|
August 24, 2001
Headlines--- PinnFund's Fanghella pleads not guilty to all charges Where is Erik Brown or Erik Boron of Preferred Capital fame? European American Bank/Equipment Lease Finance—Fred Anderson Wave of high-tech failures could be a deluge come fall Gateway's credit rating is lowered to 'junk' status Free “Firewall” for Personal Computers from “ the Computer Guru” Whitley Friday Car Survey Results
EXCLUSIVE Name of Nigerian Letter/E-Mail Writer Revealed, PLUS----- Option #7 ------------------------------------------------------------------------------------------------ American Express--- Leasing News is aware about situation regarding the Sierra Cities portfolio, specifically a group we all know well, and while RT told everyone to be quiet about it, the shadow knows as we have been sitting on this story since last year. Yes, many people knew about this “bomb.” Full story soon. editor ------------------------------------------------------------------------------------------ CIT--- Yes, we know the new CIT group fired some of their auto fleet and all of their truck division people. We are working on several stories re: cit: as indications they are also building up their broker/intermediary division. ( Bob Cragin tells me nothing, including the car he drives---calls it just a “company car. “ ) Bank of America and others are getting out of the fleet business, and so are many of the financial companies as the margins are not there, and the losses are as unemployment is rising. The new Tyco Group will come to the marketplace fully charged, ready to take on GE/Heller. And we will stop making Tempe, Arizona jokes as a good friend of ours told me he is moving his family there. editor _______________________________________________________________ PinnFund's Fanghella pleads not guilty to all charges By Bruce V. Bigelow SAN DIEGO UNION-TRIBUNE STAFF WRITER The months-long investigation into the evaporation of $330 million at PinnFund USA began to play out in different federal courtrooms yesterday, as two principals faced allegations of fraud and ill-gotten gains. In a brief appearance before U.S. Magistrate Louisa S. Porter, PinnFund founder Michael J. Fanghella pleaded not guilty to all criminal charges arising from the alleged scam. Fanghella, 50, who was dressed in a tan prison jumpsuit, faces charges of transporting millions in stolen funds across international borders and filing false financial statements with the U.S. Department of Housing and Urban Development. He is being held at the Metropolitan Correctional Center in downtown San Diego. Government lawyers contend that Fanghella bilked at least 166 investors out of $330 million sunk into PinnFund, a Carlsbad mortgage lender that ostensibly used investor money to fund high-risk home loans for people with blemished credit. While no new information was disclosed at Fanghella's arraignment, some new details about PinnFund's operations spilled out during a separate hearing before U.S. District Judge Marilyn Huff. Among the revelations was that Oakland resident James Hillman, a lawyer who raised investor money for PinnFund, made loans totaling $12 million in late 2000 to cover missed payments from PinnFund to investor partnerships he had created. Hillman's lawyer, Pam Naughton, disclosed the loans in a challenge to government claims that Hillman took more than $93 million in ill-gotten gains from PinnFund. Naughton argued Hillman made much less than that. Nevertheless, Hillman's loans apparently allowed PinnFund to continue operating for months before federal authorities moved against the operation. The Securities and Exchange Commission contends that PinnFund officials ran a classic Ponzi scheme, in which money from new investors was used to pay interest to earlier investors. Authorities say Fanghella diverted $109 million of investor money to fund his lavish lifestyle. Hillman maintains that he was just as duped as investors were. He has said that he thought he was raising money to underwrite subprime mortgage loans. Another revelation came yesterday from Anthony Dain, a lawyer who represents a San Diego investor group called Ardantz Associates. Dain told the court that Hillman convinced Ardantz Associates to invest $500,000 in PinnFund in October 2000, just months before Hillman withdrew $8 million of his own investments from the mortgage company. Huff convened the hearing to determine whether Hillman was using his gains from PinnFund to pay the lawyers defending him in a civil lawsuit filed by the SEC. Huff has frozen various assets in the case, including roughly $33 million controlled by Hillman. Hillman's lawyers, who have already racked up more than $1.25 million in legal fees, said they may not be able to continue defending Hillman unless Huff decides that Hillman legitimately earned some of his $33 million. Lawyers for