Kit Menkin’s Leasing News www.leasingnews.org  Tuesday, August 21,2001

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Headlines---

 

     The Fed Drops ¼ Point

        Official Announcment

           Associated Press Story

              Bloomberg Analysis

                Asian Marketplace

                   Agilent Cuts 4,500 Jobs

                     World Commerce Online Files Chapter 11

                  Third of venture firms expected to fail—San Diego Tribune-Union

 

                                                Ginny Young Drives Four Cars

   

Leasing News List is Up-dated : 116 Changes

 

                 Paul Harvey is Back!!!!

                                                               ///Drudge Report Extra///

 

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Official Announcement:

 

“The Federal Open Market Committee at its meeting today

decided to lower its target for the federal funds rate by 25 basis

points to 3.5 percent. In a related action, the Board of Governors

approved a 25 basis point reduction in the discount rate to 3

percent. Today's action by the FOMC brings the decline in the target federal funds rate since the beginning of the year to 300 basis points.

 

“Household demand has been sustained, but business profits and

capital spending continue to weaken and growth abroad is slowing,

weighing on the U.S. economy. The associated easing of pressures

on labor and product markets is expected to keep inflation

contained.

 

“Although long-term prospects for productivity growth and the

economy remain favorable, the committee continues to believe that

against the background of its long-run goals of price stability

and sustainable economic growth and of the information currently

available, the risks are weighted mainly toward conditions that

may generate economic weakness in the foreseeable future.

 

“In taking the discount rate action, the Federal Reserve Board

approved requests submitted by the Boards of Directors of the

Federal Reserve Banks of Boston, New York, Philadelphia, Richmond,

Chicago, Kansas City and Dallas.”

 

 

Fed cuts rates quarter-point, ready to do more

 

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ASSOCIATED PRESS

 

WASHINGTON – The Federal Reserve, still trying to keep the U.S. economy out of a recession, cut a key interest rate Tuesday for the seventh time this year, lowering the federal funds rate by a quarter-point to 3.50 percent.

The reduction pushed the funds rate, the interest that banks charge on overnight loans, to its lowest level in more than seven years.

In response, commercial banks were expected to announce that they were reducing their prime lending rates, the benchmark for millions of consumer and business loans, by a similar quarter-point, to 6.50 percent, also the lowest level in seven years.

With the latest reduction, the Fed has cut rates by 3 percentage points since the beginning of this year, including five straight half-point rate reductions, which represented the Fed's fastest credit easing in nearly two decades.

The effort is aimed at jump-starting the U.S. economy, which has been lackluster for a year and slipped close to recession territory in the spring.

In explaining its latest rate move, the Fed said in a

statement: "Household demand has been sustained, but business

profits and capital spending continue to weaken and growth

abroad is slowing, weighing on the U.S. economy."

 

The quarter-point move had been expected. Some analysts had

said the central bank might opt for a larger half-point move in

an effort to deliver a surprise to Wall Street investors, who

had already factored in a quarter-point cut.

 

Signaling possible future moves, the Fed said the balance of

risks going forward remains "weighted mainly toward conditions

that may generate economic weakness in the foreseeable future."

Many analysts believe the Fed will cut rates again at its

next meeting on Oct. 2.

 

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( Bloomberg Take on Rate Cut )

 

 

Fed Cuts Overnight Rate to 3.5%, Cites Weakness Risk

 

By John Cranford

 

Washington, ) -- Federal Reserve policy

makers lowered the benchmark U.S. interest rate a quarter

percentage point, the seventh cut this year, and signaled another

reduction is possible in coming months.

 

Fed Chairman Alan Greenspan and his nine voting colleagues on

the Open Market Committee reduced the target rate for overnight

loans between banks to 3.5 percent, the lowest since April 1994.

``Household demand has been sustained, but business profits

and capital spending continue to weaken and growth abroad is

slowing, weighing on the U.S. economy,'' the Fed said in a four-

paragraph statement accompanying its decision. Central bankers

warned the economy faces a risk of continued weakness.

 

Signs the economy is struggling include stagnant consumer

confidence, slumping profits and a persistent slide in

manufacturing. Dell Computer Corp. and Handspring Inc. are two

among many computer-related companies that have reported a drop in

sales. Those signs of weakness are countered by a rise in retail

sales, surging homebuilding and an unchanged unemployment rate

that may mean companies have gotten past the worst period of

firings.

 

Commercial banks probably will reduce borrowing costs for

consumers and businesses right away, helping to underpin an

expected rebound. Since the first of the year, the Fed has reduced

its target rate 3 percentage points to keep the slowdown from

worsening.

