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February
5, 2003
Post time8:00 a.m. PST |
"It is in vain, sir, to extenuate the matter. Gentlemen
may cry, Peace, Peace-- but there is no peace. The war is actually begun!
The next gale that sweeps from the north will bring to our ears the clash
of resounding arms! Our brethren are already in the field! Why stand we
here idle? What is it that gentlemen wish? What would they have? Is life
so dear, or peace so sweet, as to be purchased at the price of chains
and slavery? Forbid it, Almighty God! I know not what course others may
take; but as for me, give me liberty or give me death! "
Patrick
Henry, March 23, 1775
----------------------------------------------------------------------------------------------
Headlines---
Alert---American
Capital Group, Orange, California
The
Funding Tree---"I Really Didn't Know."
eLessors
2003 Lease Syndication Showcase---March 10
DC buzz: Administration mulls
Mineta replacement
Teamsters
vote to authorize strike; talks with carriers set to resume
Nation's Top Industry Leaders and Economy Experts
Optimistic
--sponsored by Beverly
Hills Chamber of Commerce
Leasing Transactions
- Reporting Requirements
Hal
Richters Accord Financial Group, is seriously ill and under hospice care
Cisco
Sees No Upturn Soon for Technology Spending
Comdex
planners file for Chap. 11
Weak
economy, donor wariness/daunting year for America's charities
NASA
Reportedly Hacked Hours After Columbia Was Lost
GE
Consumer Finance to Acquire First National
--please
see Jeff Underwood’s comments from Great Britain---
Lions,
Mariucci complete terms on five-year deal
Special:
Economic Woes Hit Law Firms
(Expect
more new law firms, smaller)
### Denotes Press
Release
Pictures from the Past----- 1986—WAEL Board of Directors
“Outgoing members of the 1986 Board of Directors received
plaques for their time and efforts in leading the membership from 1986
President Ted Parker, left; standing with plaques from left to right:
Jim Swander, RSN Equipment Leasing, Santa Clara, CA; Hal McAfee, Pacific
First Leasing, Novato, CA; Sudhir Amembal, Amembal & Isom Lease Consultants,
Salt Lake City, UT; John Torbenson, and
John Torbenson, Heritage Equipment Financing Corp.”
1987, Western Association
of Equipment Lessors Newsline
---------------------------------------------------------------------------------------------
Classified Ads---Help Wanted
SALES:
Lessor/Broker seeks experienced small - mid ticket reps (IT, Furniture,
Telcom, Medical and General), 2 in CA, 2 Nationally and 2 in NE. Must
have a book of business. Qualified Vendor leads available, strong commission
& support, Draw and benefits. Call 617-641-9628 ext.11 or email
MarkG@IntegrityLeasing.com
Sales:
LCA is a small ticket leasing company seeking results-oriented, qualified
sales professionals with outstanding performance in the lease industry.
We offer competitive salary, commissions and benefits. Fax: 248-524-0267
email:
kbernia@leasecorp.com
Sales:
Lessor/Broker-Arizona- need experienced mid-market salesperson, location
open, strong medical bkrnd pref. Top comm, draw, benefits.
Call John Torbeson 888 607 6800 john@odysseyequipfinance.com
Sales:
Small ticket leasing reps, General equip. & medical, Municipal Vendor
leads are provided.
Fred
St Laurent freds@bwresults.com
44 “Jobs Wanted” ads at: http://65.209.205.32/LeasingNews/JobPostings.htm
_________________________________________________________________
Alert---American
Capital Group, Orange, California
Do you have any information on American Capital Group of
Orange, Ca. They have one of my
vendors on hold for $450,000 since December
1, 2002. I know they are
not a direct funder and the deal is in Ohio. We had the client approved
for 8% and blew the deal. Any
help would be appreciated.
After my company, JLS Leasing
Company, was acquired by Sky Bank, I went in-house to form their leasing
program. It was a two-year short-lived
experience. We then formed Bankers Network Leasing in 2000
and now serve as a conduit or correspondence with 15 Banks located throughout
the US. We
work direct with
the Commercial Lenders.
