Quote of the Week
‘This is a very intense competition.’
, Julie Meier Wright, president and chief executive of the San Diego Regional Economic Development Corp., on the heated competition to land the permanent headquarters of the California Institute for Regenerative Medicine.
Friday, April 15
Bad Day On Wall Street:
The stock market finished the week with a thud as stock prices continued a decline that began Wednesday, April 13. Over the three days, the Dow Jones Industrial Average lost 420 points, or 4 percent, to close at 10,087.51 Friday. That day’s loss alone was 191.24 points , the Dow’s longest one-day drop since May 2003. Contributing to Friday’s loss were lower-than-expected earnings from Dow component IBM.
The technology-heavy Nasdaq fell 4.8 percent over three days to 1,908.15, a level not seen since October. Over the same three-day period Qualcomm Inc. fell 5.5 percent to $32.69, Sempra Energy fell 5.3 percent to $38.63 and Titan Corp. fell 5.0 percent to $17.01.
, Brad Graves
– – –
Petco Admits Error:
Shares of San Diego-based Petco Animal Supplies, Inc. closed at $30.36, 13.6 percent down from April 14, after the company said it erred in estimating fourth-quarter net earnings. Correcting the error may cut net earnings by $3 million to $4.5 million, the company said.
Earlier in the month, Petco said, it found it had underestimated expenses related to its distribution operation. As a result it would delay filing its annual report with the Securities and Exchange Commission. The company also said it strengthened its internal controls following the April 1 discovery.
In the days that followed several law firms, including San Diego-based Lerach Coughlin Stoia Geller Rudman & Robbins LLP, filed class-action lawsuits related to the announcement.
Petco trades on the Nasdaq as PETC.
, Brad Graves
Monday, April 18
Time Magazine’s Stern Judgment:
San Diego Mayor Dick Murphy, along with Philadelphia Mayor John Street and Detroit Mayor Kwame Kilpatrick, were ranked among the nation’s worst mayors in the current issue of
Time
magazine.
The article recaps Murphy’s struggles with the city’s pension mess and related investigations by the Federal Bureau of Investigation, the U.S. attorney and the Securities and Exchange Commission, adding that the crises almost cost him his job to “Donna Frye, a last-minute write-in candidate who runs a surf shop.”
In a prepared statement, Murphy said that, “I completely disagree with Time magazine’s conclusions. My administration has had many significant accomplishments during the last four years.”
Among those he cited: completion of Petco Park; creation of the Ethics Commission; opening of the long-delayed state Route 56; reduction of sewer spills and accompanying beach closures by 65 percent; the lowest violent crime rate of any big city; and the end of the Chargers ticket guarantee.
“And, we’ve had many more victories that have had a positive impact on San Diego’s quality of life,” he added.
, Pat Broderick
– – –
Deadline For Lego Bids:
The parent company of Legoland California closed bidding for the Carlsbad theme park and its three European theme parks. Billund, Denmark-based Lego would not say how many bids it received. Earlier in April the company said it hoped to finalize the deal by summer.
, Brad Graves
– – –
Remec Spells Out Asset Sale:
Remec Inc., the Del Mar-based maker of high-frequency voice and data transmission equipment, said in its annual 10K filing that it plans to distribute between $150 million and $200 million to its shareholders following completion of the sale of its defense and space unit to Chelton Microwave.
The distribution, contained in a document filed with the Securities and Exchange Commission, still requires approval of its shareholders and the SEC. The company plans a special shareholders meeting next month to approve the transaction.
The struggling high-tech manufacturer has been selling off parts of its operations since last year, and arranged the sale of the defense and space unit in December for $260 million cash to a subsidiary of Great Britain-based Chelton LLC.
In March, it entered into an agreement to sell its wireless systems division to Powerwave Technologies Inc. for 10 million shares of the Santa Ana manufacturer’s stock and $40 million in cash, a deal then valued at about $120 million. The company plans to hold a separate shareholders’ meeting in June for that deal’s approval.
Once the transactions are completed, Remec will have two key operating units with total revenues last year of about $75 million, which are also being shopped to buyers.
“Our strategy ultimately is to sell off the assets, and distribute the proceeds to shareholders,” said Remec counsel Don Wilkins.
Remec’s combined worldwide employment is about 5,000, including 1,300 in San Diego. About 1,000 work at the Kearny Mesa defense and space unit.
In other news, Remec reported its annual loss for the fiscal year ended Jan. 31 of $90.8 million on revenues of $423.9 million, compared to a net loss of $49.4 million on revenues of $351.9 million in the prior fiscal year.
Remec shares, traded on Nasdaq, closed at $4.98 April 18, giving it a market cap of about $318 million.
, Mike Allen
– – –
State Targets Health Card Company:
For the second time in four months, the state government ordered Affordable Health Care Solutions of San Diego to stop selling its discount health cards in California. The Department of Managed Health Care originally filed a cease-and-desist order Dec. 10. It suspended the order March 4, then reinstated the order April 14.
According to the state, the Kearny Mesa company promised insurance-like coverage in exchange for periodic payments. The state alleges the company used deceptive advertising and telephone marketing to “offer discounts from doctors, dentists, hospitals and pharmacies that are unavailable because it has no contracts with providers to offer discounted prices.” The state said several companies offer similar products, and many people filing complaints about these companies are “lower-income, Spanish-speaking, and without access to health insurance.”