 

Aggressive Rate Cutting

 

That's the most aggressive pace of interest-rate reductions

by the Fed since 1982. Even so, the economy has expanded at less

than a 2 percent annual rate since mid-2000, the weakest 12-month

period in 10 years.

 

The Fed has room to lower rates further because the economy's

weakness ``is expected to keep inflation contained,'' the

statement said.

 

Greenspan told Congress last month that rate reductions so

far hadn't yet proved sufficient to pull the economy back onto its

feet. ``We aren't free of the risk that economic weakness will be

greater than currently anticipated, and require further policy

response,'' he said.

 

The biggest problem facing the economy has been a collapse in

business investment that's forced manufacturers to reduce

inventories by cutting production. The process has been difficult

for telecommunications, computer and software companies. Business

spending on equipment and software has declined for three straight

quarters, the first time that's happened since 1982-1983.

Dell, Handspring

 

Dell, the biggest direct seller of personal computers, said

fiscal third-quarter sales will miss forecasts as consumers and

businesses put off purchases. Handspring, a money-losing maker of

handheld computers, cut prices on most of its products to spur

demand, reduce inventory and fight off rivals, after making reductions three months ago.

 

PC-industry sales fell last quarter for the first time in 15

years as corporations and home users pared spending. Dell Chairman

Michael Dell said the slowdown may last until the second quarter

of next year, damping optimism that sales might get a boost sooner

from back-to-school and holiday sales.

 

The economy's growth was measured at a 0.7 percent annual

rate in the second quarter, the weakest in more than eight years,

according to preliminary Commerce Department figures. Revisions to

that estimate may show the economy didn't grow at all or possibly

contracted for the first time since the first quarter of 1993,

analysts said.

 

Discount Rate Cut

 

The Fed's Board of Governors also voted today to cut the

discount rate on loans to banks from the Fed system by a quarter

percentage point to 3 percent. Although few banks borrow directly

from the Fed to meet their cash reserve requirements, the central

bank generally keeps the discount rate within a half point of the

overnight bank rate.

 

The Fed Banks of Boston, New York, Philadelphia, Richmond,

Chicago, Kansas City and Dallas asked for the discount rate cut.

 

Today's action was in line with the unanimous view of 82

economists surveyed by Bloomberg News. It puts the overnight rate

at the lowest since it was 3.5 percent in April 1994. It may take

six to nine months for the full effect of the Fed's rate reductions to work through the economy, analysts said.

 

Fed policy makers, in their few public comments over the last

month, have continued to say they expect a rebound late this year

and next. ``We are cautiously optimistic that our current economic

situation will improve as we approach 2002 and continue into next

year,'' said Chicago Fed Bank President Michael Moskow, a voting

member of the FOMC, in a speech in Iowa two weeks ago.

Consumer Spending

 

And Atlanta Fed Bank President Jack Guynn, a non-voting

member, said last month he expected consumers and businesses to

add to growth. ``The consumer has not completely stopped

spending,'' he said in Mississippi. ``I'm optimistic that spending

will stay at respectable levels, investment spending will begin to

pick up.''

 

So far, the economy has shown few signs of reacting to lower

rates. The Conference Board's consumer confidence index declined

to 116.5 in July from a six-month high of 118.9 in June. The index

has ranged between 109 and 119 this year, below the average

reading of 127 for the previous five years.

 

Corporate profits fell 16.8 percent in the second quarter,

the worst performance since the third quarter of 1991, based on

reports from 479 companies in the Standard & Poor's 500 Index,

according to Thomson Financial/First Call.

 

And manufacturing has contracted for 12 straight months, the

longest stretch of weakness since the 1990-91 recession, according

to the National Association of Purchasing Management.

Retail Sales

 

Other evidence supports the optimistic expectations of Fed

policy makers. Retail sales have risen in three of the last four

months when automobiles are excluded. Spending may accelerate as

$38 billion in advance tax refund checks reach consumers.

 

Target Corp.'s sales in the period ended Aug. 4 rose 8.5

percent, mostly reflecting a 12 percent gain at Target discount

stores, compared with declines of 8.2 percent at the company's

Marshall Field's department stores and 0.8 percent at its Mervyn's

chain.

 

Lowe's Cos., the second-largest home-improvement chain after

Home Depot Inc., said its profit rose 18 percent in the quarter

ended Aug. 3 as it was able to demand lower prices from suppliers.

