Business Opportunities Journal Jan-09

Business Opportunities Journal®

SINCE 1969 | CELEBRATING OUR 40th YEAR

JANUARY 2009 I ISSUE 478

Specializing in Business Opportunities, Franchising and Real Estate Investments

www.boj.com

Big winners of past lost in ‘08 . . . .Resale stores flourish. . . .Some businesses thrive when the economy dives . . . .‘09 Bleak for Venture Capital. . . . Masters in renewable energy

plus+Boom times for the repo Man

. . . .

Refitting green vehicles 44. . . .

Fair Trade wine. . . .

Foreclosure websites. . . .

Home prices dive in California

Online Edition Tap Your 401k to Buy a Franchise

9 Trends to Watch in ‘09

Business Opportunities Journal®SINCE 1969 | CELEBRATING OUR 40th YEAR

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Magazine is published monthly.

Note: Business Opportunities Journal does not know-ingly accept fraudulent, erroneous or misleading ad-vertising or other content. The appearance of business, franchise, real estate or investment opportunities in this publication does not constitute an endorsement on the part of Business Opportunities Journal and/or its pub-lisher and/or its employees. Readers are solely respon-sible for thoroughly investigating each opportunity prior to making an investment decision. To help make an in-formed decision, consult an attorney and contact your state Attorney General or the Federal Trade Commission at (877)-FTC-HELP or visit www.ftc.gov/bizop. Business Opportunities Journal, its publisher and its employees expressly disclaim any and all liability in connection with any content or statement made in this publication.

Business Opportunities Journal and Franchise Opportu-nities Journal are registered trademarks of Muir Capital, Inc. Entire contents © 2008 by Business Opportunities Journal, unless otherwise noted on specific articles. All rights reserved. No part of this publication may be repro-duced or transmitted in any form or by any means, elec-tronic or mechanical, including photocopy, recording, or any information storage and retrieval system, without written permission. Proud to specialize in Business Op-portunities, Franchise Opportunities, commercial Real Estate, and Businesses for Sale, since 1969. (ISSN 0193-3221)

Business Opportunities Journal

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c o n t e n t sISSUE 478 / JANUARY 2009

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features9 Trends to Watch in ‘09 P.4

Big winners of the past were losers P.9

franchisesResale Store Franchise Thrives P.11

Franchise Applicants Increasingly Turn Toward Financing from 401ks P.12

business opportunities Some Ore. businesses thrive when the economy dives P.14

Venture capitalists to invest less in ‘09 P.16

Ohio schools offering masters in renew-able energy P.17

Economic crunch means big business for SA repo man P.18

Backyard mechanics refit vehicles wit bat-teries P.20

Fair trade wine now available in US P.21

Cloud computing looms larger on corpo-rate horizon P.22

real estate investingForeclosure Web sites offer listings P.25

Homebuilder sentiment index remains at record low P.26

Firm: California home prices dive 38 per-cent P.27

Housing resales plummet on Oahu P.28

Urban areas struggle to find grocers, fresh food P.28

New home developments stop in their tracts P.30

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back to basics . . . 9 trends to watch in ‘09


back to basics . . . 9 trends to watch in ‘09

Here’s a quick look at some of the trends on the rise in 2009. 2008 saw

tough economic conditions, corporate layoffs, financial scandal and

investment fraud of epic proportions, stock market gyrations and de-

clines, fuel price spikes and housing market troubles. But the country

is, we believe, at its heart entrepreneurial and full of personal industri-

ousness. We predict a return to basics in investing, with an emphasis

on sound fundamentals, a surge in self employment, and a turn away

from luxury and extravagance in general. Entrepreneurs will build new

businesses, bringing fresh hope and opportunity in the new year.


trends to watch . . .

looking ahead

Recession resistant biz

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“Less exciting” but more durable businesses will be in, while trendy get-rich-quick concepts will be out. Entrepreneurs will look toward historical examples of steady businesses for guidance as they rebuild after the economic troubles of 2009. Nursing, non-elective health care, security guards and police, automotive repair, some education related work, repossession and collection agency work, bankruptcy attorneys and foreclosure services, accounts receivables factoring and related businesses, pawn shops, resale shops (see article p. 11), tax preparation work, candy stores, funeral services and others, depending on whom you ask, have been ban-tied about as recession-resistant. But only time will tell!

Luxury items and status will fade as consumers and businesses focus more on simple pleasures and basic values. Appearances in general will be less on everyone’s mind as the economic downturn runs its course. Ostentatious consumption will take a backseat to respect for living within one’s means.

With less importance placed on appearances and status symbols, consumers will be turned off by excessive marketing campaigns and hype. Big spending on slick advertising or Super Bowl parties will not be accepted from corporations laying off workers. Companies will in turn focus on their core value propositions. Successful businesses will em-phasize delivering great value in providing goods and services.

Hip to be Frugal

Return to value: at home & work


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Gas prices may have dropped dramatically from their summer highs, but the trend towards greater sensitivity to the environment is here to stay. For many years to come, people will think twice before purchasing large SUVs. In purchasing everything from light bulbs to houses, vacations to pets, consumers will factor the net effect on the environment in their choices. This will likely spell opportunity for some savvy entrepreneurs.

Green collar jobs on the rise

Real Estate Basics

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Gone are the days of buying properties on the speculative assumption prices will continue to rise untied to underlying fundamentals such as the prevailing rental rates in an area. Real estate inves-tors will return to the basics, with a look towards long-term gradual capital gains and steady rental income.


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Online BuyingThe news is full of articles about brick-and-mortar stores suffering during the fourth-quarter shopping season. However, some reports suggest many online retailers are having strong sales results. With greater sensitivity to the en-vironmental impact of driving, economic driven price sensitivity, and the growing convenience and security features offered by many online stores, the trend towards e-commerce may be hastening.

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Self reliance & independence

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There might be an upsurge in self reliance in many forms: self employment (in lieu of lay-off filled corporate culture), self-managed stock investing (in contrast to relying on money managers), striving for debt-free living (in contrast to being dependent on creditors), and looking to one’s family and friends for happiness (as opposed to mainstream defini-tions of success). After all, so many of the troubles in ‘08 were related to big institutions letting many stakeholders down, from the big mortgage banks and financial institutions, to the massive corpo-rate layoffs and Madoff scandal. For many, the old expression “if you don’t take care of yourself, no one else will” will take on more meaning now than ever.

Pet and fitness related franchises and business opportunities will deserve a second look as consum-ers look away from luxury and extravagance, and focus on timeless sources of comfort like “man’s best friend” or feeling fit.

A confluence of forces will make tapping one’s 401k for the purchase of a franchise more frequent than ever. With layoffs putting more experienced business people out lokoing for fresh opportunities, plus an unstable stock market that seems less and less like a smart place to park one’s savings, using one’s 401(k) and other savings accounts to purchase a franchise will likely gain favor. New rules might hasten the trend (see article p. 12).

Simple pleasures like pets & fitness

Alternative financing for purchases


Some Take-Aways from ‘081. The political landscape has changed. Entreprenuers will be watching closely to see what the new administration means for the true economic heart of America: the small business.

2. Debt is “out.” For much of the decade, taking out loans and accessing easy and inexpensive credit was not only socially acceptable, it was almost expected. The country had a lesson in Finance 101 in ‘08, witnessing the damaging effects of debt over-indulgence in the housing market, the financial markets, and even at the national level as the country continues to brace for fallout from its heavy indebtedness.

3. Don’t believe the hype. Investors may think twice before taking investment claims at face value after watching the $50 billion Madoff investment scam.

4. Big institutions fail. Watching major investment houses and banks tank, accompanied with layoffs, creditor and stockholder losses, will give everyone a dose of skeptisicm. What other institutions might be at risk? Insurance firms, municipalities . . . ?

5. Real estate cycles have not disappeared. Just as investors in the dot-com bubble burst of 2001 learned the hard way that economic cycles had not disappeared in the financial mar-kets, real estate investors in 2008 saw that massive run-ups in value do have their end, and the end is painful.

6. Car culture is not immortal after all. Who would have thought that the popularity of SUVs, so strong just a few years ago, would have so abrubtly halted in ‘08. Of course, July’s spike in fuel costs has subsided. But consumers will probably remember it for years to come.

7. Fossil fuels have their drawbacks. The fuel price spike was a big takeaway in and of itself. Something as ubiquitous as the gas station suddenly took on a more antiquated look as virtu-ally everyone had second thoughts about oil as the primary fuel for transportation.

8. Traditional sources of media are under pressure. 2008 was a terrible year for newspapers. Many, like the Chicago-based Tribune Co., filed for bankruptcy or placed real estate up for sale. The print news media is clearly undergoing rapid transformation away from its current economic model. The new model is still unclear.

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2008 ends, you may feel like the year’s biggest loser is you.

If you have a job, it probably feels shaky. If you have a 401(k), you can’t bear to open the statements. If you bought a house in the last five years, you feel like a sucker (unless you were the winning bid-der at a foreclosure auction).

It’s cold comfort to know that the finan-cial crash upended everyone -- calloused Maine lobstermen, french-manicured San Diego real estate brokers, Rolex-wearing Greenwich hedge fund managers.

High diesel prices as the year began ran independent truckers off the road. Soaring summer commodity costs choked busi-nesses from bakeries to airlines. Frozen credit markets left small business owners dialing their moms for loans.

Many of the biggest winners of the past lost their shirts in 2008.