investors, however, argued that all of Hillman's remaining millions instead belongs to their clients. "We don't want Mr. Hillman to go without a lawyer," said Tom Zaccaro, the SEC attorney handling the case. "We just don't want Mr. Hillman to pay for his lawyer with investors' money." The judge said she would consider the arguments before announcing her decision. ------------------------------------------------------------------------------------------------ Where is Erik Brown or Erik Boron of Preferred Capital fame? I wonder if you or your readers might help my company contact a professional from our industry who seems to have disappeared. I represent a company (name withheld) who was studying the Preferred Capital hiring model. Yes, the once famous company much published in your newsletter. One aspect that they seemed to do very well was on the ability to staff the high levels of new incoming talent in short periods of time. Rumor had it, that they could bring on 50-75 college educated employees per month. We attempted to contact the person responsible for that task a few years back with no avail. I understand he has now left the company and moved on. My company would like to contact the gentleman to do some consulting work on a hiring project we are about to undertake. I come to you has all attempts have left us no trail of this individual. If you or your readers can help us locate the individual I would be very grateful. I believe his name was Erik Brown or Erik Boron. P.S. Whether you print this or not, I want to say you do a fine job of keeping the leasing world up to date on industry trends and the future of our industry Thanks for the great updates a loyal reader. Sincerely, ( name withheld ) ( I always thought it was Murray who did the recruiting and have not heard of a Erik Brown or Boron. Please respond, and I will keep your name anonymous, if so requested. editor ) --------------------------------------------------------------------------------------------------- European American Bank/Equipment Lease Finance—Fred Anderson I thought that I would give you and the industry an update as to what is happening with all of us that were part of the Equipment Lease Finance Division of European American Bank now that the acquisition of our bank by Citibank, NA has been completed. We are in a transition phase right now with Citicapital and expect to be finished around September 17th, at which time we will have ended our employment with Citibank/Citicapital. After that date, we are looking to move as a group to another bank or finance company to start our operation up all over again and provide funding for lessors. At this time we are working with two banks that have expressed an interest in taking us on and we are open to talk to others who might have an interest in a "ready made unit" After September 17th, I can be reached at 516-822-2008 (my home telephone number) and my e-mail address at home will be LAnder9170@aol.com. In the mean time, our business telephone numbers and e-mail addresses are still valid. At this time I and my staff would like to thank all of you who have called, sent e-mails etc. to wish us well. As big as this industry is, it is still a small family when you receive the telephone calls that we did from members of this industry expressing their concerns for us. We thank you all very much.
Fred Anderson __________________________________________________________________ Free “Firewall” for Personal Computers from “ the Computer Guru” Whitley Most of the people in your industry have moved to DSL or cable for there internet service. This leaves you open for the new virus that hunt you, you do not have to do anything to get them. A firewall is need to stop this, put your wallet up I am going to give you a free fix for this go to www.zonealarm.com download the free home version (It works better than some of the $1000.00 Firewalls). If you are on a network install it on all computers and you will have to setup up the program to let other users see you. On antivirus software they all work just make sure you update every week, This is the reason 85% of user get virus, they forgot to update. Jerry Whitley (The Computer Guru) Technology Consultant Albany Guru Technology, Inc 229-435-3961 Fax: 229-436-4010 256 MB PC133 SDRam Memory for $62.00 AMD 1400 MHz System With 17" Monitor For $999.99 Visit The Web Page for more Details at www.ga-guru.com 3 New Puppies For Sale at www.ga-guru.com/puppies See Our New Product at www.para-track.com ----------------------------------------------------------------------------------------------- NAELB
Regional Conference October 19-20, 2001 Marina
del Rey Hotel & Marina, Marina del Rey, California -
Schedule of Events - Friday,
October 19, 2001 2:00 – 6:00 PM Exhibitor Setup
7:00
– 9:00 PM Networking Reception in Exhibit
Room (Exhibits Open) Saturday,
