« September 03, 2006 - September 09, 2006 | Main | September 17, 2006 - September 23, 2006 »
Andre Agassi, who retired from tennis earlier this month, showed that he retained his exquisite sense of timing on the tennis court well into his 30s. His timing in real estate may not be quite so good. Ben Cannelman reports in the Wall Street Journal:
Tennis star Andre Agassi has cut the price on his San Francisco-area home -- again.Mr. Agassi and his wife, retired tennis star Steffi Graf, are now asking $21 million for the 11-bedroom home, $2 million less than they paid for it five years ago. The couple first listed the house for $24.5 million in 2003, and dropped the price to $22 million last year. (The house has been on and off the market several times.)
The 3.5-acre property in Tiburon, across the bay from San Francisco, has views of San Francisco and the Golden Gate Bridge. The estate features two pools, three spas, a hydrotherapy waterfall and a tennis court. The 10,500-square-foot main house includes a theater, solarium, music room and a wing with four bedrooms for children or guests. There's also a detached four-bedroom staff quarters and a separate guest house. The property includes a vacant, half-acre lot that can be developed separately.
Posted by dan at 01:12 PM
We've got plenty of sympathy here for CEOs of retailers who complain that exhausted consumers are hurting their sales and margins. But sometimes retailers' sales suffer because people just don't like the stuff they have on offer. Take Pier 1 Imports. The chain reported a dismal quarter yesterday. Total sales were down 12.5 percent, and same-store sales were down a whopping 14.8 percent. Today's Wall Street Journal quotes CEO Martin Girouard as saying that while gas prices have fallen in recent weeks "consumers are still concerned with the macroeconomic situation and focused on buying needs and not wants." That may be true, but a drop of nearly 15 percent in same-store sales -- in an environment in which the economy is still growing in real terms, which is to say that everybody's same-store sales are growing -- is pretty bad.
Posted by dan at 01:05 PM
Saritha Rai reports in the New York Times on the astonishing growth of cell phones in India.
India has become the fastest-growing cellular market in the world, adding a net 5.9 million cellular subscribers in August, the Cellular Operators Association of India said this week. The gain outstripped China’s increase of 5.19 million subscribers.Large areas of India remain too poor or remote to have cellphone service, even though the middle class is growing in many cities.
As poverty slowly eases, the explosive growth in cellphone use is expected to continue in this nation of 1.1 billion people. Factors like low calling charges and cheap handsets are also behind the subscriber gains.
India’s charges per minute are said to be the lowest in the world, as service providers offer deals that include a lifetime of unlimited incoming calls for a one-time fee of 1,000 rupees ($21.75).
“Everybody can afford it,” said T. V. Ramachandran, director general of the Cellular Operators Association — “the teawallah, the dhobi and the sabsiwallah,” conjuring up the traditional tea vendor, launderer and vegetable seller.
Most of the growth has been recent. When mobile phone services were introduced in India in 1994, only the very rich could afford the handsets, which cost hundreds of dollars, along with the service. But after the introduction of competition in telecommunications that year, private companies challenged the government-owned telecommunications provider, and prices fell.
India currently has more than 123 million mobile phone subscribers, well behind the 430 million in China, and it is not expected to catch up for many years.
According to the Cellular Operators Association data, India’s half a dozen main cellphone service providers and several smaller ones now cover less than half the country’s population. Still, that is an increase from about a third of the population in 2005.
Posted by dan at 12:50 PM
Floyd Norris has a good column ($ required) today on Dell's poor market-timing record when it comes to buying its own stock. There's another reason Dell may have decided to stop buying back its own stock. So many of the options it has isssued in recent years are underwater, which means they won't be exercised, which means the company doesn't have to buy back shares to prevent dilution.
Posted by dan at 12:47 PM
A sign of the top in the hedge fund business? Jenny Anderson reports in the New York Times on the prospect of a huge hedge fund going public.
Posted by dan at 12:45 PM
Rebecca Knight reports in the Financial Times that top U.S. business schools, fearful of losing market share to other professions, are looking for younger applicants.
Top US business schools are recruiting younger, less experienced candidates in an effort to boost applications and head off competition for the best students from other graduate programmes such as law and public policy.In an attempt to lure new students, leading business schools - including Harvard, Stanford, the University of Chicago and Wharton - have moved away from the unofficial admissions prerequisite of four years' work experience and instead have set their sights on recent college graduates and so-called "early career" professionals with only a couple years of work under their belt. . . .
Applications to full-time MBA programmes plummeted during the late-1990s internet boom. While applications have rebounded over the past couple of years, they are still not at the levels they were prior to the technology bubble, according to the Association to Advance Collegiate Schools of Business, the industry body.