We provide a full
range of financial services and products to many leading restaurant chains,
Franchisors, Franchisees, Retailers and
Grocery/C-Stores. We are not limited to the number of units,
expansions or start-ups as long as the guarantors are "A" credits.
We specialize in Equipment Leasing/Financing, Project Build-out
Financing, Franchise Financing and Tenant Representation. We work with
many of the leading Real Estate Developers and are members of the
ICSC (International Council of Shopping Centers) and the NAELB.
We are looking
to you for suggestions.
With appreciation,
Jerry Sweed
Bankers Network
Leasing
330-965-0509
330-965-0609 (Fax)
jlsleasing@zoominternet.net
6551 Lockwood
Blvd. Suite 3
Boardman, Ohio
44512
----------------------------------------------------------------------------------------
The
Funding Tree---"I Really Didn't Know."
“ I quit today!! I feel a lot better!! “
( name with held
)
http://www.leasingnews.org/#bulletin
--------------------------------------------------------------------------------------------------
Conseco
Filings Announced
Conseco, Inc. announced that at the request of CFN Investment
Holdings, LLC,
18 additional Conseco Finance Corp. subsidiaries filed for
Chapter 11
protection with the U.S. Bankruptcy Court in the Northern
District of
Illinois. Mill Creek Bank and Green Tree Retail Services
Bank were not
included in the filing
-------------------------------------------------------------------------------
### #########################################
eLessors
2003 Lease Syndication Showcase---March 10
Matching Buyers With Sellers In The
Commercial
& Municipal Syndication Markets
The Ritz-Carlton, Buckhead | Atlanta, GA
About The Lease Syndication Showcase...
An exclusive group of syndication professionals from the
commercial and municipal equipment leasing markets will participate in
an upscale, professionally intimate showcase at the elegant Ritz-Carlton,
Buckhead hotel in Atlanta, GA on March 10th, where innovative promotion
of lease syndication deal flow and relationship enhancement will be introduced.
Dress Code - Business please.
How It Works...
We've found an alternative to the train wreck culture of
traditional conferences and funding source expositions where multitudes
of spectators do not necessarily contribute to a productive networking
experience. The Lessors Network delivers an intimate, upscale event where
a smaller group of syndication professionals from the buy and sell sides
are carefully screened and invited based on their networking value to
this exclusive theme specific showcase.
Invitation Only Policy
This showcase is designed to facilitate unprecedented interaction
between all Attendees, Exhibitors and Sponsors via the exchange and distribution
of 2003 Syndication Profiles and Syndication Term Sheets.
The Networking Suite welcomes you and your guest to a warm
and relaxed enclave of elegance - a place where your privacy is always
respected, complimentary refreshments are served. Exhibitor's 2003 Syndication
Profiles and Syndication Term Sheets will be available all day from tabletop
exhibits in the Networking Suite and will be distributed immediately preceding
each Exhibitor's presentation in the General Session.
General Session presentations will help you identify and
evaluate prospective syndication resources for your equipment leasing
activities. Registered Exhibitor Speakers (syndication professionals)
from the buy and sell sides will alternate delivering oral presentations
(no PowerPoint) profiling their company's 2003 syndication strategies.
The Networking Reception, a new standard in distinctive elegance
and business sophistication, represents a key networking opportunity.
While tabletop exhibits provide convenient access to Exhibitor representatives
and their promotional material, all Attendees are invited to exchange
2003 Syndication Profiles and Syndication Term Sheets with other Attendees,
Exhibitors and Sponsors during the Networking Reception.
It's all about networking, and when you leave this event
you'll know everything you need to know about which companies are selling
and which companies are buying in 2003.
Program at a glance:
http://www.lessors.com/Events-2003/Syndication/program.html
Invitation Request:
http://www.lessors.com/Events-2003/Syndication/inv-syn.html
######## ######################################
-----------------------------------------------------------------------------------------
DC buzz:
Administration mulls Mineta replacement
Landlinemag.com
The Official Publication of the Owner-Operator
Independent Drivers Association
According to the Washington Whispers column of U.S. News
& World Report, " administration officials are bracing for the
resignation of Transportation Secretary Norman Mineta, the 71-year-old
former Clinton Cabinet member who suffers from painful back ailments."