The kings of Wall Street watched as their banks either disappeared through merg-ers or bankruptcy or received injections of tax dollars to stay alive. The congress-men who once hung on Alan Greenspan’s every indecipherable utterance turned hostile, as the once-revered oracle was reassessed, and found to be an oaf. Inves-tors who had trusted Bernard Madoff with $50 billion saw the money manager who had given them steady returns for decades admit it was all a Ponzi scheme.

The financial hurricane made the winners stand out even more.

Hedge fund manager John Paulson made billions by betting against the housing boom. Economist Nouriel Roubini and money manager Peter Schiff, who’d been laughed off as economic Cassandras, were proven right as their dire predictions came true, again and again. Despite con-ventional wisdom that the labor move-ment is near death, Boeing Co.’s machin-

ists union flexed its muscle during an eight-week strike.

Some winners and losers don’t bear ex-planation -- renters win, owners lose; retirees with old-fashioned pensions win -- for the time being -- while those with 401(k) plans lose. Florida, California and Nevada lose on home price depreciation, Michigan and Ohio lose on jobs, and nearly every state seems likely to lose tax revenue.

The year’s many losers and scant winners are below, listed by group:

LOSERS: Gamblers

Rich men who made big bets used to be lionized. Not this year.

One billionaire beset by debt was Sum-ner Redstone, who held a fire sale, sell-ing $233 million of his CBS Corp. and Viacom Inc. stock as he struggled to re-structure $1.6 billion in debt. He also sold his majority stake in Midway Games Inc., which makes ``Mortal Kombat’’ video games, for $100,000 -- less than one-one-hundredth of a penny per share.

Sheldon Adelson, billionaire majority owner of the Las Vegas Sands Corp., also got himself in trouble with debt. The com-pany’s expansion into overheated Macau failed to pay off and gambling revenue dropped in the recession, forcing he and his wife to come up with $475 million of their own money to pay down some of the company’s $9.21 billion in long-term debt. Shareholders are still waiting for a rescue: The company’s shares have lost about 95 percent of their value this year.

Some bets were personal. Aubrey Mc-Clendon, CEO of Chesapeake Energy Corp. was forced in October to sell almost 95 percent of his holdings -- representing more than a 5 percent stake in the natu-ral gas giant -- to meet a personal mar-gin call. His fire sale of more than $570

mil l ion w o r t h of stock pressed share prices lower.

LOSERS: Private equity kings

Private equity champ Edward Lampert looked smart when he bought Kmart out of bankruptcy, then began selling off its real estate. Wall Street anticipated anoth-er success when he scooped up Sears. It hasn’t turned out that way. While Lam-pert is great at selling off a company’s pieces, he’s less great at the fundamen-tals of retail: selling more lawnmowers, bath towels and sweaters. Sears Holdings Corp. lost $146 million in the most recent quarter, the stock is down about 60 per-cent for the year and the company is still searching for a chief executive, nearly a year after its last CEO resigned.

Likewise, real estate mogul Sam Zell burdened Tribune Co. with $13 billion in debt when he bought the company last year, leading it to file for bankruptcy in December. While he blamed the econ-omy, employees and observers blamed him.

``We knew he was going to take this busi-ness under,’’ said Philip Gregory, a law-yer for a Los Angeles Times auto critic and five former newsroom employees who sued Tribune in September over Zell’s takeover. `Òf course he’s blaming the market, but it’s really the $13 billion in debt that he brought into the business.’’

LOSERS: Pollyannas

Jerry Yang, Yahoo Inc.’s chief executive, kept waiting for Microsoft Corp. to offer a better price than $47.5 billion for Ya-hoo. It never happened. Instead, Yahoo’s stock sagged near five-year lows, making his refusal look less like an effort to get the best price for shareholders and more like excessive optimism. Yang said in No-

Big winners of the past were losers in 2008By ELLEN SIMON

AP Business Writer


vember that he’d step down and Yahoo, in December, overhauled its severance plan in a move that would save a buyer somewhere between $462 million and $2.1 billion.

Former Texas Sen. Phil Gramm, also a vice chairman of Swiss Bank UBS, made headlines -- and enemies -- in July, when he said the U.S. was in `à mental reces-sion.’’

``We may have a recession; we haven’t had one yet,’’ said Gramm, who was, at the time, an economic adviser to presi-dential candidate John McCain. ``We have sort of become a nation of whiners.’’

LOSERS: U.S. automakers

The CEOs of the Detroit Three went to Washington to beg for billions in bailout money. But it wasn’t on their hands and knees.

As new car sales cratered, the group flew private jets to D.C. in November to ask for billions in bailout money. Worse, they came without a plan.

After they drove to Washington for a re-peat visit, the Senate quashed a bailout, but the Bush administration approved a $17.4 billion rescue loan.

`Àllowing the auto companies to col-lapse is not a responsible course of ac-tion,’’ Bush said.

WINNERS: Cassandras

As markets plummeted, the dourest eco-nomic observers gained respect.

Nouriel Roubini, a New York University economics professor, said in 2006 that the worst recession in four decades was on its way. He predicted that mortgage defaults would spread, investment banks would no longer exist in their current form and Fan-nie Mae and Freddie Mac would tumble.

Peter Schiff, president of Euro Pacific Capital, has been saying for years that the economy was built on too much con-sumption and not enough saving. ``The disease is all this debt-financed consump-tion,’’ he said on a 2006 CNBC appear-

ance. ``The cure is that we stop consum-ing and start saving and producing again. That’s a recession. Sometimes, medicine tastes bad, but you gotta swallow it.’’

Dean Baker, an economist the Center for Economic Policy and Research, has been tracking the housing bubble since 2002, when he published a paper titled, ``The run-up in home prices: Is it real or is it another bubble?’’ His answer: Bubble. Lately, he has been arguing that the best way to stabilize home prices is to bring them lower and the best way to rescue ho-meowners who can’t keep up with their mortgages is to keep them in their homes -- as renters. Again, few seem to be listen-ing, despite his record.

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Associated Press writers Michael Liedtke, Mark Williams and Ryan Nakashima contributed to this report.

SPECIAL SECTION

Franchises Making News


Resale Store Franchise Thrives in DownturnIn contrast to dismal retail clothing sales figures, Kid to Kid, a chil-dren’s resale franchise, has been posting strong sales gains going into the year end shopping period. In September, the franchise posted an average sales gain of 15 percent.

September’s growth is not isolated. In August, the National Associa-tion of Resale and Thrift Stores (NARTS) issued a statement saying that two-thirds of its members had seen big increases in year-to-date sales. In 2008 third quarter comparable store sales, Kid to Kid’s used product sales increased 14 percent in July, 15 percent in August, and 17 percent in September.

“New shoppers are learning what our customers have known all along—that resale businesses, like Kid to Kid, are a great way to find quality merchandise for kids at a price that won’t break the bank,” said Donna Gylling, owner of The Woodlands Kid to Kid location. “It’s a win-win option no matter what the economy is doing.”

The Woodlands store opened in February 2005. Another store in Spring, Texas will be opening soon.

“I decided to open my store because I wanted to break away from the headaches of the corporate world,” Gylling said. “Opening a business was risky, but having a business that continues to grow in value to our customers has made it a sound investment.”

“Gas and food prices go up and down but our prices are consistently low throughout the year—and that is why I believe resale businesses, like Kid to Kid, are constantly growing,” Gylling said.

NARTS called resale retailers a “recession proof” investment because their growth and profitability do not appear to be tied to the market.

Kid to Kid opened its first store in Sandy, Utah, in 1992. It currently has more than 75 stores in 21 States and in Portugal.

On the Net:

http://www.kidtokid.com/franchise.php


finan

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Franchise Ap-plicants In-creasingly Turn Toward Financing from 401ksWith new small business financing difficult to obtain, many franchise applicants are utilizing a financing program that draws on retirement accounts, like 401(k)s and IRAs, to launch their business.

At Honest-1 Auto Care, an auto repair and maintenance franchise chain, about 20 percent of franchise locations, including the newest two locations in Pennsylvania and Utah, have suc-cessfully used this type of financing. Commonly referred to as the Retirement to Franchise Transfer plan, individuals can use their retirement funds to purchase stock in their new franchise business without triggering early distribution taxes or penalties. Since funds are being transferred from one investment to another, franchise owners are able to use the money for all small business needs, ranging from purchasing the franchise, paying for start-up expenses, expanding the business and covering franchise fees and employee salaries. As the franchise grows, so does the value of the owner’s retirement savings.

For Ransom Towsley, a franchise owner in Brid-geville, Pa., the retirement financing plan granted him a financial opportunity that he may not otherwise have had. As a businessman for more than 15 years, Towsley wanted to join Honest-1’s

successful business model without taking out a traditional small business loan.

“There are a lot of people like myself, baby boom-ers with a 401K, looking to invest in something other than the stock market,” Towsley said. “Now as my business grows, so does the value of my retirement savings. When I sell my franchise at retirement, the proceeds will go tax-free into my 401(k). Today, I would much rather invest in myself than in the stock market.”

Franchise applicants are finding it increasingly difficult to secure funding for their new business, a factor in the growing popularity of retirement transfer plans. According to the Small Business Administration, the number of 7(a) loans – the most frequently accessed loan type – fell 30 per-cent in the fiscal year that ended Sept. 30.Honest-1’s corporate headquarters recommends several financial firms, which provide individuals with all of the information needed for a smooth trans-action.