Meanwhile, applications to law schools have risen 16 per cent in the past five years, according to the Law School Admission Council. Applications to public policy schools have also increased. Both these graduate programmes tend to require less work experience and are therefore inclined to admit a large portion of new graduates.
Business school admissions officers said the new drive to attract younger students was in part the result of a realisation that they had inadvertently limited their applicant pool by requiring several years' work experience. Talented students who might otherwise have gone to business school instead opted for a law or policy degree because they were intimidated by the expectation of work experience. . . .
So far, efforts to attract younger students are paying off. The incoming crop of students at leading US business schools is younger and less professionally seasoned than in years past. At Stanford, for instance, the average number of years' work experience for the incoming class is 3.8 years, compared with an average of five years in 2001. About a dozen students in the class of 370 are straight from university. At MIT's Sloan School of Business, the average age of MBA candidates has been steady at 28 for many years but this year fell to 27. At Wharton, where there had been a de facto admissions policy of no fewer than four years' work experience, 3 per cent of this year's class of 800 students have less than two years' work experience.
The class also has 10 students who are new college graduates. Harvard Business School has also had success in encouraging younger applicants by doing away with the $235 (€185, £125) standard application fee.
At the University of Chicago, roughly 10 per cent of the incoming class have less than three years' work experience under their belt, compared with 2 per cent five years ago.
Posted by dan at 03:53 PM
Foreclosure rates are on the rise. Danielle Reed reports in the Wall Street Journal:
Online foreclosure-data service RealtyTrac of Irvine, Calif., said yesterday 115,292 properties nationwide entered some stage of foreclosure last month, a rise of 24% from July and nearly a 53% increase from a year earlier.Also yesterday, Foreclosure.com of Boca Raton, Fla., which also tracks foreclosures nationwide, said new residential foreclosures fell by 6.7% in August from July to 26,255 nationwide. The company's figures, however, show that foreclosures are up 7.3% compared to August 2005.
The divergent results can be explained by the way each company counts foreclosed properties. RealtyTrac data includes properties in the early stages of a foreclosure proceeding, even before the bank actually owns those properties. About 60% of these get remedied or the properties are sold before they get to the auction stage, said Rick Sharga, vice president of marketing for RealtyTrac. . . .
Foreclosure.com noted that the West was becoming "an emerging foreclosure hot spot," with new foreclosures in Arizona up 155% in August from July. Foreclosures in California were up 32% and New Mexico saw a 10% increase.
And Bloomberg reports, by way of the New York Times
Foreclosures on prime adjustable-rate mortgages rose to a four-year high in the second quarter, a sign that more homeowners with good credit ratings are having trouble paying their bills.The share of the loans entering foreclosure, which occurs when a lender tries to seize property, climbed to 0.27 percent at the end of June, from 0.21 percent three months earlier, according to a report yesterday by the Mortgage Bankers Association in Washington. . .
The rate of subprime ARM’s — representing lending to people with poor credit histories — that were entering foreclosure rose to 2.01 percent, the highest since the fourth quarter of 2003, the report showed.
Posted by dan at 10:42 AM
Miriam Jordan of the Wall Street Journal follows up on the extraordinary story of Danel Padilla Peralta, the illegal immigrant, who graduated Princeton as salutatorian. Apparently, the U.S. government isn't particularly interested in keeping him in this country.
Dan-el Padilla Peralta, an illegal immigrant studying at Princeton University, last spring risked his future by turning himself into U.S. authorities. The star student wanted to accept a prestigious scholarship to attend Oxford University in Britain, but he faced being barred from re-entering the U.S. for a decade if the U.S. government didn't change his immigration status.Tomorrow, Mr. Padilla will leave the country to begin his studies at Oxford's Worcester College. But his future remains in limbo, and he has no guarantee he can come back to the U.S.
Mr. Padilla, the subject of a front-page profile in The Wall Street Journal in April, was brought to the U.S. by his parents at the age of four from the Dominican Republic and overcame a childhood in homeless shelters and slums to become an award-winning classics student at Princeton. After he got the Oxford scholarship, Mr. Padilla asked the U.S. Citizenship and Immigration Services to adjust his immigration status, citing the extraordinary circumstances in his life -- including moving 13 times and being abandoned by his father -- that had prevented him from addressing his situation sooner.
When his case became public, Mr. Padilla benefited from a high-profile campaign on his behalf. Senators and congressmen wrote letters, and the case was featured on prime-time television newscasts.