October 20, 2001 7:30 – 9:30 AM Continental Breakfast in Exhibit Room (Exhibits Open) 9:15 – 10:45 AM Working with Local Banks! Is this for you? Pros and cons with Hows and Whys. Speaker: John Winchester, Comco Equipment Leasing Group 11:00
– 12:45 PM Working Lunch: Ethics
and Legal Tidbits. A panel of brokers and funders discuss their thoughts on
ethical and legal issues facing the leasing industry. Moderator: Joseph Bonanno,
Esq., NAELB Legal Counsel 1:00 – 2:30 PM Meet with the Funding Sources. (Exhibits Open) 2:30
– 4:00 PM IRS Section 179 can make you
& your vendors money – This Year! The ITC is gone. What is ITC you ask? In the old days of leasing, December was one
of our busiest months of the year because of the Investment Tax Credit. We can still promote year-end business using
IRS Code Section 179. Your vendors will
recognize a new selling strategy, and perceive you as a valuable advocate. Your existing database of lessees (what better
a list of qualified leads can you get?) will have more incentive to obtain additional
equipment. You will make more money. What a country! Speaker: Bob Bell, Independent
Leasing Associates 4 ¾ Hours of Educational Workshops 5 ½ Hours of Networking with Funders and Brokers NAELB Regional Conference –
October 19-20, 2001 Pre-Registration
Deadline is October 5, 2001 On-Site
Registration Available after October 5, 2001 Hotel Information: Address: Marina del Rey Hotel & Marina 13534 Bali Way, Marina del Rey, California 90292 Room Rate: $119 Single/Double Occupancy Reservations: Call the Hotel Directly at 310-301-1000 - NOW! Quantity Conference Rates: NAELB Members: Broker – 1st Attendee $95.00 x ______ Broker – 2nd Attendee $75.00 x ______ Funder – 1st Attendee $135.00 x ______ Funder – 2nd Attendee $115.00 x ______ Exhibit Table: $115.00 x ______ Non- Members Broker – 1st Attendee $150.00 x ______ Broker – 2nd Attendee $130.00 x ______ *
Add $20 per registrant for on-site registration
go to www.naelb.org ----------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------------- Bob Homan’s Explanation of Nigerian Money Bob' s explanation of the origin of the "Nigerian e-mail scams" had me laughing so hard I couldn' t wait for the punch line. Unfortunately for him their wasn't one, leading me to worry that his explanation of a "Nigerian Pygmy" connection was sincere. Nomadic Nigerian Pygmies don' t have Sun Workstations in the bush, nor are they proficient hackers that know how to relay spam off of unsecured Exchange servers. They are too busy trying to catch their next monkey for dinner without falling out of their loin cloth . The real culprits are typically young, white, American male hackers that sit around their computers trying to figure out how to use their spamming/relaying knowledge to steal from people like Bob Homans. If his explanation was a joke, you got me. If it wasn 't, please be advised that Bob Homans is the most gullible of all the village idiots this side of Nigeria, and you should take him off of your list and get him a subscription to National Geographic. PLEASE publish my reaction. Thank you. David Leidy www.flexlease.com dleidy@flexlease.com from Bob Hamans: If you read my analysis closely you will notice that it was written in response to an e-mail that Kit Menkin sent me. In that e-mail Kit theorized that the person sending all these e-mail, purporting to be Nigerians, or whatever, were being sent by some "writer" somewhere. I was merely trying to help Kit out, suggesting a possible identity of the "writer," and where he or she might be "writing." I have saved a copy of Kit's e-mail, and would be happy to forward it to you upon request. As for the National Geographic I already subscribe. I recommend it. -- Bob Homans/Norden Capital ( Wow, I didn’t know what a hot topic this was. Several said I had a full book collection, which we may have. Officials from he US Post office, Department of Justice, Attorney General, Consumer Affairs, OSHA, and the Fair Water Act also want to know. Years ago, Bob Jacobson told me while playing cards that if you put a million monkeys in a room with a million word processors, one of them will type a good lease proposal. Okay, I will tell you where those letters come from: The “Gazelle” . He is waiting to come back, but in the meantime, but needs to raise some more money. In interest age, you can bounce from anywhere, and the "Gazelle" knows how to bounce back better than anyone else.. If you don’t believe me, go here: Nigerian Stock Exchange http://www.wallst-intheblack.com/pub/nig.html editor ). __________________________________________________________________ August 21 Day in History Did you mean to run the Quantril item and the lawyer item side-by-side, or was it by chance? You must be getting playful in your old age; the Bar Association probably is the best place to store lawyer jokes! Menkin history? Bob