With 19 locations across the nation, Honest-1 is rapidly expanding with plans to double its number

Honest-1 Auto Care’s Applicants

Use Retirement Funds as a Fi-

nancing Alternative

Business Opportunities Journal 12


of stores in a year. Honest-1 Auto Care™ is the only national full-service auto repair and maintenance franchise chain that is 100 percent ESA Certified eco-friendly.

Two firms Honest-1 works with that assist franchise applicants with this process are Guidant Financial Group and Benetrends. Guidant Financial Group reportedly completes about 200 of these transactions a month.

The process starts with the establishment of a new C-corporation for the new franchise. The C-corpo-ration in turn creates a new retirement plan. Firms such as Guidant Financial Group or Benetrends assist by developing the required documents, in-cluding the basic plan documents and enrollment forms, as well required federal filings.

Funds from an existing retirement plan are rolled over into the new C-corporation’s new retirement plan. The retirement plan then acquires stock of the C-corporation. The transfer company will see that appropriate procedures are followed and stock certificates are issued.

“The ability to tap into retirement funds, is a concept that has been used as a resource for small business finance for years,” said Tim McCarthy, vice presi-dent of franchise development at Honest-1. “A lot of potential small business buyers are now learning

that you can invest in a business and at the same time lower your overhead during startup. They are not having to tap into home equity or secure a bank loan.”

On the Net: www.honest-1.com

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Papa John’s International, Inc. (NASDAQ: PZZA), recently announced that it has surpassed $1 million in sales by mobile Web since launching the tech-nology in July.

The milestone is the latest in a rapid rise in “alternative order-ing” channels and sales for the chain, which earlier this year eclipsed $1 billion in overall online sales. The chain has embraced a number of new technologies, even recently rolling out a Facebook page that captured more than 175,000 fans in less than a week. In addi-tion, the brand is offering a new iPhone application to its suite of digital widgets, launched in December.

“Papa John’s recognizes that people are using their handheld devices to make everything

they can more convenient, and that includes viewing an entire menu before ordering their pizza,” said Nigel Travis, Papa John’s, president and CEO. “The trend now is to leave the laptop at home when traveling. Almost everything can be done right from your phone.”

Papa John’s online sales have grown exponentially since 2001, with online sales on av-erage growing more than 50% each year and nearly reaching $400 million in 2007 alone. Today, more than 20% of all Papa John’s sales come online or through text, widget, or smart mobile device, and the compa-ny believes sales via alternative access channels could one day surpass traditional telephone orders.

Papa John’s Surpasses $1 Mil-lion in Mobile Web Orders

Honest-1 Auto Care is rapidly growing, aided not only by it’s ESA Certified eco-friendly services and inviting

lobby , but by some of its franchisee’s innovative use of 401(k) funds as an alternative source of financing.


EUGENE, Ore. (AP) -- Take a timber baron, a mega-landlord and a purveyor of fine chocolates. Blend in some widespread financial woe. And there you have it -- a recipe for turning economic lemons into entrepreneurial lemonade.

The Ford family of Roseburg did it in the Great Depression, lay-ing the foundation for Roseburg Forest Products -- now one of the largest privately owned wood products companies in the nation.

Chuck Shepard of Coburg found opportunity in the deep recession of the early 1980s, accumulating many of the 1,700 rental units now owned by his company, Umbrella Properties.

Bob Bury launched his business experiment on a shoestring budget during that same recession and found his road to success paved with chocolate. His Euphoria Chocolate Co. now sells its trademark truffles and dozens of other products at four Eugene locations.

`Ìt was really low risk,’’ Bury says of his company’s modest start. ``We bought our first 500 pounds of chocolate, and that seemed like a risk. But I guess we could have eaten it.

`Ìt’s nice to have assets you can eat.’’

Billionaire investor Warren Buffett offers perhaps the most famous tactic for negotiating both the highs and lows of economic cycles. His advice is to ``be fearful when others are greedy and to be greedy only when others are fearful.’’

With the current recession deepening and becoming more wide-spread, other business strategists across the country have weighed in on how to survive -- or even thrive.

Kenneth Ford could have been reading from that playbook when, in 1936, he bought a few pieces of equipment and machinery from

a bankrupt sawmill and launched the company that would become Roseburg Forest Products.

`Ìt was just hard work and total commitment,’’ says Ford’s son, Allyn, who is now the company’s president and CEO. ``Through his determination and stubbornness, he was able to get through that period.’’

Kenneth Ford was still in his 20s when he laid the groundwork for the long-term stability of his emerging wood products company in the 1930s. Using the sawmill’s revenue and his own good credit, he began buying repossessed and otherwise distressed timberland in Douglas County -- about 160,000 acres by the mid-1940s.

Roseburg Forest Products continued piling up its cache of tim-berland, making its last significant acquisition two years before Kenneth Ford’s death in 1997.

It now owns an estimated 800,000 acres in Oregon and Northern California and ranks as Oregon’s fifth-largest private company.

`Ìt wasn’t what you’d call a stroke of lightning event,’’ Allyn Ford says. `Ìt was a lot of hard, hard work and perseverance.’’

The connection may seem tenuous between timber in the Great Depression and chocolate during the deep recession of the 1980s, but the two stories share some underlying principles.

Bob Bury was working at Wagon Works, an automotive repair shop on West 13th Avenue, when the company’s owners decided to branch out with a restaurant in the building next door.

Their Cafe Central -- in the spot now occupied by Cafe Soriah -- became immediately popular among Eugene’s young profes-sionals, and it also gave Bury and his wife, Sue Subbot, access to

Some Ore. businesses thrive when the economy divesBy JOE MOSLEY

The (Eugene) Register-Guard

Business Opportunities

& Entrepreneurship

BUSINESS OPPORTUNITIES


a kitchen for their own experimental business.

They launched Euphoria Chocolate Co. in 1981, just as the North-west’s deepest recession on record was settling in.

``We didn’t know any better,’’ Bury says. `Ìt was really kind of a crime of opportunity.’’

Euphoria and Cafe Central both benefited from a shift into high-end cuisine that began in the San Francisco Bay area and was sweeping the West Coast.

But Bury says he learned a lesson during that recession, and it has held true during each period of economic decline since then: A chocolate truffle is an `ìnexpensive luxury’’ that consumers feel they deserve and can afford.

``(Euphoria) actually took off pretty fast,’’ he says. ̀ Ì was willing to sell a few hundred truffles the first month, and we sold 4,000. It was really the right time, the right place.’’

Not that Bury’s company does its best business in a recession -- it doesn’t.

But with an appealing product and good business practices, he’s learned to ride out the low points of a cyclical economy.

``We’ve been through two or three pretty tough recessions, and one of the things we’ve done that’s stood us well over the years is we’ve never gotten too overextended,’’ he says. ``We’ve taken risks, but they’ve been calculated risks.

``My advice is to find some way to get through it -- lean out your business. And when you do (get through the recession) and come out the other side, you’re going to make some money because your competition is going to be gone. Make sure you’re going to get through it, because it pays off in the end.’’

Chuck Shepard would add that a little bit of foresight can also improve your chances of success in tough times.

Shepard first began buying rental units in 1975, but sold all he had accumulated -- four apartment complexes and a few other properties -- in 1979.

Real estate prices had been soaring, and he expected a correction.

That began a couple years later, and by the time Shepard began reinvesting -- primarily in duplexes -- prices had dropped by about 40 percent.

`Ì wouldn’t say I was successful during the ‘80s, but my success came from the decisions I made during the ‘80s,’’ says Shepard, who now owns Hoodoo Mountain Resort and its campground management arm in addition to Umbrella Properties.

``Going into the recession (in the 1980s), I saw it coming, and I put more of my assets in a liquid position,’’ he says. ``My success is that I was patient; I watched what was going on, and even though I saw a good deal, I didn’t jump on it.

``Part of it, too, is I had faith that the market was going to come back.’’

Shepard says he saw the current recession coming a few years ago, but this time he chose not to sell because his business priorities have changed.

Rather than building inventory, his primary concern is to maintain Umbrella’s current stock of housing and the jobs that his busi-nesses generate.

So Shepard has decreased leveraging on his properties to acquire other properties, and in general is trying to minimize debt.

``Try to maintain liquidity, be careful and stay on top of your busi-ness,’’ he says. ̀ `We are trying to be real careful with watching our cash flow in and out, so we don’t get ourselves into a short-term problem that could develop into a bigger, long-term problem.’’

Shepard says he has been a ``pretty picky buyer the last couple years,’’ although Umbrella did add 300 apartment units and 600 storage units a year ago and is in the process of buying another 100 housing units.

In the last big recession, real estate hit its low in about 1984. Shepard says he believes the current market is a couple years from a comparable turning point.

But he says the economy already has had a significant impact on prices, affecting both buyers and sellers.

`Ì think for single home buyers, there are good deals to be had,’’ he says. ̀ `For somebody trying to sell their home in Eugene, if they can’t give up the idea of getting what it was once worth, they’re just being foolish.’’

Shepard says his own limited buying over the past year or so has been driven only partially by price, with market position and other factors also weighing in.

``There haven’t been great deals, but there have been good deals that have worked well for us,’’ he says.


Survey: Venture capitalists to invest less in 2009SAN FRANCISCO (AP) -- Venture capi-talists are bracing for their toughest year since the dot-com bust as they try to survive the bursting of an even bigger investment bubble.

