties, a region known as the "Inland Empire." ----------------------------------------------------------------------------------- Immelt says GE remains on track to increase earnings By Melissa Mccord, Associated Press WAUKESHA, Wis. (AP) General Electric Co. remains on a track to increase its earnings by double digits in the next year despite a tough economic climate and its sliding stock price, the company's chairman and chief executive told shareholders Wednesday. GE will do that in part with growth in its power business and its high-tech services, Jeffrey Immelt told about 2,000 people at the company's annual meeting. GE's stock price has dropped 15 percent since Immelt took over in September from longtime GE chairman and chief executive Jack Welch, Immelt said. ''GE is a company with an underperforming share price. To be specific, the stock is where it was three years ago. ... I hate where our stock price is today,'' Immelt said. ''But our stock price today does not reflect our performance or our value.'' Immelt said the company increased its earnings by 11 percent during 2001 and now earns 50 percent more than it did three years ago. Immelt, 46, joined GE in 1982 after graduating from Harvard Business School. He spent three years running GE's medical systems business in Waukesha, where Wednesday's meeting was held. During Welch's two decades as its leader, GE expanded from a $13 billion appliance and lightbulb maker into a $480 billion conglomerate that provided strong returns during tough economic times. But earlier this month, General Electric reported its first-quarter earnings slipped to $2.5 billion in the January-March period, down from profits of $2.57 billion in the same quarter of 2001. Its income before accounting changes totaled $3.5 billion. GE shares closed down 30 cents to $32.50 in trading Wednesday. Immelt chatted and shook hands with shareholders before the meeting in a large, silk-lined tent the company attached to the Waukesha County Expo Center. During the meeting, Immelt received praise from shareholders, although a few like GE engineer Jonathan Rutschky from Eagle wondered outside the meeting whether the Ohio native could live up to Welch. Yasin Damji, a GE project leader from Waukesha, said Immelt's transition came at a tough time for the company after the collapse of Enron Corp. in December. ''He's had to do much more than Jack had to do,'' Damji said. GE, like other companies, has faced increased scrutiny since the Enron scandal. Analysts have demanded more information, and a leading bond fund manager last month questioned GE's honesty when it explained the issuance of $11 billion in longer-term bonds and the source of its consistently strong profits. GE has denied misleading investors, and Immelt said the company has expanded its annual report and conference calls with analysts and shareholders. ''Shareholders have every right to be concerned, to ask questions,'' Immelt said. David Moorman, a retired GE engineer from Pewaukee, attended the meeting because he was concerned about the company's stock slide. ''It's a victim of 9-11, it's a victim of the economy,'' Moorman said. ''The Enron scandal certainly didn't help us a bit. It's caused people to be more suspicious, with or without reason.'' Immelt also addressed the environmental concerns of some shareholders by saying GE is committed to working with the federal Environmental Protection Agency to have the Hudson River dredged for PCBs. In the past decade, GE has spent $1 billion on environmental cleanup, including $200 million on the Hudson, Immelt said. GE dumped the vast majority of the PCBs into the Hudson that are contaminating sediments. Polychlorinated biphenyls, or PCBs, have been linked to cancers in tests on laboratory animals and neurological problems among adults. A resolution proposed by environmentalists and several religious groups demanded that GE disclose the lobbying and public relations costs of fighting the dredging proposal. Shareholders voted down that resolution, one of eight proposed by shareholders and rejected Wednesday. On the Net: General Electric: http://www.ge.com/ Data suggest recession delivered blow to incomes---huh? By Associated Press ASHINGTON - Last year's recession, currently viewed as the mildest in US history, may not have been so mild after all, some private economists said after looking at new government data yesterday. A state-by-state report released by the Commerce Department showed that Americans' incomes for all of 2001 were considerably smaller than the government had previously estimated in another report on the gross domestic product, the broadest measure of the economy's health. Some private economists believe the lower estimate of personal incomes - a component in calculating the GDP - will result in a significant downward revision to GDP for all of 2001. Last year, the economy, already slumping when it was jolted by the Sept. 11 terror attacks, grew by just 1.2 percent, a big slowdown from 4.1 percent increases posted in 1999 and 2000. Each year, the government revises estimates of GDP for certain periods, based on more complete data. It will release annual benchmark revisions for 2001, along with 1999 and 2000, on July 31. Yesterday's report showed that incomes grew 3.7 percent in 2001, while the most recent GDP report, released in March, said incomes rose 4.9 percent. The difference of 1.2 percentage points works out to $90 billion. ''It sounds to me that they are going to have to revise away a lot of last year's growth, and it will turn out that the recession was indeed a recession and was more severe than previously thought,'' said Mark Zandi, chief economist at Economy.com. Even if that turns out to be the case, private economists said, it doesn't change the widespread belief that the economy is now recovering from a recession that began in March 2001. Steve Landefeld, director of the Commerce Department's Bureau of Economic Analysis, wouldn't comment on potential revisions. But he did say the initial estimates in the GDP reports included assumptions the government