Teichman, CLP Teichman Financial Training 3030 Bridgeway Sausalito, CA 94965 Tel: 415-331-6445 Fax: 415-331-6451 e-mail: BoTei@aol.com "Providing education and training to the equipment leasing and financing industry." ( Yes is the answer. Bob catches everything.. Let me add no one commented on the Drudge Peruvian story, right after the up-dated List. Trudi Kovats-Griffin told me Leasing News had been boring the last few days, and to spice it up that day, so I did. editor ) ------------------------------------------------------------------------------- Option #7 I thought you all would get a kick out of this. Just giving you a break from your long day at work. 1. Call Deutsche Bank / National Discount Brokers at 1-800-888-3999. 2. Listen to ALL of the options (it only takes 10 seconds). 3. Press 7 and listen. EVERY company should have an Option 7 Donald Dulmage Don@PanoNet.com --------------------------------------------------------------------------------------------------- Friday Car Survey ( Chronological Order as Received ) I am a proud owner of a '91 Lincoln Mark VII with 130,000 miles, still runs like it was a brand new car, having said that I probably jinxed myself now and it will break down tomorrow! Bill Schimmel ICTKID2@aol.com Advantage Leasing Co. Midwest city, Ok. ~~~ A 1974 Volkswagen "Thing". I am the original owner (my other cars are Audi Quattros). Charlie Meaker Mrlease@aol.com Lease Financing, Inc. 800-478-2330 - Fax 520-398-2652 Since 1987 - Financing for Business Equipment and Modular Buildings --- End of Original Message ~~ You have to like a woman who drives a 67 Alpha Romeo Giulietta, and a Camaro convertible. ( Ginny Young Aug 21 ) I've got a E320 4-Matic and a new Pathfinder. We have a classic car store near us in Southport, CT. They have a really cool summer car for sale. A '67 Jeepster convertible, Aqua and white. Its 4-wheel drive w/Automatic. Keep up the good work. Ray Leone RAYLEONE@aol.com ~~ 2001 BMW X5 Thought I'd chip in my two cents on the car survey (been on vacation for a couple of weeks). I drive a 2001 BMW X5. Picked it up at the factory... did the driving school and factory tour. It was great! Bob Chlebowski rchlebowski@captechleasing.com ~~ Three Cars please withhold my name (don't want anyone to think I am bragging or making too much money): I drive 3 cars Jaguar XJ year 2000 primary car Mustang 35th anniversary- only 1000 made (summer car, beautiful day) has 7000 miles after 3 years Lincoln Navigator for those cold rough winter days I too like old furniture, but damn my cars better have the best damn technology around ( name withheld ) ~~~ 2001 Cadillac; license tag is "LESSOR" 46' Silverton Aft Cabin Motor Yacht; boat name is "Running Rate" Bob Bell bob@independentleasing.com ~~~ I drive a burgundy 1980 El Camino Conquista. Great cruising car. Only incident: Stalled in traffic last year, attempted to push it to the side of the road and shred an Achilles tendon. 4 months in a cast and 8 months of therapy later, still wouldn't trade it in for nuthin'. Jim Buckles Preferred Broker Solutions http://www.pbs4u.com System 1 Sales and Support Specialists (866) 352-8665 phone (435) 514-3787 fax ~~~~ I wasn't going to get into this however, if Jim Fleming can post / boost about his Mountaineer, (and he lives in Florida . . no mountains Jim) then I have should have plenty of room. I drive a 1997 4x4 Suburban to prospect (inland) I captain a 28' Wellcraft to prospect (near ICW or Eastern Ports) I drive a 2001 Nissan 4x4 Crew Cab, to pick up financials and/or commitment fee, then I drive my 1969 Cadillac Convertible all the way to the bank to make a deposit. Leasing was much simpler in the 80's !! Jeff Murray U.S. COMMERCIAL LEASING, INC. 800-640-USCL Ext #42 ~~~~ For Sale--- Currently drive: 1998 S420 with 50,000 miles (Work car) 1999 Porsche 911 Cabriolet with 4,000 miles (Play car) Need to sell both and buy a 15 passenger van due to recent addition of Quadruplets which added to the 9 year old and 6 year old twins gives us 7 kids and a nanny making a car that seats 10 plus cargo the only choice. Can you say "Youth Bus"? Anyone interested in a great deal on a Porsche or a Mercedes should contact me right away :-) Jeff Beier North American Capital jeffbeier@nacapital.com (949) 425-0259 _________________________________________________________________ Wave of high-tech failures could be a deluge come fall By Andrea Orr REUTERS PALO ALTO, Calif. – The dot-com storm isn't over. Even after waves of dot-com failures have washed ashore in recent months, many other struggling companies are heading toward the rocks. For every company like the Internet grocer Webvan Group Inc. that called it quits this summer, there remain others such as software maker NetObjects Inc., that are fast running out of cash, and options. NetObjects, which makes software for building Web