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Januray
29, 2003
Post time 7:35 a.m. PST |
Headlines---
Pictures from the Past---1978 David Walish
"The
course of this Nation does not depend on the decisions of others"
President
George W. Bush
Dollar
Retreats Against Major Currencies
West
Coast states bear the brunt of high unemployment rates
Venture Capital Investing at the Bottom,
Going Up!!!
CIT
---Ying/Yang Del/Calbreath
Superbowl Economic effect expected
well below '98 event
"Only in Ninersland"--Skip
Bayless, San Jose Mercury
Special
Report: War
Threat Eroding Consumer Confidence
Rebecca Gomez
### Denotes Press
Release
---------------------------------------------------------------------------------------------------
Pictures from the Past---1978 David Walish
Dave Walish, President of Lease Marketing, Inc
Fresno, California
___________________________________________________________
"The Course of this Nation does not depend on the decisions
of others."
President
George W. Bush
Lessors, discounter, brokers tell Leasing News that it almost
feels
like “9/11” again. Businesses
are scared to make a decision, and
want to wait.
“It is almost like they are trying to talk themselves into
giving up,”
one leasing company executive told me. “ We have more salesmen
than last year, but the volume is down as it appears decisions
are
being put off.”
“The phone is not ringing, “ another told us, “and don’t
use our
name, please!”
No one appears to want to go on the record. The “Sky is Falling” fable of
Chicken Little was brought up a number of times.
Small to mid-size business has brought the economy out of
the doldrums in
the past, but it appears they are out of cash. And almost
like the Oakland
Raiders, they have not come to the stadium to play.
“The Count Down to War Begins,” Tim Russert, NBC News
http://www.whitehouse.gov/stateoftheunion/
full text of President Bush’s State of Union address
http://www.washingtonpost.com/wp-srv/onpolitics/transcripts/bushtext_012803.html
-------------------------------------------------------------------------------------------------
Dollar
Retreats Against Major Currencies
By Mariko Hayashibara
TOKYO (Reuters) - The dollar retreated against other major
currencies on Wednesday after President Bush said in his State of
the Union speech that "crucial hours may lie ahead" for
U.S. forces in the Gulf.
Bush made it clear that the United States is prepared to
act to disarm Iraq with or without U.N. backing.
"If the United States goes to war alone, then it will
lead to further dollar selling," said Motoshi Imura, a senior
manager of foreign exchange at Bank of Tokyo- Mitsubishi.
As European trade set in, the dollar softened to trade at
117.88/91 yen at 1:51 a.m. EST after stop-loss sales were triggered
at 117.95 yen.
The euro was at $1.0869/74 against $1.0825 in late Tuesday
U.S. trade but off an earlier high of $1.0880. Against the yen,
the single European currency was at 128.19/30 yen against 128.44
yen in late U.S. trade.
Sterling rose to $1.6472/77 compared with $1.6410.
Players are now looking ahead to Bush's meeting with British
Prime Minister Tony Blair on Friday at Camp David to see if any
time frame for an attack will be discussed.
"The market is dominated by the risk of war," said
Junya Tanase, global markets officer at JP Morgan Chase.
Tanase said if new developments are seen on the Iraqi front,
the euro may move above a psychological barrier of $1.1.
In an attempt to convince doubting allies, Bush called on
the U.N. Security Council to convene on February 5 to hear Secretary
of State Colin Powell present information and intelligence about
Iraq's suspected programs on weapons of mass destruction.
SNOW IN DOUBT
Dealers said the dollar's renewed softness was also due to
market skepticism about the United States' "strong dollar"
policy, despite an affirmation of the policy by Treasury Secretary
nominee John Snow overnight.
In U.S. trade, the greenback had been mildly supported by
Snow's restatement of the policy.
"I favor a strong dollar," Snow said in prepared
remarks for his confirmation hearing before the Senate Finance Committee.
"A strong dollar is in the national interest."
Many traders had thought Snow would have no choice but to
back the long-standing policy given the United States' need for
foreign capital to finance its current account deficit, but some
had been worried that he might give in to growing protests from
U.S. manufacturers that the dollar is too high.
While retaining strength against the dollar, the Japanese
currency was sold against its European counterparts.
Dealers noted growing demand for the euro, the pound and
the Australian dollar from Japanese retail investors who are fed
up with the extremely low interest rates in Japan.