The bleak outlook that emerged in a survey released in December isn’t a surprise, given the economic havoc wrought by a credit cri-sis that began with a reckless home lending spree on the heels of the last U.S. recession in 2001-2002.

That last downturn was triggered, in part, by venture capitalists’ ill-advised invest-ments in unprofitable Internet companies, a splurge that also reeled in stock market investors before eventually collapsing. The fallout saddled venture capitalists with huge losses, prompting them to decrease their investments in 2002 and 2003.

This time around, venture capitalists are caught up in an even larger mess that had far less to do with their investment choices. ``Today’s issues are systemic, with broader, deeper reach and a longer duration,’’ said Roger Novak, a general partner with No-vak Biddle Venture Partners in Bethesda, Maryland.

To cope, most venture capitalists are plan-ning to curtail their investments in startups while remaining on the lookout for possible bargains.

If the recession worsens, companies that already have gotten funding from venture capitalists might be under pressure to sell at a discount if they aren’t already making money on their own.

And there should be opportunistic buyers lining up, reasoned Rory O’Driscoll, man-aging partner for Scale Venture Partners in Foster City, California.

`Ùnlike 2001, these are companies with viable and efficient business models that are cheap -- not because they are broken but because the world is broken,’’ O’Driscoll said. `Ònce the world heals, they will bounce back strongly.’’

But a rebound isn’t likely next year, based

on the survey of 400 venture capitalists polled in the United States from Nov. 12 through Dec. 12 by the National Venture Capital Association, the industry’s main trade group.

Fifty-six percent of the VCs predicted the economy would worsen next year while another 25 percent expect the dreary condi-tions to remain the same. Only 19 percent forecast better times by the end of 2009.

The tough atmosphere will depress in-vestments, according to 92 percent of the surveyed venture capitalists. Those findings echo another poll of venture capitalists released this month by KPMG LLP.

Venture capital investments have been on the upswing since 2003, although there could be a slight dip when this year’s final numbers are added up.

Extending recent trends, 48 percent of ven-ture capitalists expect money to continue to pour into ̀ `clean technology’’ -- alternative energy and other projects aimed at causing less pollution. Twenty-five percent of the polled venture capitalists believe biotech-nology investments will rise next year.

``There is no recession on innovation and great ideas will get funded,’’ said Mark Heeson, president of the National Venture Capital Association.

But entrepreneurs involved in semiconduc-

tors, media, entertainment and telecom-munications will likely have a particularly hard time raising money next year. The vast majority of venture capitalists said invest-ments in those niches will fall next year.

Venture capitalists themselves expect to have a hard time raising money, with 96 percent of the survey respondents predict-ing their investment partners will be reluc-tant to contribute to funds next year. Some pension funds and college endowments may even try to sell their existing venture capital stakes to adhere to asset-allocation requirements dictating how much exposure they can have in higher risk investments.

The stock market’s turbulence is expected to close another important financial avenue for venture capitalists. To realize a return on their investments, venture capitalists typically groom their portfolio companies for initial public offerings of stock.

Just one venture-backed company, Rack-space Hosting Inc., has gone public in the past nine months. Nearly three-fourths of the polled venture capitalists expect the IPO drought to extend through 2009.

Venture capitalists like Venky Ganesan of Globespan Capital are betting the economy will be on the mend in 2010. ̀ `We will need to take strong medicine now and if we do, I am very optimistic for the future,’’ he said.

By MICHAEL LIEDTKEAP Technology Writer



DAYTON, Ohio (AP) -- Several Ohio universities are offering the state’s first masters degree program in renewable energy in an effort to address the need for clean and economical energy sources and create new business opportunities.

`Ì don’t think the energy problem is going to go away any time soon,’’ said University of Dayton student Fiona Martin, 22, who is among the first students to be accepted into the new program beginning next month. ``This isn’t something we can ignore anymore.’’

Degrees will be awarded by the University of Dayton and Wright State University, with classes also held at Central State and the Air Force Institute of Tech-nology at Wright-Patterson Air Force Base. Classes will focus on developing energy-reducing design techniques and better forms of solar energy, fuel cells and biofuels.

The program builds upon interest among college students in wind power, solar power and other renewable energy technologies.

Hocking College in southeastern Ohio began offering an associate degree in alternative fuel tech-nologies in 2003 -- offering one program that focuses on wind, solar and other technologies and another program focusing on hybrid vehicles and batteries.

``We literally started this campus in a cornfield,’’ said Jerrold Hut-ton, dean of advanced energy and transportation technology at the Hocking College Energy Institute in Logan.

The first class had three students. This fall there were 41 first-year students, and Hutton expects twice as many next fall.

Martin, a mechanical-engineering major from Chesterton, Ind.,

became interested in renewable energy when she worked for a com-pany in Germany, helping the firm with solar and wind projects. Then last summer, she worked for a Chicago company that audits commercial buildings and shows companies how to save energy.

`Ìt’s nice to be able to kind of contribute, to be able to have an im-pact on the environment and to help people save money, especially in times like this when money is very tight,’’ she said. ``Renewable ener-gies are great, but they are still not as efficient as they could be. The technology is coming. But the opportunity right now is really to reduce energy consumption where we are using it excessively.’’

As part of the master’s pro-gram, Martin will direct students to do similar energy audits of low-income hous-ing, churches and buildings owned by community orga-nizations.

After getting her degree, she plans to go back to work with the Chicago company. After that, she might go into business doing energy audits of homes and maybe teach at the university level.

Paul Talley, 55, of Huber Heights, intends to apply for the program at Wright State. Talley is a manufacturing engineer for auto supplier Delphi Corp., but the plant where he is working is clos-ing at the end of the year.

Talley believes finding cheaper energy is necessary to revitalize U.S. manufacturing and that graduates of the program will be in demand.

`Àlternative energy -- if we’re going to survive, it’s absolutely inevitable,’’ he said. Martin also believes there will be a healthy

Ohio schools offering masters in renewable energyBy JAMES HANNAH

Associated Press Writer

1818



SAN ANTONIO (AP) -- The court order that Greg Castro sees before he repossesses a car does not explain why a person lost the vehicle.

This San Antonio repo man doesn’t neces-sarily want to know. But Castro often finds out after a shocked car or truck owner runs outside as he’s loading the defaulted vehicle onto a wrecker with the lighting speed of a pit crew boss.

`Èighty percent of them are people whose life got the better hand of them, and they just can’t pay their bills,’’ Castro said as he prepared to repossess a Honda SUV from an upscale neighborhood near Stone Oak.

In this battered economy -- with unemploy-ment at a 14-year high, a rate that threatens to climb even higher -- car repossessions are on the rise.

``Job loss is the No. 1 reason for reposses-sion,’’ said Tom Webb, chief economist for Atlanta-based Manheim, an auto auctioneer of repossessed vehicles.

While economists predict companies will

continue to lay off employees next year, the automobile industry and banks are taking steps to curb repossessions, as they ulti-mately cost businesses more while simul-taneously hurting consumers, experts said.

San Antonio’s economy is in better condi-tion than other parts of the country -- local unemployment was 4.9 percent for the quarter that ended in September, while the national rate was 6.1 percent -- but some lo-cal repo men say car seizures are increasing.

`Ì’d say we’ve seen a 10 (percent) to 15 percent increase,’’ said Gary Amezcua, owner of San Antonio Recovery Inc.

Nationally, more than 1.5 million cars were repossessed last year, up 10 percent from 2006, Webb said. There has been another 10 percent increase to date this year. Such a change isn’t unusual, but the rise is signifi-cant because many of the cars repossessed recently involved ``good loans’’ to people with high credit scores, Webb said.

``The economic times just caught up with people,’’ Webb said.

In previous economic cycles, seizures in-creased, in part, because of subprime loans to people with poor credit and unstable employment.

``We saw people with two or three repos on their records that could get a car with a big down payment,’’ said Michael Waldron, owner of Prime Time Adjusters Inc., which employs Castro.

As subprime credit dried up, underwriting practices changed in recent years to make it harder to lend to people who could not truly afford vehicles.

``There really aren’t subprime lenders ex-tending credit to people with credit issues now,’’ Waldron said.

Banks now are further limiting auto loans to people by insisting on higher credit scores and bigger down payments, Webb said, and so repossessions could drop off. And banks are trying to work with borrowers, experts said, because lenders lose money when they seize and auction vehicles to used car dealerships.

`Ìf you’ve got a $20,000 balance on a car that’s worth only $10,000, you’re taking a serious loss by repossessing it,’’ Amezcua said.

In many cases, the banks will renegotiate loans after vehicles have been repossessed. Once a car has been repossessed, car buyers have 10 days to pay off the past due balance or work out a deal with the bank.

Three years ago, 10 percent of people with repossessed vehicles would get their cars back from Prime Time Adjusters. Now, Waldron said, 65 percent of repossessed vehicles are being redeemed.

``The banks would rather them redeem them on good faith than take an average loss of $8,500 to $10,000 at auction,’’ said Waldron, a 20-year veteran of San Anto-

Economic crunch means big business for SA repo manBy ROBERT CROWE

San Antonio Express-News


nio’s repo business.

Many repossession companies include the word `àdjuster’’ in their names because it refers to service of adjusting a loan, which was the practice banks preferred before repossession became popular in the 1980s, experts said.