Paul Bedard writes the column. "Insiders say that House
Secretary Mel Martinez...is being touted as Mineta's replacement,"
Bedard's column says.
Mineta recently underwent surgery at Walter Reed Army Medical
Center to relieve long-standing back pain related to disk stress and scoliosis,
a curvature of the spine.
Mineta, a former San Jose, CA, congressman, recently spent
a few weeks at the hospital, holding meetings and telecommuting from his
hospital bed.
------------------------------------------------------------------------------------
Teamsters
vote to authorize strike; talks with carriers set to resume
Landlinemag.com
The Official Publication of the Owner-Operator
Independent Drivers Association
The members of the Teamsters Union have voted to authorize
a strike against companies represented by the Motor Freight Carriers Association,
the union announced Feb. 3.
In a statement, union representatives said 95 percent of
the members who voted favored authorizing a strike. The vote was called
after negotiations with the carriers' group broke down in late January.
The MFCA, a national trade association, represents unionized
general freight carriers such as ABF Freight System, Roadway Express,
Yellow Freight and USF Holland. The Teamsters and the MFCA said the break
in talks - which the MFCA described as a "temporary recess"
- was caused by differences over wages and benefits.
However, just as the strike vote was wrapping up, the two
groups said they would resume negotiating Feb. 5 in Chicago, the union
said.
"The strike vote has already had an impact by leading
to a quick return to talks later this week," Teamsters General President
Jim Hoffa said.
"Both sides have had an opportunity to fully review
and evaluate their respective wage and benefit proposals," Tim Lynch,
President and CEO of the MFCA, said in a statement. "We look forward
to returning to the bargaining table and resolving these final remaining
issues."
The agreement between the groups, which expires March 31,
covers 65,000 members of the Teamsters Union.
Smaller carriers that traditionally adopt similar contracts
employ another 20,000 Teamsters, the union said.
---------------------------------------------------------------------------------------------------
############## ###########################################
Nation's Top Industry Leaders and Economy Experts Optimistic
on This Year's Outlook at Economic Summit 2003 sponsored by the Beverly
Hills Chamber
of Commerce
(Please don’t laugh---Read the story. editor)
BEVERLY HILLS,
Calif.-----
According to conclusions
reached by 18 of the nation's foremost business and economic experts today
at the Economic Summit 2003, which was hosted by Beverly Hills Chamber
of Commerce and Civic Association and attended by 300 of the region's
top business leaders, Southern California can look forward to continued
growth in the real estate market, while anticipating improvements in the
technology and local tourism industries and trade with China -- all positively
impacting the state of the region's economy in the coming year.
The Summit showcased
three industry economic panels, each comprised of five speakers who addressed
the economic realities facing Southern California's economy, the effects
of the digital revolution on the entertainment industry, as well as the
global economy's impact on the local economy.
"Our region
represents more than half the entire Californian economy," said Ali
Soltani, President of the Beverly Hills Chamber of Commerce and Civic
Association. "This event brings together the top minds in economics
available with business leaders who want to be ahead of trends."
Leading figures
from the area's top financial industry firms and UCLA's Anderson Forecast
delivered overall optimistic predictions about international and maritime
trade, the entertainment and real estate industries, and the domestic
hotel/tourism outlook for Southern California in the coming year.
"With the
ports of Los Angeles and Long Beach combined, we're handling 65% of the
nation's entire cargo," said Larry Cottrill, Assistant Planning Director/Manager
of Master Planning for the Port of Long Beach. "Long-term forecasts
predict a 5% to 6% average growth rate in container trade."
"The entertainment
industry can look toward a fairly positive year as well," said Walter
Zifkin, CEO of the William Morris Agency.
"I would
rate the entertainment industry a seven out of ten for 2003," said
Zifkin.
"This will
be a strong year for music and television, as well as reality TV. Together
with recent technological changes, the entertainment business is also
experiencing growth from expanding into Latin America, Asia and Eastern
Europe. The forecast is very good."
Another market
that is showing strength for the coming year is residential real estate.