sites and was to have been a big hit in a wired world, last week warned it had only enough money to last through through Sept. 30. The company is still searching for ways to stay in business, but its 35 cent share price shows how much faith investors have put in its prospects. In fact, a recent count based on Reuters data turned up some 482 U.S. companies, including 24/7 Media Inc. (), Critical Path Inc.and Netcentives Inc.), whose stocks are below $1 a share. Many of them are technology companies. Such a depressed stock price does not always mean imminent death but often tends to signal a predicament too deep to dig out of. Think it was a rough summer in the technology industry? Just wait until the fall. "There are going to be a lot more companies failing," said Greg Roston, deputy director of the Institute for Economic Policy Research at Stanford University. "There are a lot of money-losing companies that had said they were fully funded for a year, and now that year is coming to a close." PUTTING PROFIT ON A DISTANT HORIZON While the bust that began in the dot-com sector more than a year ago continues to strike consumer Internet companies, it is also spreading to other areas of technology from software to telecom. The demise of these companies tends to follow a pretty standard script. Their losses mount as they discover they had mistakenly counted on a robust economy and lavish consumer spending continuing forever. Now that everyone has cut back, these businesses have to put profitability on a more distant horizon, and they have to find more cash to bridge the gap. While some will find a way to make it through the downturn, all forecasts are that the majority of them cannot be saved. Consider the financial condition of a few of the businesses that have survived to date, but which now trade at barely $1, or even lower: - ExciteAtHome Corp., whose money losing Internet content and access business has close to $1 billion in debt, stunned investors last month when it said it had already burned through most of the $185 million in emergency financing which was supposed to carry it well beyond this year. With a stock at risk of being delisted and no sign of its losses abating, auditors say its future is in doubt. - Drugstore.com Inc. won a quick and decisive victory over now-defunct rival PlanetRx, but it is still not expecting to turn a profit until the year 2004. A problem, since it is due to run out of money next year. - Ask Jeeves Inc. lost more than $20 million from its Internet search business in the latest quarter, and withdrew an earlier forecast to turn a profit by the end of this year, with revenue below expectations. One of the biggest gaining IPOs of 1998, Ask Jeeves stock has crashed from an all-time high of $169 to just over $1 a share this week. - Critical Path Inc., which makes software to support corporate email systems, suffered declining revenue and an $81 million net loss in its latest quarter. The company is trying to stretch out its limited cash by slashing jobs and consolidating offices. - Globalstar Telecommunications Ltd , the mobile satellite telephone company, is on the brink of bankruptcy. After cutting half its staff this month, it said it could make its cash last the rest of the year, but probably not much longer. SILENCE FROM WALL STREET What does Wall Street have to say about these companies' prospects? Not much. In an insult worse than harsh criticism, financial analysts are simply ignoring the same stocks that were on the top of many brokers' recommended lists. Critical Path, which a year ago was trading at $79 a share and had 17 analysts covering it, now is worth just 38 cents a share and is followed by just three analysts. The group of analysts covering Globalstar has dwindled from 10 a year ago to three today. Conference calls to discuss financial results, which used to be chummy back-slapping sessions between management and Wall Street, have turned into somber and quiet events where it is sometimes hard to tell if anyone has dialed in. The volumes of companies still struggling to survive is especially striking considering how many have already failed. So far this year, some 377 stocks have been delisted from U.S. exchanges for failing to meet minimal financial requirements, according to a count based on data from the exchanges. That already tops the than the 337 that were delisted in all of 2000 – also a difficult year that marked the start of the dot-com bust. By another measure, corporate bankruptcies are on track to beat last year's record level. So far, some 127 publicly traded companies have filed for Chapter 11 bankruptcy protection, vs. 176 for all of last year, said George Putnam, publisher of The Turnaround Letter, a newsletter that looks at investment opportunities in distressed companies. "Do we expect more bankruptcies? Yes," said George Putnam, publisher