Construction of new homes rose 2.8 percent in July to the

fastest pace in 17 months. And the number of fired workers filing

for unemployment benefits has been below 400,000 for four straight

weeks, the first time that's happened since mid-April, suggesting

the pace of firings is slowing.

 

While today's Fed statement suggested policy makers aren't

ruling out further rate reductions, analysts are beginning to

doubt there will be additional cuts unless business investment

slumps further or consumers curb their spending.

Of the 25 banks and securities firms that trade directly with

the Fed, 13 say today's rate reduction will be the last this year

and 12 expect at least one more -- possibly at the next policy

meeting on Oct. 2.

 

Before today's announcement, trading in fed funds futures

contracts suggested about a four-fifths probability of another

quarter-point reduction by the end of the year.

 

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Asian Marketplace

 

Tokyo's main stock index fell yesterday for the fourth straight session to its lowest close in nearly 17 years, dragged down by weakness in technology shares. The benchmark 225-issue Nikkei Stock Average fell 187.60 points, or 1.64 percent, to 11,257.94 -- the lowest finish since Dec. 11, 1984, when it closed at 11,250.83. On Friday, the average closed down 0.60 percent to 11,445.54. 

 

This may affect Orix Corporation, billed in their press releases as “Japan's top leasing company, Orix Corp.”  There is a re-shuffling of many companies for stock market

report purposes.

 

Fujitsu announced plans yesterday to slash 16,400 jobs, or 9 percent of its work force, in a bid to stem red ink amid a worldwide electronics slump. The Tokyo-based company said 11,400 of the job losses will be at its overseas operations. The company has 180,000 workers worldwide. 

 

Locally, the bad news for continues as:

 

Agilent ( formerly the other half of Hewlett-Packard , here in San Jose ) posts loss, will cut 4,000 jobs: Agilent Technologies Inc., a maker of test and measurement equipment, reported a third-quarter loss that was narrower than Wall Street had expected, but said yesterday that it is slashing 4,000 jobs because business is expected to stay sluggish for quite some time. 

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WCO Files Chapter 11

 

World Commerce Online, Inc. filed for protection under Chapter 11 of the

Bankruptcy Code with the U.S. Bankruptcy Court. The Company stated that it

has not attained sufficient cash flow from operations to fund the on-going

business and additional bridge loan financing that heretofore had been

secured during the latter half of 2000 and the first seven months of 2001

was not available. Consequently, the Company was not able to fund the

current operating costs of the business or meet the near term obligations of

existing unsecured creditors.

 

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Ginny Young Drives Four Cars

 

I actually trade off driving 4 vehicles.  I am basically an "old fashion" girl.

 

  I prefer old houses to new houses and I prefer antiques to new

furniture.  Three of my 4 cars are old.

 

 I drive a 67 Alpha Romeo Giulietta when I want to zip around town.

 

A 69 Firebird convertible when I want the freedom of wind blowing through my hair (Note to self:  Don't wear lipstick when your driving or riding in a convertible).

 

A 61 Jaguar Mark II (<oh, what a beauty) when I want to be stared at.

 

 My newer car is a 97 BMW 750IL which is without a doubt the most comfortable car in the world.  It is so big and roomy.  It is also very practical, if the economy really takes a dive which causes the leasing business to halt and the stock market to crash, I can live in this car very comfortably.

 

 

Ginny

 

GinnyYoung@bravacapital.com

 

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Third of venture firms expected to fail

 

 

By Bruce V. Bigelow

SAN DIEGO UNION-TRIBUNE STAFF WRITER

 

Venture capitalists who saw their numbers mushroom in recent years now expect their ranks to thin by as much as a third in 2001, according to a poll intended to gauge industry sentiments.

The survey, released yesterday by the Deloitte & Touche consulting firm, suggests many venture firms will fail due to an inability to raise new funds from their deep-pocket partners.

The most vulnerable ones appear to be the newest venture firms and those that invested heavily in Internet startups, said J. David Clark, a managing director at Deloitte & Touche in New York.

"A lot of the first-time, less-experienced and less-seasoned venture capital portfolio managers will in fact fold up shop," Clark said.

From 1995 to 2000, the number of U.S. venture capital firms jumped almost 75 percent -- from 397 to 693 -- according to the National Venture Capital Association of Arlington, Va. In 1999 alone, 117 new firms were founded.

A new VC firm typically opens for business after the managing partners created a fund by raising millions of dollars from college endowments, pension funds and other limited partners. The partners then make selective investments in start-up companies, providing entrepreneurs with a crucial source of early funding.

Roughly two-thirds of those surveyed said they expect it will be more difficult for VC firms to raise additional funds over the next six months.

