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Headlines--- Madison Capital Acquires Powernet Financial Group Chief White House Economist Hubbard Sees Upturn Early 2002 Bank’s Earning Power Drops-- Milwaukee Journal Paul Gores US Internet Council Releases Third Annual Survey of Net Trends
Third Quarter Corporate Profits Off 72% Special: Downturn Dictionary By Scott Kirsner, Boston Globe Leasing News List is Up-Dated: http://www.leasingnews.org/list.htm ###denotes press release ____________________________________________________________ Now is the time to Network and Pick Each Other Brains November 19 EAEL Expo Sheraton Meadowlands Hotel East Rutherford, NJ (914) 381-5830 ______________________________________ December 3, Denver, Colorado Arthur Andersen and the Committee on State Taxation (COST) are measuring the level of interest in organizing a dinner during the Streamlined Sales Tax Project meeting in Denver on Monday night, December 3. Each person attending will be responsible for their own expenses. If you wish to participate send an email to Susan Hatfield at susan.k.haffield@us.andersen.com Dennis Brown DBROWN@ELAMAIL.COM __________________________________________________________ ####
########################### ##################### Madison
Capital Acquires Powernet Financial Group. PowerNet
was an equipment leasing brokerage firm supporting a national network
of independent sales professionals with a diversified lender base. PowerNet had the ability to tailor lease packages
specifically for each client and lending institution. With
PowerNet’s established customer base and extensive brokering capabilities,
the new alliance with Madison Capital will provide an array of financing
options for clients. PowerNet’s
principals were Lynda Reynolds, President and Secretary, and John
Craine, Treasurer. Together,
Lynda and John have over 23 years of leasing experience.
John will manage our Boston office. Also
joining the principals is Kathy Harris.
Ms. Harris has been with PowerNet since August of 1999. She has extensive background in Human Resources
Management and Customer Service. Madison
Capital 410.653.6269 Madisoncapitalonline. ####
################### ######################### Heather
D. Hamlin hhamlin@701cathedral.com ___________________________________________________________________ Chief
White House Economist Hubbard Sees Upturn Early 2002 By
Paul Carrel, Reuters PARIS
– The U.S. economy is likely to stay weak in the fourth quarter but
should stage a modest recovery in the first three months of 2002,
Chief White House economic adviser Glenn Hubbard said on Monday. "I
share the view of private forecasters on a first quarter with quite
modest but positive growth and then accelerating later in the year,"
he said on a visit to the Paris headquarters of the Organization for
Economic Cooperation and Development. Hubbard
said it was too soon to make a call on the final quarter of 2001.
"I
think the fourth quarter will be weak, how weak remains to be seen,"
he said. "The stimulus that's in effect from monetary policy
though should again be able to kick in by the end of this year or
early next year." He
said his forecasts depended in part on approval in Congress of a stimulus
package in the coming weeks. U.S.
President George W. Bush has proposed a package chiefly comprised
of tax relief measures worth up to $75 billion to help kick-start
the economy, but his plan has been held up in Congress, with Democrats
proposing an alternative. "I
think delay of a month or two is not good," Hubbard said. "I
think that the effect that the private sector forecasters have been
looking for from the stimulus package will disappear in their forecasts
without prompt action." PACKAGE
SEEN BY EARLY DECEMBER He
said he was confident of a timely deal, however, and stressed that
the package would add about 0.5 percent to GDP next year, equivalent
to around 300,000 jobs. "I
think that ultimately the Congress will do the right thing... We feel
that certainly by early December and hopefully by Thanksgiving Day
in the U.S. (November 22), we'll have an agreement," he said.
U.S.
gross domestic product, the broadest measure of total economic activity,
fell by 0.4 percent in the third quarter as the already weak economy
reeled from the shock of the September 11 hijacked airliner attacks
on New York and Washington. Hubbard
said earlier this month that the likelihood of a contraction in the
fourth quarter was "quite high." A
fall in fourth quarter GDP would tip the United States into recession,
according to the loose definition of two straight quarters of GDP
shrinkage. Hubbard
declined comment on the interest rate policy of the U.S. Federal Reserve
or the European Central Bank, but said the ECB should study the exact
meaning of its price stability goal. "I
think the main issue for the ECB is to try to figure out exactly what
its price stability mandate means," he said. The
ECB has moved more slowly than the Fed in cutting rates but cut its
key rate by 50 basis points to 3.25 percent last week. It has a mandate
to ensure price stability, with a medium-term tolerance ceiling of
two percent for inflation. Hubbard
said there was "substantial monetary stimulus in the pipeline"
after 10 Fed rate cuts this year that have slashed the key Fed funds
rate to 2.0 percent, the lowest since 1961. "There
are deflationary pressures around the world from weak demand and it's
important for central banks to remain vigilant," he added. He
was in Paris for a regular meeting with other OECD delegates to review
the global economic situation. U.S. financial markets were closed for a holiday on Monday. (Paris Newsroom On Line: the Full List in Alphabetical and Chronological Order: http://www.leasingnews.org/list.htm Leasing News List Chronological 124 changes Equalfooting.com (11/2001) files for bankruptcy, going under.( 10/2001) having financial problems. We asked president this question and then sales manager a few months ago when it was reported they let salespeople go. They denied any problems. Leasing News heard otherwise. Ampent (11/2001) Ampent's site back up, reportedly ; landlord is allegedly suing them; VC has reportedly dropped them, may even be perusing legal action. appears they are operating out of a PO Box. (10/2001) site is off line, looks like they are going “south.” (8/2001) formerly Accesslease.com; There are rumors there have been serious cutbacks in sales and marketing here. Senior Marketing Manager Parker Trevin says it is minor, basically a change in strategy and denies the rumor. Westar, Tumwater, WA (11/2001) a leading automobile e-finance company, seeking to sell the “rapidly growing and recently profitable” firm due to funding needs and problems. “unable to secure adequate funding for