But immigration officials weren't swayed. Yesterday, a USCIS spokesman said that "a decision has not been made in his case." But officials familiar with the situation said the immigration agency wouldn't grant Mr. Padilla's request out of concern that would send a signal to thousands of other illegal immigrant students that they deserved similar treatment. . . .
Mr. Padilla, who maintained a 3.9 grade-point average in college, said he had nonetheless decided to take the coveted two-year Sachs scholarship, which is awarded each year to one Princeton graduate. "Going to Oxford has been a dream of mine for a long time, and the opportunity to study there has me practically in raptures," he said. He'll also be able to visit the Roman and Greek sites he has only read about in books. Before he even starts his studies, he said, "I'm thinking of spending a weekend at Hadrian's Wall," a Roman monument in the north of England.
Once at Oxford, Mr. Padilla plans to apply to the U.S. for a discretionary waiver. If granted, the waiver would enable him to gain admission to the U.S. as a tourist on a temporary basis despite his previous unlawful presence. He would apply for such a waiver at the U.S. Embassy in London, which would then recommend action on his behalf by U.S. Customs and Border Protection.
It's possible the publicity generated by Mr. Padilla's case will help him secure waivers when he needs them. Mr. Yale-Loehr said he is "cautiously optimistic" about the prospect of winning such reprieves.
But if Mr. Padilla is denied a waiver, he will be stuck outside the U.S. for 10 years. "I am hopeful that the waiver will allow me to visit my family and friends," he said. In particular, Mr. Padilla, who was raised in New York City, hopes to attend his U.S.-born brother's high-school graduation in May.
Posted by dan at 10:38 AM
My latest in Slate, on the rash of blue-chip CEO dismissals.
Posted by dan at 10:36 AM
Gregory Zuckerman has a good piece in the Wall Street Journal on the mediocre performance of some big-name hedge funds this year. Should be a lot of interesting quarterly and annual letters this year.
Some of the most hallowed names in the hedge-fund world are producing very human returns this year.They've been dogged by confusion about where interest rates, stocks and commodity prices are heading, and poor bets on emerging markets and housing-related shares.
Jack Meyer, the former investment manager of Harvard University's endowment assets, set a record earlier this year by raising $6 billion for his new hedge fund, Convexity Capital. But it has produced returns of roughly 1% so far this year, after accounting for fees charges by the fund, according to people familiar with the results.
Another high-profile start-up, TPG-Axon, a $6 billion fund launched by Dinakar Singh, who previously ran Goldman Sachs Group's in-house trading, was up almost 3% through August after fees, according to an investor.
Mr. Meyer and a representative of TPG wouldn't comment on their results. Neither group discloses its performance publicly.
The Dow Jones Industrial Average is up more than 7% this year, by contrast. The payoff from owning short-term Treasury bills also has been greater than the returns of these prime-time funds. Some hedge-fund investors expect more, since these private investment partnerships, historically for the rich and institutions, are able to make bets on all kinds of global markets -- and in recent years have often scored big.
Meanwhile, the main hedge fund run by iconic investor Louis Bacon at Moore Capital Management was up only about 1.5% through August, while a big Moore bond fund was down about 3%, according to investors. Paul Tudor Jones's $4.7 billion Tudor B.V.I Global Fund Ltd., which makes bets on global "macro" trends, was up less than 3% through August, according to investors, and Richard Chilton's $800 million Chilton International Ltd. fund is down about 3% this year.
Representatives of Tudor, Moore and Chilton wouldn't comment, and don't publicly disclose performance.
Posted by dan at 10:32 AM
Old folks have more housing debt today than they did in the past. Tara Siegel Bernard reports in the Wall Street Journal:
"Older Americans are carrying larger mortgages into retirement for longer periods of time, which means they risk coming up short unelss they rein in consumption or boost their savings, a study found. . . .
Rising home-equity values, coupled with low interest rates, contributed to an increase in teh percentage of households holding second mortgages across age categories. But the jump in percentage of older Americans with second mortgages was notable: nearly 20% of respondents in their 60s reported a second mortgage, up from 5.1% in 1990 and 7.0% in 1980. And almost 18% of those in their 70s reported holding a second mortgage in 2000, up from 2.3% in 1990 and 8% in 1980, according to the study by Adolph A. Neidermeyer and Richard A. Riley, Jr., professor and associate professor of accounting, respectively, at West Virginia University in Mortgantown, and Natalie Wesley, a McNair Scholar at the same university."
The study is in the September issue of the Journal of Financial Planning.
Posted by dan at 10:26 AM
Jane Kim reports in the Wall Street Journal on the latest wrinkle in housing-related credit.