That scenario will likely take years to play out, however, as venture firms tally the losses they incurred after making bad bets on dot-coms and other technology start-ups.

Venture firms "don't announce that they're closing the doors or anything," said Jeanne Metzger of the National Venture Capital Association. "They just don't raise another fund."

The consulting firm polled more than 2,000 venture executives on the East Coast and in Silicon Valley.

None of San Diego's venture capitalists were polled, but several said yesterday the results were consistent with the wrenching shakeout they've experienced over the past year.

"We never expected the market to stay as strong as it was," said Dan Pittard of IdeaEdge Ventures, a San Diego venture firm founded last year. "We expected a correction, but we never expected the correction to be as severe or as long as it's been."

IdeaEdge closed down one of its start-up companies earlier this year. More recently, the firm has been seeking tenants to sublease some of its excess office space.

"With the capital markets as they are, we can't support as many companies as we thought we could at the outset," Pittard said.

The downturn also hit hard at Enterprise Partners, San Diego's largest venture firm, which raised an additional $20 million "annex" earlier this year to shore up imperiled investments made from its fourth VC fund, a $200 million pool known as EPIV.

"We should have made fewer investments and saved more money, but in the market at that time we didn't see through the fog," said Bill Stensrud, a managing director. "Essentially we had to go to our investors and tell them we had screwed up and we're sorry."

The problems have also extended to some corporations, such as Compaq Computers, which has decided to shut down its corporate venture fund.

A Texas buyout and investment firm, Hicks Muse Tate & Furst of Dallas, decided to end its experiment in venture capital last November when it declared it would make no new venture investments. More recently, the firm said it will not provide follow-on financing to any of the dozen start-ups it has already backed.

Despite the downturn, the Deloitte & Touche survey found nearly 90 percent of those surveyed believe now is a good time to be a venture capitalist.

"What better time to invest in new companies than now?" asked Rick Fink of Miramar Venture Partners, a new Southern California venture firm that raised $62 million earlier this year. "We're coming to the party with fresh capital at a time when the valuations are low."

Still, about 77 of those surveyed expect further "down rounds" -- in which start-up companies receive less financing than in previous funding rounds.

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Paul Harvey Returns to Airwaves

 

By The Associated Press,

 

CHICAGO (AP) - Paul Harvey returned to the airwaves sounding a

bit hoarse but telling his audience he ``feels so good to be back.''

``Americans, in judging the speaking voice which is still

 

undergoing renovation, please be merciful,'' Harvey said Monday as

he closed his five-minute morning program, ``Paul Harvey News and

Comment.''

 

The 82-year-old broadcaster had been absent from his daily radio

shows since mid-May while recovering from what he believed at first

was a severe case of laryngitis. Doctors later diagnosed a virus

that had settled in one of his vocal cords, and he was treated in

Chicago earlier this month, Chris Berry, vice president of ABC News

Radio, said Monday.

 

Harvey's voice sounded scratchy and hoarse as he began his

broadcast with his trademark ``Good Morning, Americans,'' with news

of Tropical Storm Chantal and President Bush's visit to Milwaukee.

But it seemed to clear up as he went along, and near the end of the

program, Harvey broke into song.

 

``It's been a long winter without you. It's been a long winter

without you,'' he sang. As he closed, Harvey said he felt so good

to be back on the air that he might start singing the news. ``And

you wouldn't want that,'' he said, laughing before signing off with his trademark ``Good Day!''

 

Harvey will do only his morning broadcast and his daily ``Rest

of the Story'' program for a few weeks, leaving the duties of his 15-minute midday program to guest hosts while he continues to

recover, Berry said.

 

Harvey signed a 10-year, $100 million contract with ABC Radio

Networks last November to continue the commentaries that he began

broadcasting in 1951. The broadcasts teach about 24 million

listeners daily.

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 116 Changes

 

     Here are the most recent changes

 

  (   On line in both Chronological and Alphabetical Order; Complete List

 

           http://www.leasingnews.org/list.htm )

 

Microfinancial, Waltham, MA (8/2001)  Leasecomm, Attorney General investigating,

      many complaints on line http://www.leasingnews.org/archives/August01/8-15-01.htm

United Capital, Austin Texas  (8/2001) Telephone not answered, Steve Dallas

             new e-mail address: sdallas@sfgllc.com; appears all United Capital

             e-mail addresses changed to Spectrum Leasing.  ( 3/2001) reports from readers                             

             that customer base, leasing deals,  being given to "sister company" Spectrum     

           Leasing, same building; United Capital still

             not taking new deals, many employees let go, looks dark.