"Real estate
prices are going through the roof -- the region is realizing record increases
in housing prices, especially in L.A. and Orange County thanks in part
to record low interest rates," said Christopher Thornberg, Senior
Economist with the UCLA Anderson Forecast. "It's a good time to buy
real estate. Additionally, there is also a substantial spike in rental
demands." Commercial prospects are not quite as bright in San Francisco
where some real estate businesses are converting commercial properties
into residential rentals to capture the spike in that market.
As far as the
region's tourism industry is concerned, Bruce Baltin, Senior Vice President
of the Los Angeles office of PKF Consulting, noted that San Diego, along
with other up-and-coming destination resorts in Carlsbad and Dana Point,
saw a phenomenal 20% growth in this past year.
"Benefiting
from the downturn in air travel, cities like San Diego are enjoying intra-state
tourism from Los Angeles residents. The hotel industry is figuring out
that the domestic market is the main target," said Baltin.
In kicking off
the Summit's second panel discussing the impact of the digital revolution
on Southern California's entertainment industry, Charles "Frank"
Stirling, Executive Director of Digital Cinema for Space and Communications
Services for Boeing, noted, "The creative community is now finding
more flexibility with content using digital cinema. With digital (technology),
the entertainment industry can digitally represent characters, change
scenes, adding new elements to the entire creative process from capture
to post-production to distribution."
The panelists,
Scott Dinsdale, Executive Vice President of Digital Strategy for the Motion
Picture Association and the Motion Picture Association of America; David
Elliot, President of Technicolor Entertainment Services; and Kurt Hall,
Co-Chairman and Co-Chief Executive Officer of the Regal Entertainment
Group, all agreed that digital cinema would become the buzzword in the
coming years. In addition, they noted the positive progress that digital
cinema had undertaken in the past few years.
"It's not
if digital cinema would come, but when," said Hall. "And the
audience is starting to recognize that." The panelists also addressed
the challenges facing digital cinema, such as piracy before or during
a movie's theater release.
"There are
two important issues where that's concerned," said Dinsdale. "Firstly,
how secure is this movie when it gets to the theater in digital form,
and how hard is it for people to duplicate copies of it? Secondly, projected
images from a digital movie will be more difficult to capture on camcorders
than the traditional 35mm film reels."
Panelists in the
third and last group talked about the global economy's effect on regional
economies. All speakers agreed on the importance of China's emerging economy
on the U.S. economy.
"China is
clearly a major producer, more so than Japan," said Dr. John Silva,
Chief Economist at Wachovia Securities. "It is definitely a plus
for the American consumer to be heading that way."
Another strong
market trend is the move toward the technology sector.
"It's my
number one bet for the next year," said Dr. Silva. "Technology
is perhaps the one market that will experience growth, because people
realize that technology is always evolving, always changing -- it's here
to stay."
All the panelists
were fairly optimistic about how the economy would fare in the coming
year.
"We are in
the midst of a modest recovery that is similar to the 1991 economy,"
said Thomas McManus, Managing Director and Chief Investment Strategist
at Banc of America Securities LLC. "And because we went into the
recession gradually, we will exit gradually. We should see a recovery
beginning in mid-2003."
Still, the speakers
advised caution and patience on the consumer's part, while weathering
out the volatility of the economy.
"Improvement
in consumer confidence may actually allow the stock market to do a little
better," said John Manley, JR, CFA Managing Director of Salomon Smith
Barney. "In a recession, investor confidence is mostly needed for
the economy to pick up. The numbers will tend to go higher then."
The Economic Summit
2003 was produced by Beverly Hills Chamber of Commerce & Civic Association
in partnership with The Milken Institute. Presenting sponsor was Zurich
Capital Holdings. Session sponsors were City National Bank and Bank of
America. Additional sponsors of the Economic Summit included corporate
sponsors Beverly Hills BMW, Rolls-Royce of Beverly Hills, and Wachovia
Securities; supporting sponsors Beverly Hills Ltd. Mercedes-Benz, HSBC,
Southern California Edison, Union Bank of California and William Morris
Agency; cooperating sponsors United States Chamber of Commerce and Century
City Chamber of Commerce; and media partners Media Networks, Inc., Los
Angeles Business Journal and The Hollywood Reporter.