The debt-strapped people who walk into the office of Rick Flume, a San Antonio bankruptcy lawyer, often are expecting a car to be repossessed at any moment.

``You need your car to keep your job so you can pay your bills,’’ he said. ``Filing (Chapter 13) bankruptcy may be the only way to avoid a repossession.’’

In some situations, filing bankruptcy is the only way to stop repossession while renegotiating a loan with lower payments, Flume said.

Waldron’s company works with the coun-try’s biggest auto lenders. In previous years,

he would receive court orders to seize a vehicle after a buyer had fallen behind two months on a loan.

``Now we’re seeing cars that are four months behind,’’ he said.

One major reason for repossession is that people don’t keep in contact with lenders. Flume said car buyers have a better chance at renegotiating a loan if they show good faith to the lender.

In the weakening economy, Waldron has repossessed everything from airplanes to speedboats and the entire pickup fleet of a small business.

``This is the worst I’ve seen it in 20 years of doing business,’’ he said.

Waldron worries the people he encounters in the field -- often in the early morning hours -- will only become more hostile. It’s not uncommon for repo men to be confronted with guns and baseball bats.

While seizing a Cadillac in 1996, Waldron was shot by the car owner’s neighbor. The shooter was convicted in the incident and remains jailed.

In Texas, a state that gives property owners, and even their neighbors, much latitude in using deadly force to protect property, repo men have the law on their side. The Uniform Commercial Code permits repos-session so long as it `ìs peaceful.’’

Waldron and his employee Castro say they’re often called the most vile and filthy things, but they try to keep the peace by explaining to car owners that they’re just doing a job. He says the daily surprises and threats he encounters keep the job interesting.

``Things get pretty freaky,’’ said Castro, who has had guns drawn on him. `Ì like the thrill of the hunt. I do want to go home at the end of the night, but then I do like the chase.’’


Backyard mechanics refit vehicles with batteries

ST. PETERSBURG, Fla. (AP) -- Cornelius Cronin bought a $900 Chevy S-10 pickup and spent several weeks removing things he didn’t like mainly its dirty, gas-guzzling engine. He fitted an electric motor and bat-teries under the hood, and now purrs around Oldsmar in a red truck that uses no gas and emits no air pollution. A documentary film asked: Who killed the electric car? Maybe a better question is: Who built the electric car?

At a time when the federal government is investing in hydrogen fuel cell research, and big automakers are working on more sophisticated hybrids, a growing number of creative tinkerers and small businesses around the Tampa Bay area are taking a different tack.

They’re fashioning their own electric cars, one battery at a time, without waiting for Detroit or Japan to catch up.

Some of their friends say it’s crazy to pour their dreams and sweat into cars that go only 25 to 50 miles before they need to be plugged in for several hours to recharge.

But Cronin, 47, says he loves saving money on gas and helping to preserve the environ-ment. ̀ Ìt’s so simple, it’s so clean,’’ he said. He’s proud of what he put together with his own hands. `Ì’m looking forward to building another one.’’

Car buyers seem increasingly willing to try new technologies like the hybrid Toyota Prius. But hybrids rely on gasoline, even though they use electric power as well.

Some people are looking beyond the gaso-line era.

Like Sebastien Bourgeois. As president of a St. Petersburg manufacturer of solar pool heaters, Techno-Solis, he had access to a full machine shop and some clever col-leagues, and an itch to try something new.

So he bought two 1965 Volkswagen Beetles for $2,000 each and spent some time poking inside them and taking mea-surements. After the en-gines came out, he and his colleagues custom-built a special mount and installed an electric motor and batteries. The entire process, from design to driving, took about three months.

Now Bourgeois drives an all-electric Beetle to work each day and said he doesn’t mind that it needs recharging every 25 or 30 miles or so. That’s less than his daily commute. He also doesn’t mind the cost of recharging his batteries: He figures he’s paying about 2.5 cents per mile, or 75 cents per recharge.

He also has started sell-ing the conversion kits through a new company, RebirthAuto. The $7,000 kits include the motor mount which they designed, and soon will include a spe-cially designed controller that regulates the electric power.

Parts like these are scarce, which might explain why there are so few homemade electric cars. ``This business has sort of been stuck in its infancy for years,’’ said Jeffrey Jenkins. He’s a partner in a business with Bourgeois to develop and sell electric conversion components.

The U.S. Census Bureau estimated that about 56,000 electric cars were on the road in 2004 -- less than one-tenth of 1 percent of total U.S. cars, not counting hybrid vehicles.

RebirthAuto says it has sold 10 of the $7,000 conversion kits. To Bourgeois, electric cars make so much sense that he said he wonders why they aren’t common.

`Ìt blows me away,’’ Bourgeois said. ``Why don’t we have more cars that are electrified?’’

Electric cars date to the late 1800s, and once were more common than gasoline-powered cars.

To the average driver, they are still an oddity, but some believe that will change. Surely, gas prices will go up again. And advocates say electric cars cause far less air pollution, even when powered by electricity from coal-fired plants.

By CURTIS KRUEGER St. Petersburg Times



OAKLAND, Calif. (AP) -- Coffee, tea or ... fair trade wine?

TransFair USA, the Oakland-based group that has certified every-thing from coffee and tea to bananas and flowers as being ethically produced, now is putting its seal on wines from Chile, Argentina and South Africa.

The wines -- which are available nationwide this month at grocers and liquor stores nationwide, including Whole Foods Market and Sam’s Club -- are a first for U.S. consumers.

``You’re getting award-winning wine that has just fantastic quality that also has an incredibly uplifting effect on the lives of literally thousands of farmers and farm workers,’’ says Paul Rice, presi-dent and CEO of TransFair USA. `Ìt’s a great product that also

represents tremendous hope and pride.’’

The fair trade movement has been established in Europe for de-cades -- fair trade wines have been available there for five years -- but is gaining momentum in the United States.

Last year, sales of fair trade products, passed $1 billion for the first time, according to TransFair and the Fairtrade Labelling Organization.

A Fair Trade Certified product means TransFair has determined that farmers got fair prices, workers got decent wages and the product was produced in an environmentally responsible manner.

Importers and retailers pay a premium -- the wine premium is 10 cents per bottle -- that is earmarked for community improvement, such as a new water system or educational scholarships.

Charles Redfield, senior vice president of fresh food for Sam’s Club, says fair trade products offer high quality and are popular with customers. Company buyers, meanwhile, see the benefits of the system firsthand.

`Ònce you go out and experience it as an individual, it changes your whole lens of sustainability.’’

So besides the hobbyists converting old cars in their garages, some big manufactur-ers are rolling out electric vehicles as well. But some sound like works in progress.

There’s a ̀ `neighborhood electric vehicle’’ on the market called the Zenn (zero emis-sions, no noise), but its top speed is only 25 mph. It is sold at the Transportation Station in Clearwater.

There’s a high-performance electric sports car called the Tesla, which can be yours for $109,000. Chevrolet is preparing to roll out an electric car called the Volt, but it’s not available yet.

A Tarpon Springs shop, Black Bay Tech-

nologies, hopes creative designs will set it apart.

Company president George Keramas proudly points to an elegant black, three-wheeled chopper with a distinctive look: no motorcycle engine mounted on its frame. This is the `èlectric trike,’’ powered by an electric motor and batteries that sit in a cube-shaped case between the rear wheels.

``The main thing is the look,’’ Keramas said. ̀ `We’ve tried to come out with some-thing that’s very sleek looking.’’

The electric trikes retail for $19,900, and Keramas said a dealer bought the first two.

He also is trying to develop a sports car and an off-road stealth vehicle for the mili-tary. After all, electric motors run quietly, and it’s hard to sneak up on anyone in a gasoline-powered Humvee,

None is your average car.

But Keramas has three reasons he hopes his vehicles will sell: ``People are look-ing for ways to save money, help save the environment and reduce our dependence on foreign oil.’’

Fair trade wine now available in US stores By MICHELLE LOCKE Associated Press Writer


Cloud computing looms larger on corporate horizon

SAN FRANCISCO (AP) -- Todd Pierce recently put his job on the line.

To meet the computing needs of 16,300 employees and contrac-tors at Genentech Inc., Pierce took a chance and decided not to rely entirely on business software from Microsoft, IBM or another long-established supplier that would have let Genentech own the technology. Instead, Pierce decided to rent these indispensable products from Google Inc.

The Internet search and advertising leader will run Genentech’s e-mail, as well as some word processing, spreadsheet and calen-dar applications, and it will do it over an online connection -- an unconventional approach called ``cloud computing.’’

The decision has turned Genentech, a biotechnology pioneer, into a lab rat for Google and other alternative software services trying to convince skeptical corporate decision makers that cloud computing is more than a pie-in-the-sky concept.

In the process, Google Inc. hopes to bleed revenue from Microsoft Corp. and surpass its biggest rival in the race to control the gears of computing.

Genentech’s chief executive, Arthur Levinson, sits on Google’s board of directors, but Pierce insists those ties didn’t propel his leap of faith.

After lengthy internal testing, Pierce became convinced that Google can trusted to provide critical software programs for Genentech as adeptly as it deciphers Internet search requests to sell ads.

``You don’t want to get caught clinging to the past,’’ said Pierce, Genentech’s chief information officer. `Ì feel like we are surfing in front of the wave instead of the back of it.’’

Cloud computing has already swelled into an estimated $36 bil-lion market this year, representing roughly 13 percent of global software sales. The big question now is whether it can turn into a technology tsunami that sweeps Microsoft and other software industry staples into obsolescence.