makes about wages and salaries that often get revised. Sung Won Sohn, Wells Fargo's chief economist, said he didn't believe the lower personal income figures were significant. ''I don't think it will change the conclusion that we had the mildest recession during the postwar period.'' Zandi said it's possible that GDP in the second quarter of last year, which grew at an anemic rate of 0.3 percent, could be revised into negative territory. That would mean the economy shrank during the period. Leasing News delivered by e-mail has This Day in American History as the “signature.” It is only available in the e-mail edition. Equipment Leasing Association Chicago Funding Exhibition Conference Our firm (Cobra Capital) exhibited at the ELA show. We are one of the "private funders" that Steve described in that we have our own bank line, we fund with our own money and most importantly, do not offer up our portfolio for sale to any of our blind permanent portfolio investors until after we have established the lessee's ability to pay on a timely basis. I have been attending the Chicago ELA Funding Conference for longer than I would like to admit. No question, there are fewer funding sources and fewer deals to go around. But, our observation is that this was one of the more substantive conferences because the attendees that came had real deals with real pricing and real credits. We walked away with a sense of relief and it just may be possible that the smoke and mirror players of the boom and bust cycle are pretty much gone by virtue of having their pocketbooks and wings clipped. For now. Those aggressive boom and bust players and business models could not last long and gave our industry a very black eye. Our model was received well at the ELA conference and over the last year we have gotten positive feedback both from our industry associates as well as from the traditional bankers outside of our industry. Cobra Capital is very traditional and is absolutely nothing new. It is however, diametrically opposite the failed "super broker" business model. I would strongly encourage our industry to encourage and support this "traditional" business model particularly if it is backed up by experienced operators who have real "skin in the game." I doubt any those failed "Super Brokers" ever had one nickel of their own money at risk. Local commercial banks are slowly and very cautiously getting back into the business. Cobra Capital also provides outsourced bank leasing programs and we have seen a considerable increase in the number of inquiries for our services from local community and small regional size banks. In fact, we are going to offer a quarterly group training session for local bankers to re-introduce them to our industry but in a much different way. Our approach is not a sales pitch. We take a reverse approach and tell them the downside first and for those who are still left sitting in the room, we then demonstrate to them why our business is still very lucrative and how it can be executed in a very traditional and successful manner. The IPO model failed. The Super Broker model failed. The "Skin In The Game" model will always prevail. We won't get rich quick, but we can still make decent money and be proud of what we are doing. Dale Kluga President Cobra Capital LLC dale@cobrallc.com 630-573-2000 -------------- ### ################################# Strategic Research Institute Presents: June 10 - 11, 2002 w Regal Knickerbocker w Chicago, IL Jittery Capital Markets - Nervous Lenders, Issuers, & Investors – Accounting Uncertainty - Heavy Scrutiny of Structured Finance - A Lackluster Recovery - Private Capital on the Sidelines - Consolidation Issues - Tight Market Liquidity In its Third Year, But Especially Timely, This Popular Conference Will Help You Decipher Current Market Trends. Leading Industry Professionals will Analyze and Answer Your Questions on Such Issues as: Register Now Log On www.srinstitute.com/ca274 Call 888-666-8514 info@srinstitute.com Want to Sponsor? E-mail Rita Karsadi at rkarsadi@srinstitute.com Please mention priority code DEM001701 when registering. w State of the Market: Current Market Challenges & Prospects w Investing in Equipment Lease and Auto Paper w Financing and Securitizing Small Ticket Leases and Debt Obligations w Using ABCP Conduits to Warehouse and Finance Equipment/Auto Paper w Auto Lease & Loan Securitization: A $70 Billion Market Review w Funding Finance Companies: Successful Strategies to Raise Liquidity w A Comprehensive Review of Residuals in Equipment Lease and Finance w Small Cap Companies: Funding and Securitization w Latest Legal, Regulatory, and Accounting Directives Shaping the Industry This is the ONLY established Industry Gathering focused Specifically on Equipment/Auto Lease and Loan Securitization and Finance Alternatives for Leasing and Finance Companies. Join the Hundreds of Your Colleagues who have Attended the First Two Annual Conferences by Signing Up Today. ### ####################################### _______________________________________________________ Equipment Leasing Recruiting Debate I am and Equipment Leasing Recruiter, and have been reading the latest excerpts by these other Equipment Leasing recruiters, and have one simple thing to say. Guys, we need to get on the phone, and stop writing these letters! The Leasing community knows who we are. They are going to use us, or they're not. It's our job to persuade them to get to work with us! This is done over the phone, not a publication. Let's stop using this publication as a marketing tool, and use what God gave us, our voice! Get on the phone! -name withheld. (I hate to disagree with a reader, but the purpose of the classified recruiting section is to let readers who which recruiting company specializes in the leasing community. The great majority of the people who have taken out our “help wanted” adds are “afraid” of recruiters, don’t know where to begin. The great majority of the “jobs wanted” don’t want to pay “recruiter fees.” The recruiting industry does not have the best mouse trap. You need to get your message out “all the time.” The larger companies have public relation departments, information officers, marketing departments, and often both inside and outside advertising firms. Why? To get the word out. To let the world know they are alive and what they do and why you should do business with them. The same applies to employment recruiters in the leasing business. editor ) ______________________________________________________ Business