Sponsored By Beverly
Hills Chamber Of Commerce And Civic Association, the second largest Chamber of Commerce in Los
Angeles County, and has served the business community of greater Beverly
Hills since 1923.
############### ################################
We Get Letters-------------
I saw the piece that you had on on-line auto shopping and
I will attest
to the fact that it works. I purchased a 1 year old Mercedes S500
through e-bay motors and the entire transaction went smoothly.
You can
log on, find the car you want, arrange payment through Pay
Pal, and have
the car shipped to you (that cost an extra $800 but well
worth it)
My car had 15,000 miles on it and was still under warranty
(is still
under warranty). The
local Mercedes dealer had the same identical model
with higher mileage at a price tag that was $14,000 higher
than my bid
on e-bay.
I actually had to participate in several auctions to get
the car I
wanted at a price I was willing to pay but that entire process
was a
blast! Once the transaction
was completed, the seller arranged for
shipping and the car arrived a few days later in perfect
condition.
The e-bay "seller", where I bought my car, has
become one of the largest
pre-owned Mercedes dealers in the US because of e-bay. He
reportedly
sells more than 1000 pre-owned Mercedes a year just on e-bay.
I will
definitely do it again and would highly recommend it to anyone
who
doesn't like the hassle that is usually associated with buying
a car.
Bob Rodi, CLP
President
LeaseNOW, Inc.
www.leasenow.com
drlease@leasenow.com
1-800-321-LEASE (5327) x101
(Also received several requests for the top ten auto web
sites again:
1) EBay Motors (www.ebay.com/ebaymotors)
2) MSN Autos (autos.msn.com)
3) Kelly Blue Book (www.kbb.com)
4) AutoTrader.com (www.autotrader.com)
5) Edmunds.com (www.edmunds.com)
6) Autoweb.com (www.autoweb.com)
7) Ford Motor Co. (www.ford.com)
8) Yahoo Autos (autos.yahoo.com)
9) Cars.com (www.cars.com)
10) Autobytel (www.autobytel.com)
http://www.leasingnews.org/#online
---
FirstCorp
Kit you handled the Firstcorp story professionally and with
a lot of class
(as you do with all the rumors you attempt to get to the
bottom of). I
appreciate the way you kept/keep the identity of those providing
the details
nameless if they request.
Looks like we got this one right. Keep up the good work
TKs again
Frank Washburn
<fwash@att.net>
http://www.leasingnews.org/archives/February%202003/02-03-03.htm#first
--
Even though I am out of circulation until June, I still find
your site the most
interesting on the web. I look forward to each days issue.
Keep up the great work.
Gary W. Psaledas
Fisher4444@aol.com
I find your newsletter very informative and a
"must have" job tool. Thanks
Shelia Barge
sdb@acsitx.com
---
I got it!! (www.leasingnews.org)
I just have to get use to pulling up rater than it popping
up on my email everyday.
To tell the truth, pulling it up is probably better for me.
thx,
Norman de Lapouyade
NDelapouya@aol.com
SunShore Leasing Corp
(We are working on an HTML version, but we do not have the
advertisers or money to pay for its operations, so we are going to offer
it on a subscription basis to cover costs.
If enough readers are interested, it will join our original text
version and website version. We
will continue the original text version
and website version for free.
(If it passes our
advisory board, look for it by Valentine’s Day. Editor)
Regulate the Leasing Industry
Subject: LEASECOMM
Date: Tue, 4 Feb 2003 15:13:06 -0800
To: loganadam@juno.com
Cc: Kit Menkin <Kitmenkin@leasingnews.org>
From: Juliet Weir <Juliet@virtuallydirt.com>
You guys might be interested to find that there are a colossal
number of complaints generated by Leasecomm. I have decent credit and
do not
want to damage it by closing my account strictly. What I
am doing is going back onto the broker who brokered my account to Leasecomm
in
the first place since they apparently did so at exactly the
time that Leasecomm was failing. They were also apparently aware since
there had
been some less than subtle signs of the impending sinking.
I have located an attorney in Mass. who is reviewing my contract.
In the mean time it is simply astonishing to me that this industry is
so
grossly unregulated and out of control .