of The Turnaround Letter, who figures things will get somewhat worse before they get better. "I'd say we are nearing the peak, but I don't know if it will be this year or next." What all these bleak numbers do not always capture is the steely resolve of some companies to make things work. Among those that are no ready to give up the fight, is Exodus Communications Inc. the struggling provider of Web hosting facilities, which is expected to be almost out of money by year end. After drifting below $1 a share earlier in the summer, the stock enjoyed a relatively strong burst as investors speculated that a business with more than $300 million in quarterly revenues and extensive physical assets that are critical to the digital economy, was bound to find a savior. Perhaps. Then again, others believe that today's tough economy is nothing compared to what will happen in the fall, when consumers really start to feel squeezed by the recession and curtail discretionary spending even further. David Tice, a portfolio manager who has for years been forecasting a long and deep recession, sees a high-tech industry that is swimming in excess capacity. In just one dire sign he offers, Tice estimates that only about 390 million of the 650 million to 700 million cell phone handsets on the market this year will sell. "There's much worse to come," said Tice. "It starts to build on itself as more people get laid off, and it goes into a downward spiral." --------------------------------------------------------------------------------- Gateway's credit rating is lowered to 'junk' status ( Aug. 17 Dell posts $101 million loss as demand for PCs dwindles ) Company a 'fallen angel' after S&P's downgrade By Bruce V. Bigelow UNION-TRIBUNE STAFF WRITER Gateway officially became a fallen angel yesterday, when Standard & Poor's downgraded the San Diego computer maker's credit rating from "investment grade" to speculative -- or "junk" -- status. On Tuesday, the independent rating service said a record 75 companies have suffered a similar fate since the beginning of 2000. Companies, or issuers, that fall from investment to speculative grade are known as "fallen angels" on Wall Street. With yesterday's action, Gateway has joined the ranks of such noteworthy financial casualties as PG&E Corp., Edison International, Comdisco and Lucent Technologies. In yesterday's action, Standard & Poor's reduced both Gateway's corporate credit rating and the company's bond rating by two notches, to "BB" from "BBB-minus." The "BB" rating is S&P's second-highest junk grade. Its rating outlook for Gateway is negative. "The downgrade reflects extremely competitive industry conditions, a declining revenue base, and the company's expectation that it will not return to material profitability until fiscal 2002," Standard & Poor's said. A lower credit rating can raise a company's cost of borrowing, particularly in the short-term commercial paper market, a popular source of financing. The price of Gateway shares fell by 21 cents, or more than 2 percent, to close yesterday at $9.79 in regular trading on the New York Stock Exchange. Gateway said that S&P failed to consider a planned restructuring at the computer maker. "S&P's outlook is based on the current market environment and our current business," said Donna Kather, a Gateway spokeswoman. "We're confident that the strategic restructuring steps we're considering will have a positive impact on our business moving forward, and we look forward to sharing those details in the near future." Desktop computer makers have come under intense pressure this year as demand slackened and declining sales squeezed profit margins. Gateway, which sells most of its personal computers to U.S. consumers, has seen its market share erode while Texas-based Dell made gains, apparently by slashing prices. Both Gateway and Dell sell custom-built PCs directly to customers, but Dell has a much larger percentage of the corporate market. Amid much fanfare earlier this year, Gateway said it was refocusing its efforts on the company's core PC business through a "back-to-basics" strategy. The company has sought to cut costs by closing some of its retail stores and laying off thousands of employees. Gateway said that plan didn't work and on July 19, reported a second-quarter loss of about $9 million, or 2 cents per share, excluding special charges and a write-down of an investment. That was down sharply from a profit of $118 million, or 36 cents a share in the year-ago quarter. Sales fell to $1.50 billion from $2.21 billion in the year-ago quarter. More recently, Gateway revealed plans to pull out of its European markets by closing its operations in Ireland and the United Kingdom. The company also is considering pulling out of Japan, Australia and New Zealand. "Its challenges are large, given the current abysmal state of the PC