Travel to Decline Further in 2002
Airfare
structure reform, Trusted Traveler program needed according to new
survey April 2002 (Newstream) -- The Business Travel Coalition
has released its annual U.S. Business Travel Survey. Major findings
include that: 1) business travel will decline further in 2002; 2)
many corporate cutbacks in travel are permanent; 3) business airfare
levels are perceived as too high; 4) substitutes to the commercial
airline product have become mainstream; and 5) support is growing
for a "Trusted Traveler" program as an antidote to airport
security hassles. The 2002 U.S. Business Travel Survey was sponsored
by Unisys Corporation (NYSE: UIS) and conducted in collaboration with
the Association of Corporate Travel Executives (ACTE). Some 184 corporations
representing $2.9 billion in annual, domestic U.S. air transportation
purchases participated in the survey. Members of the press may access complete
survey results at www.btctravelogue.com/pressonly.htm. "It is imperative that as an industry we strive
toward implementation of a Trusted/Registered Traveler program to
improve security, traveler convenience and airline economics,"
said Olivier Houri, vice president and general manager, Unisys Global
Transportation. "Many business travelers are opting to use their cars in short-haul
city-pair markets because of the time and hassle factors associated
with airport security. Since business travel levels are declining,
we at Unisys are working with our airline and airport customers to
bring these levels back up through the development of technology-based
loyalty and identification systems." "The airline industry financial crisis is
far graver than in the early 1990s. Strategies for inducing significant
business traveler demand at profitable yields are few. The industry
must find a way to reform the airfare structure for business travel,"
stated Kevin P. Mitchell, publisher, BTCTravelogue.com. Unisys is a worldwide information technology services
and solutions company whose 37,000 people help clients in more than
100 countries utilize technology to seize opportunities, overcome
challenges and succeed in the global economy. The company offers a
rich portfolio of business solutions led by its expertise in consulting
and systems integration, outsourcing, network services and security,
coupled with leading enterprise-class server and related technologies.
Primary vertical markets for Unisys worldwide are the financial services,
transportation, communications, media, commercial and public sectors,
including U.S. federal government customers. Unisys is headquartered
in Blue Bell, Pennsylvania, in the Greater Philadelphia area. For
more information on the company, access the Unisys home page on the
World Wide Web at www.unisys.com. Investor information can be found at www.unisys.com/investor.
The mission of Business Travel Coalition,
located in Radnor, PA, is to advocate public policy and supplier issues
of concern to customers of the business travel industry. Learn more
about BTC at http://www.btctravelogue.com Kevin P. Mitchell is publisher of BTCTravelogue.com,
a free daily news briefing on the global business travel industry
produced by Business Travel Coalition as a service to the industry.
Founded in 1988, the Association of Corporate Travel
Executives (ACTE) is a member-driven organization wholly dedicated
to the science of business travel management with an international
constituency. ACTE membership totals more than 2,400, including business
travel executives in Asia-Pacific, Canada, Europe, Middle East, Africa,
Latin America and the United States. The organization is headquartered
in Alexandria, Va., with regional offices located in Brussels, and
Singapore. ACTE's web site is www.acte.org. Unisys is a registered trademark of Unisys Corporation.
All other brands and products referenced herein are acknowledged to
be trademarks or registered trademarks of their respective holders.
------------------------ Produced for Unisys
Contacts: Cheryl Hutchinson Kevin P. Mitchell 610-587-5596 ---------------------------------------------------------------------------- Business Travel Coalition
214 Grouse Lane Trend Shows That More People Are Choosing Portable
PC for Work and Play April 2002 (Newstream) – : More and more people are using laptop computers
these days -- and it's not just the road warrior businessperson who
works on the go. In fact, an estimated 30-million laptop computers
will be shipped this year. So just what do all these people DO with
their laptops? A new survey came up with some interesting facts. Roberta
Facinelli has more. Laptop computers are going mainstream, and you've
just got to look at how people are using them to tell. A recent survey
conducted by Intel shows that 60 percent of laptop owners use their
laptop in bed, more than half while eating, a whopping 81 percent
while watching TV, and 48 percent while undressed or in their underwear.
Don MacDonald from Intel's mobile PC group. Today's
fastest laptops are the all-on-one tool for work and the ultimate
toy for play. They're sleek-looking, feature DVD player-recorders,
brilliant color screens and a Pentium 4 mobile processor that reaches
top speeds of 1.8 GHz. The performance and power management of the
Pentium 4 mobile processor support a better wireless experience while
conserving battery life, allowing you to unplug, hit the road and
still connect to the Internet from almost anywhere. Today's laptops are 450 million times faster and
25 pounds lighter than the first luggable PCs from the 1980's. I'm
Roberta Facinelli reporting.
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