Yet for all the potential and hype surrounding cloud computing, breaking old habits won’t be easy -- particularly with business-software powerhouses Microsoft, IBM Corp., Oracle Corp. and SAP AG all maneuvering to protect their existing, lucrative soft-ware franchises while also setting up their own online services to compete with the industry upstarts.

Even Genentech, the biggest U.S. company to buy Google’s ap-

plications package so far, isn’t ready to abandon Microsoft entirely. It’s still licensing Microsoft programs like Word for writing docu-ments and Excel for creating spreadsheets.

Typically, companies own their own software, which requires installing programs on disparate computers followed by years of expensive upkeep to keep the technology humming. In contrast, cloud computing lets companies have someone else run their soft-ware remotely for a monthly or annual fee, with users accessing the programs over live Internet connections.

The idea has won over small business owners, government agen-cies and schools, and now larger companies are taking a closer look, particularly as they look for ways to save money during a brutal recession.

`Àlmost everyone already runs a lot of their personal life on the In-ternet and there is no doubt that the future of business applications will be there too,’’ said Zachary Nelson, head of cloud computing specialist NetSuite Inc. `Ìt’s just a matter of when companies are ready to make the move.’’

Former Oracle executive Marc Benioff planted the seeds for the cloud computing movement nearly a decade ago when he brazenly declared ̀ `the end of software’’ and started Salesforce.com Inc. to sell subscriptions for a customer management program accessed over the Internet.

Benioff’s San Francisco-based company is now the largest cloud computing service for businesses, with a market value of $4 bil-lion, about 52,000 customers and revenue totaling $1 billion in its past four fiscal quarters.

But Salesforce’s income of $37 million during that time translates into a measly $3.70 profit on every $100 in sales. That looks anemic alongside Oracle’s net margin of about $24.80 for every $100 in sales in the comparable period.

And San Mateo-based NetSuite still hasn’t eked out its first quar-terly profit after a decade in business, despite steady growth that boosted its revenue during the past four quarters to $143 million.

The slim profit margins reflect the expenses cloud computing pro-viders must absorb to build big data centers and hire the engineers to run their software applications, while they charge relatively modest fees to use their service. What’s more, they don’t require their customers to pay additional money for product updates and maintenance -- a gold mine for traditional software makers.

Amazon.com Inc. is among the other prominent backers of cloud computing. The Seattle-based retailer runs a Web services arm that

By MICHAEL LIEDTKE AP Technology Writer



leases data storage space and computing power to businesses much like a utility dispenses electricity, as needed, to its customers. The initiative has attracted hundreds of thousands of business users during the past two years, but analysts say it has been a financial flop so far. Amazon.com doesn’t break out the unit’s results.

Google doesn’t disclose the results of its business applications division, but it’s relatively small, too. The Mountain View-based company’s non-advertising operations generated combined rev-enue of just $540 million during the past four quarters, while Google’s advertising sales totaled $20 billion.

After studying cloud computing trends, Sanford Bernstein ana-lyst Jeffrey Lindsay predicted Google’s applications will rake in revenue of about $1.5 billion by 2012, a small share next to the estimated $18 billion for Microsoft’s desktop office software.

Oracle CEO Larry Ellison doubts cloud computing will ever pro-duce big enough profits to finance the hefty investments required to develop products sophisticated enough to satisfy major companies.

Ellison has gone so far as to draw derisive comparisons between cloud computing and Webvan, an online grocery delivery service that was supposed to spell the demise of traditional supermarkets, only to go bankrupt in 2001.

`Ìt’s ludicrous (to think) that cloud computing is taking over the world,’’ Ellison said during Oracle’s annual shareholders meeting in October.

The dismissive remarks were striking given that Ellison was an early investor in Salesforce and even sat on the company’s board before getting into a rift with Benioff. What’s more, Ellison is the majority owner of NetSuite, with a 53 percent stake in the company.

Nelson insists Ellison hasn’t lost faith in NetSuite. ̀ `We can be as profitable as a traditional software company,’’ Nelson said. ``We are still in a growth cycle.’’

Microsoft is angling to protect its position as the world’s largest software maker by planning what it calls a new operating system for cloud computing, called `Àzure,’’ that is supposed to make it easier to toggle between programs stored on a hard drive and on the Web. Microsoft has also said it will launch Web-based ver-sions of its Office programs, including Word and Excel, but has not yet set a date.

Dave Girouard, who heads Google’s cloud computing services for businesses, believes Microsoft’s expansion will only bring more credibility to the concept and help his company sign up more paying customers.

Although it refuses to provide a specific breakdown, Google ac-knowledges most of the roughly 1 million businesses, government agencies and schools using its office applications rely on a free version. For nearly two years now, Google has been peddling a

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more sophisticated package that costs $50 annually per employee account.

The economics appealed to Genentech. Based on the number of Genentech employees granted Google software accounts, the South San Francisco-based company is paying at least $800,000 per year for the online package.

Buying and maintaining a similar software package from Micro-soft, Oracle or IBM would have cost considerably more, though Genentech declined to say how much it saved by subscribing to Google’s office package. Whatever the figure, the savings for Ge-nentech won’t stop there. Pierce figures the company eventually would have had to invest $70 million to $80 million to build a data center, full of computer servers, to run its software and might have had to hire more engineers and technical specialists.

``That’s a huge amount of cost that won’t generate $1 in sales for my company,’’ Pierce reasons.

Barbara Nielsen, a management associate at Genentech, likes

having the choice between the competing programs offered by Google and Microsoft. In the first several weeks of using Google’s software, she found its word processing and calendar programs helpful for jointly working on projects with more than 50 people spread across her division.

Collaborating on team projects is easier on Google’s applications because employees can edit their work from any computer with an Internet connection and then store their work so it can be reviewed and possibly expanded upon by another worker somewhere else. In contrast, employees jointly working on Microsoft’s traditional office programs must send revisions back and forth.

But Nielsen still feels more comfortable using Microsoft’s Excel program when she needs a spreadsheet application, partly because she prefers its features.

``We are just starting to be enlightened’’ about the Google ap-plications, Nielsen said. `Ì don’t see them as a replacement for Microsoft. I see them more as a companion.’’

Ask AP: I am a real-estate agent and I have a client who recently had an incorrect, negative entry removed

from a credit report. They checked their score again, and it had gone DOWN by 50 points, even though nothing changed on the report other than the error being removed.

This meant my client no longer qualified for a particular mortgage.

Is anyone responsible for regulating credit scores?

Carol Skees

Albuquerque, N.M.

------

Three national credit bureaus -- Equifax, Experian and TransUnion -- generate credit reports, which are used to determine credit scores, also called FICO scores.

The Fair Credit Reporting Act requires the three bureaus to give you a free copy of your report once every 12 months. You’re also entitled to a free report if your score resulted in a company taking negative ac-

tion against you, such as denying you a job or a loan.

If you notify a credit bureau of an error, FCRA requires the credit bureau to in-vestigate it, usually within 30 days. The company that provided the information in dispute must also investigate.

If the company confirms there was an error, it’s required to notify all three credit bu-reaus. Once your credit report is corrected, the impact on your score should be immedi-ate, according to John Ulzheimer, president of consumer education for Credit.com.

You can also request that the credit bureau send a corrected report to prospective lenders.

If you can’t get a negative item removed from your report, you have the right to at-tach a brief statement (100 words or less) to your credit file. But Ulzheimer cautions that the note might be irrelevant since most lenders only look at your score.

Errors in credit reports are common and can happen for any number of reasons, including mistaken identity, out-of-date

information or mere typos. So it’s impor-tant to check your report regularly -- and especially before you apply for a new loan.

Your client’s score might have gone down if the item in error was an account in good standing, such as a credit card with a high limit. Her score might also have dropped for reasons unrelated to the error that was corrected.

In very rare occurrences, the removal of an error might lower a score by giving more weight to other, more negative factors in your report, said Barry Paperno, a spokes-man for Fair Isaac Corp., the company that developed the FICO score. Even in such a circumstance, he said, a 50-point drop is unlikely.

--Candice Choi

AP Personal Finance Writer

New York



Real Estate Investment

Opportunities

Foreclosure Web sites offer wide range of listings

LOS ANGELES (AP) Foreclosure search Web sites have grown increasingly popular as more would-be homebuyers have begun focusing on finding distressed properties.

But discerning which site works best isn’t easy: Most boast they’ve got the most listings and charge users a fee for all but the most basic property details.

Their results can vary widely, too.

I searched a single ZIP code in the Los An-geles area on several of the better-known sites and found as few as 53 listings to more than 1,000.

The sites find foreclosures through a variety of ways, with some collecting information on foreclosure-related filings from various county recorder’s offices, title companies, lenders and other sources.

Several types of documents are generated when a home enters the foreclosure process, beginning with a notice of default, a phase some refer to as pre-foreclosure. This stage reflects that a homeowner has fallen behind on their mortgage payments, but could con-ceivably catch up and not necessarily lose their home.

Other documents the sites look for are notices of trustee sales and notices of repossession, when a property goes back to the bank, also known as a ``real estate owned property’’ or REO.

If popularity is any indicator, Foreclosure.com and RealtyTrac.com are among the top foreclosure sites at the moment.