The yield on the key 10-year Japanese government bond fell
to a historical low of 0.770 percent on Wednesday.
"There has been constant buying of the euro, the pound
and the Aussie dollar by Japanese individuals recently," said
Kota Kimura, an assistant manager at Shinkin Central Bank.
"Interest rates are falling worldwide, but outside rates
are still much higher than Japanese rates," he said.
Looking ahead, traders were also paying attention to the
Federal Reserve's two-day policy meeting that will conclude on Wednesday.
No one is expecting a policy change.
But some analysts say the Fed may shift its policy bias by acknowledging
that the risks to the economy are from weaker growth rather than
inflation. At present, the Fed holds that the risks are neutral.
West Coast
states bear the brunt of high unemployment rates
By Leigh Strope
ASSOCIATED PRESS
WASHINGTON – West Coast states are being battered by the
ailing economy, leading the country again in high unemployment rates
last month, while the Dakotas and Nebraska posted the lowest jobless
rates.
The new data, released Tuesday by the Labor Department, shows
that the jobs outlook in much of the country remains bleak. But
no states reported wild swings in their unemployment rates, suggesting
some stabilization – at least for now.
Finding a job is taking longer for people out of work. Last
year, jobless workers spent an average of 16.6 weeks looking for
employment, up from 13.2 weeks in 2001.
The economy's uneven recovery poses challenges for President
Bush, who is pushing for another round of tax cuts to stimulate
growth and create jobs. The nation's unemployment rate has hovered
around 6 percent since April 2002.
The bumpy recovery is similar to the last recession, when
Bush's father was president. High unemployment that failed to start
dropping until almost two years after the recession ended helped
cost the first President Bush a second term.
Though jobless rates aren't reaching the levels of the last
recession, voters who can't find jobs could spell trouble for Bush,
particularly in key battleground states such as Michigan, Pennsylvania
and West Virginia – which had unemployment rates of 5.9 percent,
6 percent and 5.6 percent, respectively, in December.
But the West Coast has been particularly hit hard, and Bush,
who has viewed political opportunities in that Democrat-backing
region, may be forced to shift focus. Many economists predict the
nation's jobless rate will continue to rise in coming months, hitting
as high as 6.5 percent this summer and ending the year at current
levels.
"The economy is flat – there is no new job growth,"
said Mark Zandi, chief economist at Economy.com
Alaska posted the highest state unemployment rate last month
at 7.4 percent, rising from 6.8 percent in November. A drop in tourism
and low energy prices earlier this year are major factors for that
state's job troubles.
The technology bust, the 2001 energy crisis and the weak
travel and aviation industries have taken a major toll on West Coast
states. Oregon's jobless rate was second highest at 7 percent after
dropping from 7.1 percent in November. Washington posted an increase
in December to 6.8 percent, up from 6.7 percent; California saw
a rise to 6.6 percent, up from 6.5 percent.
Also among the highest rates were Mississippi at 6.7 percent
and the District of Columbia at 6.6 percent.
The upper Midwest has consistently posted the lowest unemployment
rates in the country. North and South Dakota had jobless rates of
3 percent last month, and Nebraska had 3.4 percent.
Those states have benefited from large agriculture subsidies
that helped keep their economies afloat, Zandi said. Also, many
workers laid off by companies in those states return to farming
and are not counted as unemployed. Another factor, particularly
in North Dakota, is the small population that has continued to drop,
he said.
During 2002, employment fell in 28 states and the District
of Columbia. The largest declines were in Illinois, Massachusetts,
New York and Georgia. The biggest employment gains for the year
were in Florida, Nevada, Kentucky and Wisconsin.
On the Net:
State unemployment report: www.bls.gov/news.release/pdf/
laus.pdf
---------------------------------------------------------------------------------------------------
Venture Capital
Investing at the Bottom, Going Up!!!
Venture Capital Investing Flat in Q4 2002; Full Year 2002
Finishes at 1998 Level
(at bottom, now will up!!!! )
WASHINGTON -- The
steady decline of venture capital abated in the fourth quarter of
2002 with total investments of $4.2 billion, essentially flat from
the prior quarter of $4.5 billion, according to the PricewaterhouseCoopers/Venture
Economics/National Venture Capital Association MoneyTree Survey. A total of 692 entrepreneurial companies received
funding in the fourth quarter compared to 671 companies in the third
quarter.