Coming up with the money for a down payment on a new condominium may soon be as easy as charging it: American Express Co. is expected to announce today that it will allow some customers to use its cards to make condominium down payments.For now, the service appears to be limited to a select few: luxury-condo buyers in Manhattan. American Express is rolling out the program with New York real-estate firm Moinian Group, for one of its properties currently under construction -- the Atelier condominium in Midtown Manhattan. Both companies say they plan to expand the service to other properties and partners.
For condo buyers, the deal will allow them to earn reward points or frequent-flier miles on big transactions, while extending the amount of time they have to meet the down-payment requirements and eliminating the hassle of getting certified checks. Buyers will earn one point for every dollar charged.
Joseph Moinian, Moinian's chief executive, says the company is offering the service as an amenity to attract high-end condo buyers.
Bill Glenn, American Express's head of merchant business, says the move is part of the company's efforts to expand the ways its clients can use its cards. The companies didn't disclose the terms of the agreement, although Moinian will pay American Express a fee on each transaction. The condo buyer won't be charged an additional fee.
American Express says the program is available across all of its cards, including its bank-issued cards. Since AmEx charge cards -- Green, Gold, Platinum, and Centurion -- don't have preset spending limits, cardholders will be able to charge the large amounts required for down payments.
Posted by dan at 10:20 AM
A couple weeks ago I speculated that Time Warner might be tiring of its magazine businesses, and that management might possibly sell off Time, Inc. Well, today the company announced it would put a bunch of its smaller magazines on the block. Romenesko has the memo.
Posted by dan at 04:52 PM
If doctors can be bought by pharmaceutical companies for this little, how come it costs patients so much to go see them? Andrew Pollack reports in the New York Times:
Stanford University Medical Center will prohibit its physicians from accepting even small gifts like pens and mugs from pharmaceutical sales representatives under a new policy intended to limit industry influence on patient care and doctor education.The new policy, which the medical center is expected to announce today, is part of a small but growing movement among academic medical centers. Yale and the University of Pennsylvania, for instance, have announced similar policies.
“We want to secure the public trust to value what happens in academic medicine,” Dr. Philip A. Pizzo, dean of the Stanford School of Medicine, said in an interview.
Posted by dan at 11:22 AM
My latest in Slate, on the plight of 9/11's financial/business first responders.
Posted by dan at 08:34 AM
Ever wonder why Europeans are so into alternative energy? It's because they have to rely on Russia for a large chunk of their natural gas and oil. Stefan Wagstyl's article ($ required) in today's Financial Times shows why that is potentially worrisome:
Russia plans a massive increase in the scale of its exports of oil and gas to Asia in its quest to expand its political and economic role as a global energy supplier, Vladimir Putin has said.According to the Russian president, it plans to export 30 per cent of its oil and gas to Asia in 10-15 years compared with 3 per cent today.
Mr Putin said Russia would continue to "behave in a responsible way" in the market. But his ambitious target will raise concerns in the European Union, the biggest importer of Russian energy, that its supplies might one day be affected by the flow of oil and gas to Asia.
Posted by dan at 08:55 AM
The Financial Times concludes that seven of the top ten business schools in Europe are in. . . .France.
Next they'll tell us that seven of the top ten restaurants in Europe are in Scotland.
Posted by dan at 08:51 AM
Interesting article in the Wall Street Journal on GE CEO Jeffrey Immelt's first five years at the helm.
When Jeffrey Immelt became chairman and chief executive of General Electric Co. in the days before Sept. 11, 2001, it was the house that Jack Welch built. Today, GE is beginning to look less like his predecessor's company and more like his own.It's more focused on increasing revenue through new technology. Mr. Immelt stresses marketing and customers while pulling back on some internal processes, such as the Six Sigma quality program.
It's more collaborative and less transient. Mr. Immelt keeps managers in jobs longer, to take advantage of their expertise. He has broadened his circle of key advisers and describes GE's culture as "aggressive but nice."
The changes highlight Mr. Immelt's departures, in both style and substance, from the legendary Mr. Welch. Inside GE, the atmosphere is so different, "I can cut it with a knife," says David Calhoun, who resigned last month as vice chairman to become CEO of Dutch market-researcher VNU. . . . .
Simultaneously, Mr. Immelt is pushing GE to be a more global company. He travels at least twice a year to both China and India. Revenue from outside the U.S. is estimated to nearly double to $80 billion this year, from $44 billion five years ago. Globalization also means creating a more diverse work force. The number of non-U.S. citizens among GE's top 500 managers has tripled since 2001.