In the four weeks ended Dec. 13, Foreclo-sure.com received 26.5 percent of all online traffic visits after users searched Web sites for the word ̀ `foreclosure,’’ according to the research firm Hitwise.

RealtyTrac was ranked second, with 17.1 percent of visits, in the same period, Hitwise said.

ForeclosureStore and ForeclosureToGo each have been on the rise of late, entering the top 100 real estate Web sites in November.

The more popular real estate listings Web sites, such as Zillow.com and Trulia.com, typically display foreclosure filings culled from other sites.

Zillow lists foreclosure listings from Fore-closure.com, while Trulia displays listings from RealtyTrac Inc.

So it makes sense to go to the source.

Many of the sites I tried had common search features, allowing users to look up homes in some stage of foreclosure by ZIP code, city and state. Some break out listings ac-cording to where they are in the foreclosure process and also include homes involved in a bankruptcy, for sale by owner and those with tax liens.

Most sites allow users to see a partial ad-dress, and some details on the property, such as how many bedrooms and bathrooms and square feet.

But for a full look at foreclosure data on list-ings, users have to pay monthly fees ranging from $39.80 to $79.95, going by the sites I

examined. Many offer a free trial period of a week to try the full services, although a credit card is typically required to do so.

RealtyTrac’s free access gets you listings with incomplete addresses, although I found a couple of exceptions.

It also breaks out results by foreclosure stage and in addition to displaying photos when available and other basic details, it provides an aerial shot of the properties.

To access enhanced features, such as a map of comparably priced properties, a listing’s loan history, liens, and when and how the property has changed hands, for example, one must sign up for the a subscription, which runs $49.95 a month.

Rick Sharga, RealtyTrac’s vice president for marketing, says the site has 1.9 million foreclosure and bank-owned properties, with about 1 million of those listings homes that have yet to be repossessed.

By comparison, Foreclosure.com boasts more than 1.8 million listings, which users can sort through by stage of foreclosure.

The site says it gets its listings from fore-closing lenders, government agencies and corporate sellers. A subscription costs $39.80 a month.

A site eerily similar in look, feel and pricing to Foreclosure.com is ForeclosuresToGo.com.

In my test drive, the site returned listings missing with photos and other basic informa-tion, such as the number of rooms. The site

By ALEX VEIGA AP Real Estate Writer


offers a status for the properties, but only one was labeled as ``new.’’

A relatively recent entrant to the foreclosure listing search business, ForeclosurePoint.com, has sought to stand out by letting users see listings’ full addresses for free.

That can enable a buyer to approach a hom-eowner who might be in default and willing to pursue a short sale, says ForeclosurePoint spokesman Cary Brazeman.

`Ìf you’re a homebuyer interested in a single home ... why pay anybody?’’ he says.

The site, which launched in June, says it tracks filings on about 2 million properties in some stage of foreclosure, although its reach only extends to 34 states. Its premium membership is among the highest around

at $79.95 a month, and includes the ability to track multiple properties at a time and receive timely alerts on when they are up for auction, opening bids and more.

Those extras, Brazeman notes, are aimed more for professional real estate investors.

For regular homebuyers, experts suggest they avoid paying fees at all and use the Web sites merely as a way to benchmark what foreclosure prices are like in a given area.

``They’re not always up to date, they’re don’t always have the most current information,’’ says Delores Conway, director of the Cas-den Real Estate Economics Forecast at the University of Southern California.

Instead, she suggests homebuyers approach real estate brokerages and ask for the agent

who has done the most foreclosure transac-tions, because they’ll generally have the most up to date information on a listing.

On the Net:

RealtyTrac: http://www.realtytrac.com

Foreclosure.com: http://www.foreclosure.com

ForeclosurePoint: http://www.foreclosure-point.com/

ForeclosuresToGo: http://foreclosurestogo.com/

ForeclosureStore: http://www.foreclosure-store.com/

Trulia: http://www.trulia.com/

Zillow: http://www.zillow.com/

REAL ESTATE OPPORTUNITIES

Homebuilder sentiment index remains at record lowLOS ANGELES (AP) -- A key gauge of homebuilders’ con-fidence remained at a record low this month, as builders con-tinued to be overwhelmingly discouraged in the prospects of a housing turnaround amid a worsening U.S. economy and rising unemployment and foreclosures.

The National Association of

Home Builders/Wells Fargo housing market index held at nine in December for the sec-ond month in a row.

Index readings higher than 50 indicate positive sentiment about the market. But the in-dex has drifted below 50 since May 2006 and has been below 20 since April. The slide in builders’ confidence sharpened

this fall in the wake of the U.S. financial crisis, slipping three points in October and then five points in November.

``The crisis continues,’’ NAHB Chairman Sandy Dunn said in a statement. ``Congress and the Administration must step in with substantial incentives to bring qualified buyers back to the table as well as effective

foreclosure relief programs if we are to end this negative spi-ral that is weighing so heavily on our national economy.’’

Homebuilders have asked Con-gress to enact a 10 percent tax credit of up to $22,000 for homebuyers that purchase a home over the next year. They also are seeking a temporary interest-rate reduction on 30-

AP Wire Service


year mortgages.

Government incentives are needed, homebuilders contend, because many buyers are fear-ful of jumping into the housing market due to uncertainty over the economy and how much longer the three-year slide in home prices will continue.

``We have seen no improvement over the past month in terms of sales conditions for new homes,’’ said David Crowe, the association’s chief economist.

`Ìn fact, certain factors have gotten progressively worse, not the least of which is the job market, where massive layoffs are having a devastating effect on consumer confidence.’’

Major public builders such as D.R. Horton Inc., KB Home, and Centex Corp., have seen their stocks hammered as hous-ing woes have worsened.

The latest builder index reflects

a survey of 426 residential de-velopers nationwide, tracking builders’ perceptions of market conditions.

The builders’ gauge of current sales conditions fell one point to eight, while expectations for sales over the next six months declined two points to 16, the NAHB said.

The index of foot traffic by prospective buyers remained unchanged at a record low of seven.

Regionally, builder confidence declined in the Midwest by one point to six. In the South, it slipped two points to 10. The index held steady in the North-east at 11 and rose in the West by one point to seven.

Firm: Statewide home prices dive 38 percentLOS ANGELES (AP) -- The median home price in California dived 38 percent in November from a year ago, as foreclosures propped up sales but eroded prices, a real estate tracking firm said in December.

The median home price dropped to $258,000 last month from $414,000 in November 2007, San Diego-based MDA DataQuick said.

A total of 32,163 homes and condos were sold statewide, up 26 percent from the year-ago period.

`Ìndicators of market distress continue to move in different directions,’’ DataQuick said. ``Foreclosure activity is at or near record levels, financing with adjustable-rate mortgages is near the all-time low.’’

Meanwhile, rates on 30-year fixed mortgages dropped this week to the lowest levels in at least 37 years. The average rate dropped to 5.19 percent, down from the year’s previous low of 5.47 percent set last week.

`À glimmer of hope for sellers in those areas is the government’s interest in driving down mortgage rates and loosening credit,’’ DataQuick president John Walsh said. `Èventually it could help ignite more move-up buying.’’

The typical mortgage payment that homebuyers committed to pay in November was $1,198, down from $1,951 a year ago.

DataQuick previously said the median home price in the nine-county San Francisco Bay area plummeted a record 44 percent in November to the lowest level since September 2000.

The median price for homes and condos there dropped to $350,000 last month from $629,000 in November 2007.

The peak median price -- $665,000 -- was reached last summer.

A total of 5,756 homes and condos were sold in the region last month, up 12 percent from the year-ago period.

``Considering the times we’re in, November turned out to be a decent month from a sales volume perspective,’’ Walsh said.

Foreclosures accounted for about 47 percent of all sales of exist-ing homes last month in Northern California, up from 10 percent in November 2007.

Solano County led the way, with 63.6 percent of sales last month involving foreclosed properties.

Earlier this week, DataQuick said the median home price in a six-county region of Southern California plunged 35 percent in November from a year ago, dropping to the lowest mark since April 2003.

The median price for homes and condos tumbled to $285,000 last month from $435,000 in November 2007.

The drop occurred as 55 percent of those who bought preowned homes and condos seized on bargain-priced foreclosed properties.

There were 16,720 homes sold last month in the region, up 27 percent from the year-ago period.

AP Wire Service


LOS ANGELES (AP) -- Selma Lozoya didn’t realize how tough it would be to help her obese mother lose weight until she had to forage for fresh groceries in the inner city.

For Lozoya, 17, not having a driver’s license was part of the chal-lenge. But the dearth of supermarkets in her South Los Angeles neighborhood choked with liquor stores, auto repair shops and warehouses made it even harder.

`Ì can’t drive yet so I’m not gonna do anything extraordinary like jump on my bike and ride it for two or three miles and ride it back with tons of stuff on it, oh no,’’ said Lozoya.

Seizing control of her kitchen, Lozoya helped her mom shed 50 pounds by banning lard from tamales and poaching chicken instead of frying it -- and she is expanding her efforts to help her neighbors.

Lozoya is working to bring better food to one of the poorest com-munities in America, where neon lights illuminate a greasy fast-food vista and obesity and diabetes are rampant. While grocery stores and healthy restaurants are scarce, corner stores are stocked with beer, cigarettes, fried snacks and fatty sweets.

Lozoya’s work with high school classmates to urge bodegas to stock healthier options is part of a larger campaign nationwide

by nutritionists and community activists to eradicate so-called food deserts.