Venture capital investing has continued to decline since
the unprecedented run-up that peaked in 2000. For full year 2002,
venture investing totaled $21.2 billion, approximately half of 2001's
$41.3 billion. Investment levels in 2002 were similar to 1998, the
last pre-bubble year, when $21.6 billion went to entrepreneurs.
Tracy Lefteroff, global managing partner of the venture capital
practice at PricewaterhouseCoopers, said: "We may finally be
near the bottom. This level of investing is more realistic and more
sustainable. By historical standards, the current run rate is healthy
for venture capitalists and entrepreneurs alike. If the public markets
and liquidity opportunities improve in 2003, we could see the return
to a more stable venture capital market."
"The level of investment seen today is appropriate considering
current private company valuations and long-term exit opportunities,"
explained Mark Heesen, president of the National Venture Capital
Association. "Venture capitalists are taking calculated risks
on new companies, but realize that these new relationships will
likely span many years and may require several additional rounds
of capital before exit opportunities become available."
Industry And Sector Analysis
The Life Sciences sector (Biotechnology and Medical Devices)
was the bright spot for the fourth quarter and the full year 2002.
Life Sciences increased 15% to $960 million in the fourth quarter
compared to the third quarter. For the year, Life Sciences totaled
$4.7 billion, accounting for 22% of all venture capital investing,
up from 13% in 2001, and the highest proportion of total venture
capital in seven years. Separately, the Biotechnology industry attracted
$2.8 billion in 2002 and the Medical Devices industry accounted
for $1.9 billion in 2002.
All other major industries experienced declines for the quarter
and the year. Software, perennially the leading industry category,
maintained its ranking in 2002 with 799 deals attracting $4.3 billion,
or 20% of all venture investing. Telecommunications followed with
335 deals accounting for $2.9 billion, or 14% of the annual total.
Investments in the Networking industry fell to $2.2 billion in 209
companies, or 11% of the total.
First-Time Financings
A total of 169 companies received venture capital for the
first time in Q4 2002, about the same as the 166 in the third quarter.
For full year 2002, 756 companies got first-time funding, down 35%
from the 1,178 companies in 2001. However, these companies commanded
a slightly larger share of overall investment dollars in 2002, capturing
$4.3 billion or 20% of the total compared to 18% in the prior year.
In general, these companies mirrored the overall industry
category trends. For full year 2002, 158 companies in the Life Sciences
sector (Biotechnology and Medical Devices combined) garnered $943
million, or 22% of all first-time financings, up from 14% the prior
year. As a stand-alone industry category, Software accounted for
the most deals and dollars in 2002 with 209 companies receiving
$880 million, or 21% of all first-time financings, unchanged from
2001. Only 61 Telecommunications companies received venture backing
for the first time in 2002, amounting to $355 million. This represents
8% of all first-time investments, compared to 15% in Telecommunications
the prior year.
Stage of Development
Venture capitalists continued to fund early stage companies
at a steady pace. In the fourth quarter, these companies attracted
$743 million or 18% of total investing, about the same proportion
as in each of the three prior quarters of the year. For full year
2002, early stage companies received $4.1 billion, or 19% of the
annual total, down slightly from 22% of the total in 2001.
Following historical norms, expansion stage companies attracted
the largest percentage of venture capital. In calendar year 2002,
they accounted for $13.3 billion, or 63% of the total, a slight
increase over 58% of the total in the prior year. The proportion
of investing in late stage companies was essentially unchanged:
17% in 2002 versus 18% in 2001.
According to Jesse Reyes, vice president at Thomson Venture
Economics, "Venture investors continue to move toward life
cycle investing -- balancing investments in start-up and early stage
companies with expansion and later stage funding -- in order to
mitigate risk and find more favorable valuations in companies that
are more mature and potentially profitable. In 2002, for every dollar
invested in new financings, a little over four dollars was invested
in follow-on deals. That can be contrasted to 1999, when one dollar
of new financing was accompanied by two and one-half dollars of
follow-on. This life cycle approach reflects VC's existing portfolios
and the maturity of the market segments they are investing in."