, Brad Graves
Tuesday, April 19
Padres Name CEO:
Sandy Alderson, one of the key architects behind the rise of the Oakland Athletics baseball franchise in the 1980s and 1990s, was named CEO of the San Diego Padres on April 19.
Padres owner John Moores called Alderson one of the best baseball minds in the game today.
“He built championship teams on the field and capably represented the integrity of the game off the field,” Moores said of his new employee who signed a five-year undisclosed contract that also includes a minority equity stake in the franchise.
Alderson was most recently executive vice president for baseball operations for Major League Baseball and was said to be the right hand man for Commissioner Bud Selig.
Previously, he was general manager of the A’s from 1983 to 1997, and the team’s president from 1993 to 1995, and from 1997 to 1998. During his tenure in Oakland, the A’s won four division championships, played in three World Series and won the Series in 1989.
Alderson, a 57-year-old attorney with a law degree from Harvard, also served four years as a Marine infantry officer in Vietnam.
He replaces Dick Freeman in the job. Freeman retains his title as president and has been given a new title as chief operating officer.
, Mike Allen
– – –
PriceSmart Settlement:
PriceSmart Inc., the San Diego-based operator of foreign warehouse club stores primarily located in the Caribbean, said it entered into a settlement agreement with a minority shareholder of its Guatemalan subsidiary that involves a buyout of the partner’s interest.
The company said it plans to purchase the 34 percent equity stake in the Guatemalan subsidiary from Michael Ascoli for $6.6 million in return for Ascoli dropping a lawsuit against the company and releasing it from prior claims.
Last month, PriceSmart said it was involved in a legal dispute in the Guatemalan courts with Ascoli concerning monetary claims, and his attempts to have a court receiver appointed to manage the company while the dispute was being litigated.
“We are pleased that all pending litigation and disputes with our former minority shareholder have been resolved,” said Chairman Robert Price.
PriceSmart, which operates 26 warehouse club stores in 12 countries and one U.S. territory, has said in earlier public filings it was involved in another legal dispute in the Philippines, and last year cancelled its agreement with a Chinese licensee. Last month, the company sold its interest in a joint venture with a Grupo Gigante that operated three warehouse club stores in Mexico.
, Mike Allen
– – –
Apparel Deal:
Phoenix Footwear Group of Carlsbad said it plans to buy Chambers Belt Co. of Phoenix for a combination of cash and stock worth $21.5 million. Phoenix, based in Carlsbad, had 2004 revenue of $76 million. Chambers had 2004 revenue of $40 million.
The acquisition is expected to close within the second quarter. Phoenix trades on the American Stock Exchange as PXG. Shares closed at $6.44.
, Brad Graves
– – –
Laser-Maker Posts Results:
Cymer Inc., the San Diego company that makes equipment to create microchips, reported net income of $5.39 million, or 14 cents per diluted share, on revenue of $84.8 million during the first quarter. In the year-ago period, Cymer had net income of $7.16 million, or 19 cents per diluted share, on revenue of $87.9 million.
Cymer makes laser light sources for microchip foundries, and deals in ancillary products and services. During the recent quarter, Rancho Bernardo-based Cymer sold 48 of the big machines, which carry an average price tag of nearly $1 million. In the year-ago quarter the company sold 70 of the machines.
Cymer’s Nasdaq symbol is CYMI.
, Brad Graves
Wednesday, April 20
Desalination Deal OK’d:
The Carlsbad City Council approved an agreement with the San Diego County Water Authority on a $270 million regional seawater desalination facility to be located at the Encina Power Station in Carlsbad. The Water Authority considers the matter April 28.
Since 2001, Carlsbad has worked with a private developer, Poseidon Resources of Stamford, Conn., on an agreement to provide fresh water to local residents, as well as San Diego County residents, from the proposed Encina plant. The deal calls for Carlsbad to purchase up to 5,000 acre-feet of desalinated water a year, and pay the Water Authority’s full cost to produce the water and the estimated cost of delivering it to Carlsbad’s local distribution system.
, Pat Broderick
Thursday, April 21
North County Mulls Adelphia’s Future:
National cable companies Time Warner, Inc. and Comcast Corp. announced an agreement to acquire Adelphia Communications Corp., a Colorado-based cable company with 5.2 million basic subscribers nationwide for $12.7 billion in cash and 16 percent of the common stock of Time Warner’s cable subsidiary, Time Warner Cable Inc.
The financially strapped company has been exploring a sale of the company since April 2004.
Adelphia, which is estimated to provide service to more than 66,000 subscribers in the North County communities of Carlsbad, Del Mar, San Marcos, Encinitas, Fallbrook, Solana Beach and Vista, had been looking to reorganize the company since 2002.
The impact on Time Warner Cable’s San Diego operation, which has 350,000 subscribers throughout the northern half of San Diego, Coronado, portions of Poway, Palm Springs, Palm Desert, Barstow, and other desert communities, is unknown at this time.
But according to sale documents, Time Warner Cable and Comcast “will swap cable systems to enhance their respective geographic clusters.”
, Lisa Kovach
– – –
Good Day On Wall Street:
The Dow Jones Industrial Average rose 206 points to 10,218.60. The Nasdaq made an even larger leap in terms of percentage; it rose 48.65 points to 1,962.41. Intel continued to bask in Tuesday’s positive earnings report; IBM rose $2; Qualcomm Inc. gained 4.5 percent, even after it reined in its forecast for the rest of the year. What’s not to love about tech?
, Brad Graves