market," said John Moore, an analyst at Moody's Investors Service, which has assigned Gateway "Baa2" issuer and bank loan ratings, its second-lowest investment grade, with a negative outlook. The company, he said, "has a good-looking balance sheet," but due to industry pressures "it would take an unforeseen, fabulous acceptance of a new PC cycle, perhaps spurred by the introduction of Windows XP, to change our outlook back to stable." Gateway has a $300 million unsecured bank credit line, including a revolving line of credit and a subfacility for letters of credit, but had not drawn on the revolving line as of June 30, according to a securities filing. Reuters contributed to this report. --------------------------------------------------------------------------------------------- Asian economies struggling, but this time it's tech-driven By Regan Morris, Associated Press, 8/24/2001 14:59 SINGAPORE (AP) Three years after a devastating financial crisis, Southeast Asia's once high-flying economies are back in trouble. But the current slowdown is different in nature, and one that few expect to be as bad. A spate of gloomy economic data has some fearing a repeat performance of 1997, when massive capital flows out of emerging markets battered Asian currencies and pushed the region into recession. Singapore is in recession now and other economies in the region may follow suit. This time around, however, the problem is slack demand for high-tech exports. ''It's anything but a crisis deja vu,'' said P.K. Basu, a Singapore-based economist with Credit Suisse First Boston. Structurally, Southeast Asia is very different place than it was in the late 1990s. Debt levels have declined. Currencies are no longer easy targets for speculative attacks. Most Asian economies have abandoned fixed exchange rates, making currencies more flexible. Adrian Foster, an economist with Nomura Securities, says Southeast Asia's problems now are mostly cyclical, rather than systemic, because the region is so heavily reliant on exporting disk drives and computer chips to the United States. The countries currently suffering the most Singapore, Malaysia, and Taiwan are the ones most dependent on computer chips and other high-tech exports. Those same countries suffered the least during the 1997-98 Asian crisis. Electronics make up roughly 70 percent of Taiwan's total exports, while they account for about 60 percent for Malaysia and Singapore, according to their governments. The heavy demand for high-tech exports in 1999 and 2000 had a negative impact on Asia because it allowed many countries to delay cleaning up their banking systems and corporate sectors. After all, why bother with painful reforms in the middle of a boom? But some reforms have taken place. ''We don't seem to be as fragile now as we were going into '97,'' said David Cohen, an analyst with Standard & Poor's MMS International. ''When problems came, everyone ran. Nobody's quite so wide-eyed anymore.'' The thought of foreign investors yanking their money out of Southeast Asia is not as terrifying simply because the region has failed to attract much foreign investment since the crisis. China now lures more money than all 10 countries in the Association of Southeast Asian Nations combined. While China and fellow giant India have bucked the trend of global gloom, Chinese and Indian appetites for electronics have not been able to offset the slump in U.S. consumer demand. With the U.S. economy expected to grow at an anemic rate over the next year or so, it is urgent for Southeast Asian economies to restructure their economies, analysts say. Wong Keng Siong, a regional economist with Dai-ichi Kangyo bank, says the slowdowns will reinvigorate the reform process, but that Asia has already come a long way. ''Most of the weak banks are already gone,'' Wong said. ''What you have left with is a crop of banks that are generally in better shape.'' Although Thailand and Indonesia need to make major reforms in their banking systems, most of the electronics-dependent countries have already done so, he said. Tiny, trade-dependent Singapore, which weathered the last crisis better than most, may end up being the hardest hit by the current electronics slump. Exports of electronic goods fell 21.2 percent to 4.8 billion Singapore dollars ($2.6 billion) in June, while the sale of computer chips fell 31 percent to 1.2 billion Singapore dollars ($650 million). The data was worse than expected. Singapore, Malaysia and Taiwan must work to diversify their economies and develop stronger services industries, economists say. ''Economies that have a bigger share of services tend to exhibit less volatile growth,'' Wong said. ''Manufacturing tends to be more susceptible to boom and bust.'' -----------------------------------------------------------------------------------------------
www.leasingnews.org |