About the PricewaterhouseCoopers/Thomson Venture Economics/National
Venture Capital Association Money Tree Survey
The MoneyTree(TM) Survey measures cash-for-equity investments
by the professional venture capital community in private emerging
companies in the U.S. The
survey includes the investment activity of professional venture
capital firms with or without a US office, SBICs, venture arms of
corporations, institutions, investment banks and similar entities
whose primary activity is financial investing. Where there are other
participants such as angels, corporations, and governments in a
qualified and verified financing round the entire amount of the
round is included. Qualifying transactions include cash investments
by these entities either directly or by participation in various
forms of private placement. All recipient companies are private,
and may have been newly-created or spun-out of existing companies.
The survey excludes debt, buyouts, recapitalizations, secondary
purchases, IPOs, investments in public companies such as PIPES (private
investments in public entities), investments for which the proceeds
are primarily intended for acquisition such as roll-ups, change
of ownership, and other forms of private equity that do not involve
cash such as services-in-kind and venture leasing.
Investee companies must be domiciled in one of the 50 US
states or DC even if substantial portions of their activities are
outside the United States.
Data is primarily obtained from a quarterly survey of venture
capital practitioners. Information is augmented by other research
techniques including other public and private sources. All data
is subject to verification with the venture capital firms and/or
the investee companies. Only professional independent venture capital
firms, institutional venture capital groups, and recognized corporate
venture capital groups are included in venture capital industry
rankings.
MoneyTree Survey results are available online at www.pwcmoneytree.com
, www.ventureeconomics.com , and www.nvca.org .
The National Venture Capital Association (NVCA) represents
over 450 venture capital and private equity organizations. NVCA's mission is to foster the understanding
of the importance of venture capital to the vitality of the U.S.
and global economies, to stimulate the flow of equity capital to
emerging growth companies by representing the public policy interests
of the venture capital and private equity communities at all levels
of government, to maintain high professional standards, facilitate
networking opportunities and to provide research data and professional
development for its members. For more information visit www.nvca.org
.
The PricewaterhouseCoopers Private Equity & Venture Capital
Practice is part of the Global Technology Industry Group, www.pwcglobaltech.com
. The group is comprised of industry professionals who deliver a
broad spectrum of services to meet the needs of fast-growth technology
start-ups and agile, global giants in key industry segments: Networking
& Computers, Software & Internet, Semiconductors, Life Sciences
and Private Equity & Venture Capital. PricewaterhouseCoopers
is a recognized leader in each industry segment with services for
technology clients in all stages of growth.
PricewaterhouseCoopers ( www.pwcglobal.com ) is the world's
largest professional services organization. Drawing on the knowledge and skills of more than 125,000 people
in 142 countries, we build relationships by providing services based
on quality and integrity. "PricewaterhouseCoopers" refers
to the network of member firms of PricewaterhouseCoopers International
Limited, each of which is a separate and independent legal entity.
Venture Economics, a Thomson Financial company, is the foremost
information provider for equity professionals worldwide. Venture
Economics offers an unparalleled range of products from directories
to conferences, journals, newsletters, research reports, and the
Venture Expert(TM) database. For over 40 years, Venture Economics
has been tracking the venture capital and buyouts industry. Since
1961, it has been a recognized source for comprehensive analysis
of investment activity and performance of the private equity industry.
Venture Economics maintains long-standing relationships within the
private equity investment community, in-depth industry knowledge,
and proprietary research techniques. Private equity managers and
institutional investors alike consider Venture Economics information
to be the industry standard. For more information about Venture
Economics, please visit www.ventureeconomics.com .
CONTACT:
Jeanne Metzger of NVCA
703-524-2549 x116
jmetzger@nvca.org
Starr Million of Porter Novelli for PricewaterhouseCoopers,
512-241-2237 starr.million@porternovelli.com
Jesse Reyes for Venture Economics
973-645-9734
################ ############################################
-----------------------------------------------------------------------------------
CIT
---Ying/Yang Del/Calbreath
From: Subject: RETIREMENT
Just a quick personal note to let you know that I will be
retiring from CIT
this Friday, January 31 after almost 12 years. Also retiring from my 30
years in the equipment finance/leasing industry (CIT, Chase
Manhattan, Ford
Financial, Citicorp, Nevada Executive, Security National
Bank (where we
first met)). I have
no immediate plans, other than to enjoy the fantastic
hilltop views from my new "retirement pad" in Escondido
(maybe I'll buy a
big Winnebago and drive around "plugging up" freeways).
It has been my great pleasure to have been your friend and
colleague all
these years. Can
you please start sending Leasing News to this personal
email address (bobdel@cox.net)... so I can stay in touch.