``Deserts are naturally occurring things,’’ said Joanne Kim, chief operating officer of the Community Coalition of South Los An-geles. ``We call this food apartheid because people have chosen to locate elsewhere even though there is substantial purchasing power here.’’

Between the three major Southern California grocery chains -- Ralphs, Albertsons and Vons -- there are six supermarkets in South Los Angeles, serving a population of about 688,000. By comparison, 19 supermarkets serve West Los Angeles’ population of about 395,000.

Retailers blame theft in urban supermarkets, high employment turnover and lack of space for choosing to locate their stores elsewhere.

While farmers markets and trucks peddling fruits and vegetables have taken root in South Los Angeles, they are inconsistent and inadequate for the area’s population, Kim said.

Some cities are trying to get more supermarkets into urban areas. The state of Pennsylvania invested $30 million five years ago and


HONOLULU (AP) -- Condominium resales on Oahu plummeted 47 percent in November, while resales of single-family homes dropped 30.6 percent, the Honolulu Board of Realtors reported.

``The demand for housing sales was the lowest in 10 years but, interestingly, the inventory of both single-family homes and condominiums actually contracted a bit last month,’’ said Harvey Shapiro, the board’s research economist. ``This lack of inventory buildup indicates a slowdown in our market rather than a collapse as some mainland cities have, unfortunately, experienced.’’

The median sales price for single-family homes in November was $594,500, down 4.9 percent from October. The median sales price for condos last month was $316,200, off 2.5 percent from

the previous month.

`Àlthough Oahu residential home sales declined substantially in November, our prices are still exhibiting much more stability than those for cities on the mainland,’’ said Dana Chandler, the board’s president. ̀ `Time will tell what the complete effects of the current economic conditions will be, but we’re hopeful that the slowdown will be shallow and only of short-term duration here in the islands.’’

November saw only 170 single-family homes sold on Oahu, down from 245 in the same month last year. November condo sales tal-lied 201, compared with 379 in November 2007.

Housing resales plummet on OahuAP Wire Service

Urban areas struggle to find grocers, fresh foodBy SHAYA TAYEFE MOHAJER

Associated Press Writer


got 61 supermarkets opened in rural and urban areas.

Chicago and New Orleans are considering similar programs, but legislation to bring the same assistance to California cities died in the Legislature in 2006 due to budget constraints.

The food disparity in South Los Angeles is an echo of the area’s history, marked by decades of segregation and racial strife, dating back before the deadly 1965 Watts riots.

In the state’s post-riot report, residents alleged price gouging and the sale of stale bread, rancid meat and rotten produce -- complaints that re-emerged decades later after race riots erupted in the wake of the Rodney King verdict in 1992, said City Councilwoman Jan Perry.

South Los Angeles has shifted from a mostly black to a mostly His-panic community in the last decade, with Latinos making up about two-thirds of the population, according to 2006 Census figures.

Today, fast food is king in South L.A. Nearly three-quarters of restaurants offer food on the go, compared to 42 percent in pricier neighboring West Los Angeles.

The city’s Community Redevelopment Agency estimates the area could support 14 new grocery stores and 74 more restaurants. But few businesses are biting on incentives that in-clude hiring tax cred-its, 35 percent electric-ity discounts for a year and low interest loans.

``You throw public subsidies at them, and they still don’t come,’’ Kim said.

Like many residents of Lozoya’s community, where 28 percent of households live below the federal poverty line, she relies on the small corner grocery a few blocks from her home for chicken, fruit and vegetables.

Until recently, Los Compadres Market and Restaurant looked like most others. But Lozoya and her class-mates gave it a healthy

makeover through a grant from The California Endowment, a private health foundation that aims to create healthy communities.

Chips and candy were removed from the front aisle of the store; a large cooler in the back was stocked with fresh fruits and veg-etables; fruits were carefully laid out to avoid bruising; milk and cheese chilled alongside beer.

``These problems are really killing our communities,’’ said Marion Standish, a program director for the endowment. ``They’re really disabling young people all over the state and limiting their potential in very serious ways, and limiting all of our potential as a result.’’

It’s those limitations that Lozoya is trying to push past -- even in her own quiet ways at home.

A few times, she’s convinced her parents to drive 45 minutes to Beverly Hills, where her father, a contractor who doesn’t consider a meal complete without red meat, balks at the price of the perfectly ripe berries Lozoya piles into the cart.

``When we get to the checkout he says, ‘This is the last time! Never again!’’’ Lozoya said, wagging her finger in imitation. ``Now, me and my mom try to pay when he isn’t looking.’’



SALT LAKE CITY (AP) -- Roland ``Rollie’’ Walker, the owner of southern Utah’s larg-est incomplete subdivision, is being forced to sell the trees to keep his project afloat. Credi-tors are posting foreclosure notices on his land, and banks are refusing to loan him money.

Walker’s `Èlim Valley’’ is by far the largest of the housing developments stopped in their tracts around St. George, once the second-fastest growing U.S. metropolitan area. It is by no means the only one. Ivory Homes, Utah’s largest homebuilder, says it’s having trouble finishing its own subdi-vision when other lots around St. George are going for half as much. And many builders have been pushed into default.

There’s a whole lot of projects

that are in deep trouble all over,’’ said Alan Carter, owner of Southern Utah Title, who said he was handling a lot of ``short sales’’ (properties that sell for less than the balance owed on a mortgage).

St. George’s golf courses, wide-open public lands and national parks attract many active residents who are look-ing for cheaper living in a mild climate. And while economists say St. George should pull out of the real estate recession fast-er than other regions, Walker says he needs new loans and buyers to step forward now, before creditors take over his land.

``There’s no such thing as stop,’’ said Walker, chief ex-ecutive of McNeil Develop-ment, Idaho Falls, Idaho. `Ìf

you stop, you’re dead.’’

Nearly four square miles in the redrock desert, Elim Valley has been laid out with roads, utilities, sidewalks and street lights. Walker has approval for `èvery square inch’’ of a dense New Urbanism-style com-munity of as many as 10,423 housing units.

But there isn’t a single house to be found at Elim Valley, nor a sign any are being built.

Still, Walker is determined, even upbeat -- ``we’re doing property tours every day’’ -- hoping to salvage his com-pany’s biggest parlay into real estate, which he launched at the peak of the boom in 2006. The next year, ANB Fi-nancial National Association, an Arkansas-based bank that invested heavily in southern

Utah and initially financed his development, collapsed and was taken over by the govern-ment last May.

ANB’s failure pulled the plug on hundreds of millions of dollars of housing projects in southern Utah, according to Southern Utah Title.

`Òur problem is the instability of banks,’’ Walker said. `Às banks stabilize, we’ll have the money.’’

The housing recession, though, is unlikely to end soon, predicts Jim Wood, director of the Uni-versity of Utah’s Bureau of Economic Research.

The market, Wood says, `ìs as bad as I’ve ever seen.’’ The turning point came abruptly three months ago.

``September hit and it just

By PAUL FOY AP Business Writer

New home developments stop in their tracts


stopped,’’ he said. ``Builders stopped building.’’

Utah is saturated with about 3,500 newly built and unsold homes, some half-finished. Around St. George, 550 of these homes are for sale, according to NewReach Inc., a Salt Lake City-based market research company.

Among overextended builders and developers, ``there’s a lot of grief,’’ said Wood, who warned that slump will last for at least a year if not longer. Utah’s homeowner foreclosure rate, now 1.5 percent, could double.

That is not what Ivory Homes wants to hear.

The homebuilder mapped out a subdivision called Hidden Valley Estates in 2006. Of the 1,072 planned residences, only 120 have been built. Just 37 sold this year. Ivory Homes is offering town-houses starting around $190,000, for thousands less than a year ago.

``We can go out and buy lots cheaper’’ elsewhere, said David Wolfgramm, chief financial officer for Ivory Homes. ``We are at a crossroads.’’

The possibility Ivory Homes might walk away was enough for the state, which leased the land for development, to lower royalty rates of up to 20 percent on home sales and make the houses less expensive. And it’s not clear that will be enough.

Over at Elim Valley, a development that sprawls across 2,300 acres, Walker is haggling with creditors.

He owes his civil engineer around $300,000 and said he plans to pay it off -- in trees. To make good on the debt, he agreed to cull

his tree farm -- 7,500 trees growing for up to two years, with 75 species from blue spruce to hardwoods.

``We really want him to succeed,’’ said Kent Nobis, a principal for Rosenberg Associates of St. George, the civil-engineering firm owed money on Elim Valley. ``For one thing, we get paid back.’’

But Walker also owes at least $10 million to a group of short-term real-estate investors who aren’t interested in a tree swap.

The investors are suing to recover money spent on land and water rights. Walker’s lawyers have temporarily blocked a foreclosure in state court.

``We just want the money back,’’ said Greg Walker, director of risk management for Cypress Capital XI LLC of South Jordan, Utah, who is not related to the developer.

`Ìt’s simply: We loan some money, take collateral. They pay it back, we return the collateral. We know the economy sucks. But we have a fiduciary responsibility to our investors,’’ he said.

Rollie Walker insists the loan from Cypress isn’t due yet. And despite his troubles, Walker believes he is in better position than many developers around St. George.

`Ì’m not without my problems, but I’d rather be me than anyone else I know,’’ but he quickly added, `Ì’m not trying to rain on everybody else.’’


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Business Opportunities Journal Jan-09