I run an excavating and stone company. I am also an engineer.
Any idiot with $100k can get on a machine and call themselves an excavator,
but thankfully, local jurisdictions, licensing stipulations
and bonding requirements serve to weed out those fly-by-night operators
simply out
to scam people. And a professional engineering license generally
takes on average seven (7) years to obtain while one works essentially as a 'resident' to another engineer.
I wonder Kit if there are similar safety nets in place to
regulate the leasing industry. Given their position of power is it time
to implement some
of these constraints?
Sincerely,
Juliet Weir
----- Original Message -----
From: Glenn Harrison
To: juliet@virtuallydirt.com
Sent: Monday, February 03, 2003 5:48 PM
Subject: LEASECOMM
CLOSE YOUR BANK ACCT and get a lawyer.
A good lawyer should be able to get you out of your lease.
These people are so crooked almost everyone is stopping payment
and getting away with it.”
They're running out of money to pay their lawyers.
(If you elect not to make a payment, at least put it in a
“trust account” or
“savings account” to show the court that you are not trying
to avoid
making the payments as per the lease contract.
(And if you are trying to get out of a lease, you want “bad”
lawyer. You know
the old joke, is he a criminal attorney? Yes, very. Or perhaps a better one
for the advice given, Do you know how to make an attorney
scream? Don’t
pay him.
(Seriously, we have been writing about Leasecomm for quite
some time.
http://www.leasingnews.org/Conscious-Top%20Stories/leasecomm.htm
(One of the points is that attorneys and court costs are
expensive
in many states. California you can go to Small Claims Court
for
under $5,000.
(Various states have laws regarding advance rentals, contracts
of
all kinds, usury laws, and all types of regulations. As important,
Microfinancial dba Leascomm is a publicly held company and
also under the laws of the SEC. They are quite well regulated,
as was Enron, Worldcom, Tyco, to name a few. Crooks will
find ways around all regulations. I happen to believe the long
arm of the law eventually gets them. Perhaps they are not
punished enough, but you better believe their lifestyle changes
(You know I think the Better Business Bureau is a great resource,
but in all the complaints, we find BBB has been there ahead
of
us with many complaints, such as Leasecom. There are also
several
web sites that warn people not to do business with Leasecom.
Evidently
applicants did not see them before they did business with
this company.
(So what is the answer---be sure you know who you are doing
business with, starting with the salesman or the broker.
See if they belong to a professional organization, ask
them for references, and if it is a vendor who refers you,
ask them how long they have known the individual.
(In your business, when you grant credit to do work, meaning
don't get paid up front, how do you decide you want to do
business with the client?
Or if you get 50% down, how do
you know you are going to get the rest? I bet if you know who
you are dealing with---no amount of regulations is going
to overcome that simple, common sense act. Editor)
http://www.leasingnews.org/Conscious-Top%20Stories/leasecomm.htm
Leasing
Transactions - Reporting Requirements
From: "Carl Villella,Jr." <CVillella@msn.com>
Kit, this just arrived to me through our local leasing association.
I
thought you my be interested.
Carl Villella, CLP
Subject: Leasing Transactions - Reporting Requirements
Pittsburgh Leasing
Association Members:
For those of you
struggling to understand FASB Interpretation No. 46, I
want to point out that in addition to keeping the FASB happy,
we must also
contend with the
SEC and the Sarbanes-Oxley Act of 2002.
Attached is a Bulletin
authored by our Kim Sachse, which analyzes the
SEC's new rules regarding disclosure of off-balance sheet
arrangements. Note
that the SEC defines
"off-balance sheet arrangement" to include obligations
described in FASB
Interpretation Nos. 45 (Guarantees) and 46 (Variable
Interest Entities).
The SEC has been talking to the FASB?
Amazing.
Note also on pp.
3-4 that this disclosure obligation reaches Operating and
Capital Leases under
SFAS No. 13.
I'm no expert on
Sarbanes-Oxley, but Kim's phone number and e-mail address
are on page 1 of
the Bulletin if you want to talk to someone who is.
Cheers.