Thanks.
Bob Del <bobdel@cox.net>
--
I just want to let you know that I have joined CIT starting
this week.
I am now part of the Equipment Rental and Finance- US group.
This will be a bit more of a generalist role in the leasing
market. Not too dissimilar to when I started in the industry
with CIT 1981-1986.
These are challenging times, but I feel very good about
joining CIT.
Keep up the good work on the newsletter!!
Brian Carey
---------------------------------------------------------------------------------------
Superbowl
Economic effect expected well
below '98 event
By Dean Calbreath
SAN DIEGO UNION-TRIBUNE STAFF WRITER
Despite a raucous weekend for the Gaslamp Quarter, Super
Bowl XXXVII turned out to be less than super for a number of San
Diego businesses, with hotel attendance and tourist spending well
below expectations.
Hotel occupancy levels and nightly rates were far below the
peaks achieved in 1998, the last time the Super Bowl was in town.
While estimates of the direct economic effect on San Diego vary
from $30 million to $85 million, most analysts say this Super Bowl
generated 15 percent to 30 percent less business than in 1998.
But local business leaders say any business is good business,
and the Super Bowl brought in far more visitors than a typical week
in January – breathing life into a normally sluggish patch of winter.
"Could hotels and restaurants have done better? They
could have done a helluva lot better," said Matt Deline, president
of RoomStar, the official hotel reservation service for the Super
Bowl. "Could they have done worse? Definitely. Essentially,
this was like the biggest convention a city could want."
On average, a Super Bowl boosts its host city's economic
performance by about one-twentieth of 1 percent, said Victor Matheson,
a specialist in sports economics with Williams College in Massachusetts.
"That sounds like a tiny number, but it's still a relatively
large impact," Matheson said.
He calculated that between 1970 and 2000, the average impact
for a Super Bowl city was about $65 million, with San Diego taking
in about $70 million in 1998.
For several reasons, the revenue generated by the Super Bowl
this year was lower than normal. Matheson calculates that the Super
Bowl may generate $50 million in extra revenue for San Diego this
year.
"The economy is softer, corporate travel is down, and
corporate partying is down – especially in light of last year's
accounting scandals," said Kelly Cunningham, economist with
the Greater San Diego Chamber of Commerce.
In addition, there was just one week between the end of the
playoffs and the Super Bowl, giving fans a short time to make travel
plans. And there was a matchup between two Sun Belt teams, bringing
in far fewer fans than a contest between teams from the Midwest
or Northeast.
Cunningham, who uses different calculations than Matheson,
estimated that the Super Bowl brought more than $100 million in
direct revenue to San Diego in 1998, and about $85 million this
year.
"The Raiders versus the Buccaneers was not the dream
matchup for the hotel business," Deline said.
About 85 percent of local hotel rooms were occupied, compared
with 92 percent in 1998, when Denver and Green Bay met in San Diego's
last Super Bowl. The average nightly rate for a four-day stay last
week was $271, compared with $325 in 1998.
Most visitors – particularly Raiders fans from Oakland and
Los Angeles – limited their time in the city to one or two days,
as opposed to 1998, when the fans were here on four-night stays.
Many of the fans who came for two nights wanted really cheap rooms,
not luxury properties.
"Each day last week, you could see the hotel rates get
lower and lower because of lack of demand," Deline said. "The
rates absolutely collapsed close to the weekend."
Deline said the downtown hotels experienced the biggest business,
with occupancy rates of about 96 percent, thanks to their proximity
to the Gaslamp Quarter and the NFL Experience – a football theme
park. Most hotels near trolley lines also fared well, he said.
Additional business for restaurants and bars was similarly
limited to specific locations rather than spread throughout the
county, said Stephen Zolezzi, executive vice president of the Food
& Beverage Association of San Diego County.
"Any place in the Gaslamp would have gotten a huge impact
for the whole week," Zolezzi said. "But if you weren't
in one of the core areas, you wouldn't have any effect at all."
Even in the crowded Gaslamp, business was less than some
Super Bowl boosters had forecast. On a typical Saturday night, the
Gaslamp attracts 30,000 to 40,000 people. On the eve of the Super
Bowl, the streets were crowded with more than 100,000 people – far
less than the 300,000 people that some voices had predicted earlier
this month.
The crowds were large enough to demand extra policing and
cleanup services.