It's more global. GE expects nearly half of its $163 billion in revenue this year to come from outside the U.S., up from 40% in 2001. Mr. Immelt moved the headquarters of the health-care unit to near London, the first time a big GE division has been based outside the U.S.
Posted by dan at 08:44 AM
If anybody out there thought the Cold War was still going on in any way, shape, or form, this should put a rest to it. A bank controlled by Russia's government has just bought a big stake in one of Western Europe's leading defense contractors. Daniel Michaels reports in the Wall Street Journal:
European Aeronautic Defence & Space Co., the main parent of aircraft maker Airbus, said a state-run Russian bank acquired a 5.02% stake in the company, strengthening ties between the European aerospace giant and a nation with significant raw materials and growing aerospace ambitions.The stake purchased by OAO Vneshtorgbank amounted to about 41.1 million shares, EADS said, and was valued at about €920 million ($1.17 billion) based on Friday's closing price. The company was notified Sept. 8, as required by securities laws, that the bank had amassed a stake greater than 5%, EADS spokesman Michael Hauger said. Mr. Hauger said the notification indicated the bank had bought the stake on its own account as a financial investment.
Posted by dan at 08:39 AM
in Spain. Keith Johnson reports in the Wall Street Journal:
MADRID -- A decade of red-hot growth in the Spanish housing market fueled a jump in such things as jobs and consumer spending, turning Spain into one of the fastest-growing countries in the euro zone. But now, economists say the real-estate boom is coming unmoored from the economic fundamentals that once drove it, and they worry the market is headed for a hard landing that could have repercussions for the rest of the economy.Incomes are no longer rising, but home prices continue to soar. Meanwhile, interest rates have started to head higher, making mortgages more expensive. Housing starts jumped 15% in the first half, while more than 3.5 million homes remain empty as owners wait for the value of the house to appreciate
"Spain is headed for a first-class beating, and the only question now is when it will come," says Lorenzo Bernaldo de Quirós, an economist and head of Freemarket International Consulting in Madrid.
For much of the past decade, Spain's housing boom seemed to have only an upside. Housing prices have more than doubled since 1997. Nearly four million new homes have been built since then as young Spaniards riding a wave of rising employment bought their first houses and older Spaniards poured their savings into real estate.
The boom has had a trickle-down effect that spread to just about every corner of the economy, which has been expanding on average 3.2% a year since 1995. Since 2000, the year the boom kicked into high gear, 20% of the four million new jobs created in Spain have been in construction. It is one of Spain's largest industries, accounting for more than 10% of the country's economic output.
Construction companies such as Actividades de Construccion y Servicios SA saw their fortunes swell as Spain became the biggest per-capita consumer of cement in the world. Homeowners, feeling richer, sparked a rise in consumer spending, which in turn kept economic growth at among the highest levels in Europe.
Posted by dan at 08:37 AM
Laurie Cohen reports in the Wall Street Journal that financial printers may be taking advantage of their Wall Street clients.
Before Celanese Corp.'s initial public offering of stock last year, financial printer Merrill Corp. told the company in a three-page estimate that it believed the "final invoice for this IPO will be in the $300,000-$400,000 range."Shortly after the offering was completed, the Dallas chemical company got a 32-page bill from Merrill, totaling more than three times the estimate. Four months later, the printer offered to reduce the bill by about $200,000 to compensate "for any missteps we may have committed," according to a letter from Merrill's Jack Simunek, senior vice president of sales, which was reviewed by The Wall Street Journal. Merrill agreed to a further reduction after an audit of the original bill, according to invoices.
Mr. Simunek declined to comment.
For many companies, financial-print bills are their third-largest expense, after lawyer and banker fees. Financial printers print everything from registration forms to proxy statements. But financial-print bills typically are vague and difficult to decipher, even for sophisticated executives. And the three major financial printers -- Merrill, Bowne & Co. and R.R. Donnelley & Sons Co. -- at times pad their bills, sometimes by hundreds of thousands of dollars, according to current and former financial-print pricing analysts, whose job is to determine how much to charge clients.
A fine piece. But Cohen doesn't raise the obvious question. At a time when it's a safe bet that pretty much everybody involved in the underwriting process--the issuer, the advisors, the regulators, and the investors--has access to both the Internet and office printers, why do companies continue to pay these printers at all?
Posted by dan at 08:31 AM
Time was, OPEC's members would have been thrilled with oil at %66 a barrel. No longer. Jad Mouawad reports in the New York Times.
Posted by dan at 08:24 AM
My latest in the New York Times, on job stability and job insecurity.
Posted by dan at 05:38 PM