William J. Smith
Reed Smith LLP
435 Sixth Avenue
Pittsburgh, PA 15219
Phone: 412-288-3306
Fax: 412-288-3063
Mobile: 412-849-8213
e-mail: wsmith@reedsmith.com
Here is the Bulletin:
Hal Richters, Accord Financial Group, is seriously ill and
under hospice care.
Address is 19 North Pearl Street, Suite 2, Covington, OH
45318. Hal was an early member of NAELB (perhaps a Charter Member). His
fine son, Doug, is in the business. doug@accordlease.com
Those of you in the industry who know Hal might want to offer
prayers to ease his pain and suffering.
charlie bancroft
BANCROFT LEASING
800-414-1308
901-761-2156
901-767-0060 Fax
CHARTER MEMBER-NAELB
__________________________________________________________________
Cisco Sees
No Upturn Soon for Technology Spending
By MATT RICHTEL
New York Times
Santa Clara, CA, — Cisco Systems Inc., the largest maker
of Internet network equipment, reported today that its sales held steady
last quarter amid a continued technology downturn. But, in remarks that
suggest an upturn is not imminent, Cisco's chief executive said customers
had grown even more cautious about spending.
The chief executive, John T. Chambers, said that corporate
executives seem to be holding tighter to their purse strings and that
geopolitical uncertainty has had a "dampening effect" on the
economy.
Cisco is hearing "even more conservative attitudes from
executives than we heard a quarter ago," Mr. Chambers said in a conference
call with Wall Street analysts to report fiscal second-quarter earnings.
Mr. Chambers said that he was optimistic about the long-term outlook for
Cisco, but that he was "a little more cautious than last quarter"
about the company's near-term prospects.
As business leaders look for signs indicating when the economy
will show some vigor, Cisco's anecdotal evidence suggests continued weakness
not just in the technology sector but in numerous businesses where Cisco
sells nearly $20 billion a year in networking equipment.
Cisco reported second-quarter earnings that were essentially
in line with its projections and with the estimates of Wall Street analysts.
Sales were $4.71 billion, down from $4.8 billion in both the first quarter
and in the second quarter of last year.
Earnings were 15 cents a share pro forma, a figure that excludes
costs related to acquisitions. That compares with 9 cents a share in the
period a year earlier.
Wall Street analysts were expecting earnings of 13 cents
a share.
The company projected that its revenue for the third quarter,
which ends April 26, should be flat to down 2 percent to 3 percent.
Industry analysts, as well as Cisco, said one cause for optimism
was the company's gross margin, a closely watched measure that calculates
sales minus the cost of producing goods. Cisco had second-quarter gross
margins of 70.4 percent, a strong figure generally speaking, and among
Cisco's better performances. In the previous quarter, the company's gross
margin was 69.3 percent.
Larry R. Carter, the chief financial officer, attributed
the higher gross margins to cost savings, notably lower component costs
and greater manufacturing efficiencies. He said that he expected gross
margins to fall next quarter to 68 to 70 percent, in part because it is
a slower season for the company.
Barry Jaruzelski, who oversees the global technology practice
for Booz Allen Hamilton, a consulting company, said Cisco appeared to
be holding its own "in spite of this hellacious environment."
He added, however, that Cisco faces several challenges before it can return
to being a major growth business, let alone the juggernaut that it was
during the Internet boom.
"They're executing within a nasty environment and sustaining
their financials," Mr. Jaruzelski said. He added, "this is an
execution story, not a growth story; they are living within their means."
Several industry analysts said that Cisco needed to continue
to break into new markets to supplement its core businesses of selling
routers and switches, the basic equipment that corporations use to build
computer networks.
David Willis, an analyst with Meta Group, said those markets
were mature and did not offer Cisco much chance for growth unless the
company took market share from competitors.
Mr. Chambers, who has said that he is focusing Cisco on new
businesses, elaborated during the call with analysts. He said the company
was spending 40 percent of its research and development on emerging areas,
including technology used for wireless communications, computer security
and storage, and transmitting voice over data lines.
Mr. Chambers also addressed the issue of dividends, which the company does not pay. He said Cisco did not have a "religious position on dividends" and would continue to monitor the issue in light of President Bush's proposal to cut taxe