            ( 1/2001 ½ employees let go, portion of portfolio sold, discounters

            not paid, vendors not paid, it is alleged. 1/2001, selling off portfolio, problems

            ahead with  vendors not paid, brokers not paid, sinking in quicksand 12/2000 no

            new deals until after  the 1st of year, Steve Dallas trying to hold it together.      

            Dallas says, " We will survive."

Ampent (8/2001) formerly Accesslease.com; There are rumors there have been serious

            cutbacks in   sales and marketing here. Senior Marketing Manager Parker Trevin 

           says it is minor, basically a change in strategy and denies the rumor.

Comdisco  (8/2001) Comdisco lays off 450 more, 3^rd Quarter shows $168 million loss

                (7/2001) -Comdisco + Execs face bankruptcy, many left holding the bag

               bag, assets for sale or sold, working on trying to get healthy by 2002, they say.

               ( 7/2001)  change of executive officers  (6/2001) reportedly considering  BK

                  (5/2001) Lays off 10% of staff, further cuts to be made

                ( 5/2001 ) Reports Second Quarter: $8 Million Loss, CEO  Pontikes

                takes early retirement a few weeks before formal announcement. Reports

                many losses to follow due to leases and loans with Dot Coms, among others.

PinnLease  ( 8/2001 ) A federal grand jury indicted PinnFund USA founder Michael   J.     

               Fanghella  20-count indictment; Nineteen counts in the indictment carry a

                  maximum penalty of 10 years   in prison and a $250,000 fine. One count –

                    filing false financial information  with the U.S. Department of Housing and  

               Urban Development -- carries a  maximum penalty of 30 years in prison and a

             $1 million fine. (8/2001) In  San Diego Feds file charges for filing false financial      

               statements  plus criminal  charges for bilking at least 166 investors out of $330 

              million after. Fanghella turns self in   ( 7/2001 )  Barbados Court Freezes

              PinnFund Exec's Assets      (6/2001) Leasing News considers it a “not guilty”

              judgment against Tommy Larsen,  but Larsen’s lawyer basically agreed to 

              comply with the temporary restraining order of March 23       

                  and agreed that Mr. Larsen would give an accounting of any possible gains he

               received that  rightfully belong to PinnFund. Since he gave in to everything the

             receiver wanted, he was not  held in contempt. The records shows that being

               acquitted or not guilty was not what  happened. The judge found he wasn't in

             contempt because, going forward, he  agreed to cooperate fully.   (6/2001) Judge

                Hands Down $109 M Default Judgment in PinnFund 

           Scandal.  Bounty Hunters Get the Nod to Go Get 'Em   ( 4/2001 ) Judge continues

            freeze of assets.

            (4/2001) Founder of PinnFund skips bail, judge issues arrest warrant

            ( 4/2001)  PinnFund out of money, closes all offices, including leasing.,

               newspaper stories say “Millions of dollars are gone.”

               (3/2001) PinnLease USA to Fold 47 Nationwide Offices-- $100 Million Fraud,

            reads like a tabloid story, perhaps largest fraud in West Coast history.

 

Drudge Report Extra

 

    Man Chops Off Testicle in Job Protest

 

LIMA, Peru (Reuters) - A Peruvian man who last year sliced off his penis to draw attention to his jobless plight on Monday chopped off one of his testicles in front of the parliament

building, police and hospital officials said.

 

``I'm doing all this to protest my lousy situation,'' Eduardo Veliz, 36, told doctors after his dramatic stunt.

 

Veliz, now a poorly paid laborer, hacked off his penis last September outside parliament after failing to meet the Congress head to ask for work. It was successfully reimplanted.

 

Witnesses said Veliz shouted at the door of Congress that he wanted to see Congress President Carlos Ferrero.

 

``When he couldn't see him, he got out a sharp knife and cut off his testicle,'' a policeman, who asked not to be named, told Reuters. Firefighters rushed over to Veliz, who was bleeding

heavily, and he was taken to a hospital where doctors said he suffered a ``traumatic castration'' of the right testicle.

 

``He's a laborer. Last year he was asking for work ... this time he wanted a pay rise because he says he earns a paltry wage,'' said Carlos Viera, spokesman at the Dos de Mayo hospital

which treated Veliz on both occasions. Peru's President Alejandro Toledo has pledged to create

jobs and alleviate the suffering of more than half the nation's 26 million people who live in poverty.

 

Despite his mutilation, Viera said Veliz could still enjoy ''a normal sex life.''

 

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“Good Day!”

 

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