them.,” says prez . W. Christensen, Jr. Equipment Finance, Lancaster, PA (11/2001) Sterling Financial to purchase for $30 million ( 70% stock/30% cash ) PinnLease (11/2001) Girlfriend to return millions http://www.leasingnews.org/archives/November%202001/11-01-01.htm (8/2001) Fanghella pleads not guilty to all charges, remains in jail. ( 8/2001 ) A federal grand jury indicted PinnFund USA founder Michael J. Fanghella 20-count indictment; Nineteen counts in the indictment carry a maximum penalty of 10 years in prison and a $250,000 fine. One count -- filing false financial information with the U.S. Department of Housing and Urban Development -- carries a maximum penalty of 30 years in prison and a $1 million fine. (8/2001) In San Diego Feds file charges for filing false financial statements plus criminal charges for bilking at least 166 investors out of $330 million after. Fanghella turns self in ( 7/2001 ) Barbados Court Freezes PinnFund Exec's Assets (6/2001) Leasing News considers it a “not guilty” judgment against Tommy Larsen, but Larsen’s lawyer basically agreed to comply with the temporary restraining order of March 23 it and agreed that Mr. Larsen would give an accounting of any possible gains he received that rightfully belong to PinnFund. Since he gave in to everything the receiver wanted, he was not held in contempt. The records shows that being acquitted or not guilty was not what happened. The judge found he wasn't in contempt because, going forward, he agreed to cooperate fully. (6/2001) Judge Hands Down $109 M Default Judgment in PinnFund Scandal. Bounty Hunters Get the Nod to Go Get 'Em ( 4/2001 ) Judge continues freeze of assets. (4/2001) Founder of PinnFund skips bail, judge issues arrest warrant ( 4/2001) PinnFund out of money, closes all offices, including leasing., newspaper stories say “Millions of dollars are gone.” (3/2001) PinnLease USA to Fold 47 Nationwide Offices-- $100 Million Fraud, reads like a tabloid story, perhaps largest fraud in West Coast history. ___________________________________________________________________ Bank’s Earning Power Drops By PAUL GORES Milwaukee Journal Sentinel staff While it may be no consolation to consumers, who have seen the earning power of their savings wither under the yearlong series of interest rate cuts by the Federal Reserve, bankers also are feeling the pain. As bank deposits start to have only slightly more earning ability - though much more safety - than a buried coffee can or the underside of a mattress, bankers are concerned about paring savings rates so low that they become an affront to consumers, who are scratching for every quarter-percent of interest they can find. "You can only go down so far on rates for the depositors. And that's where banks are. They're at a bottom right now on where they can go with rates," said John M. Anderson, a partner with the Financial Institutions Group of the accounting and consulting firm Virchow, Krause & Co. in Madison. But some banks are in a quandary over how to keep their crucial net-interest margin - the difference between what a bank pays its depositors and what it makes on its loans and investments - from slipping. The trouble is that, as the Fed slices interest rates, banks often must lower loan rates that are tied to the prime lending rate. If banks hold the line on savings rates but still reduce loan rates, the difference between what they pay depositors and charge borrowers will shrink. It wilts even further if a bank has a lot of longer-term CDs on the books paying interest rates that now look high. Unless a bank can compensate for lost revenue through non-interest income, such as fees or returns on its investments, the bank makes less money. Harry J. Argue, executive vice president and chief executive officer of the Wisconsin Bankers Association, said the margin pressure from lower interest rates is "a growing concern." "It's probably a greater concern for the smaller banks that are so much more reliant on traditional deposits to be able to fund their loans," Argue said. With interest rates at their lowest level in 40 years, thanks to 10 rate cuts by the Fed, including last week's half-point snip, some Wisconsin banks are paying less than 2% for money market fund deposits and less than 1% for passbook savings accounts. Annual percentage yields on new certificates of deposit have tumbled by more than 2 percentage points in the Milwaukee area over the past year. Yields on one-year CDs, on average, have taken even a bigger hit, falling almost 3 percentage points here since last November. Banks that are stuck with large portfolios of CDs paying 6% or 7% that have months or years left before maturity would be most susceptible to losing ground on the interest margin. The banks with higher CD rates tend to be the smaller institutions. In the past year, the biggest bank based in Wisconsin, Marshall & Ilsley Corp., purposely has stayed away from what it considers the over-pricing of CD rates as a way to generate money to lend. M&I found it cheaper to borrow money on the wholesale funding market than issue CDs with locked-in rates that could come back to bite the bank as interest rates continued to drop. M&I chose instead to promote its money market fund, which has a floating rate. At M&I last week, a one-year CD was paying an annual percentage yield of only 1.4%, or about half of the Milwaukee-area average rate for that term. A few smaller banks, with much less market reach and size, were selling one-year CD rates with annual percentage yields around 3%. The types of assets (mostly loans) and liabilities (deposits) a bank holds go a long way toward determining how it fares when rates are low, said Michael T. Crowley Jr., president and CEO of Mutual Savings Bank in Milwaukee. "There's a general feeling that there will be some compression of interest rate spreads on the financial institutions, without a doubt," Crowley said. "But it will be greater or lesser, depending upon how each company has positioned its asset-liability mix - what kind of loans it has, what kind of deposits, what sort of maturities." Crowley added: "If the Fed just keeps driving rates down, down, down, it will catch up with everybody sooner or later." Although low rates are hurting some banks as well as savers, banks have at least a couple of things in their favor. In the sour economy, loan growth has slowed. That means many banks have a lot of cash to lend and don't need to offer higher savings rates to generate more money, said Virchow Krause's Anderson. With the stock market struggling, banks at least can offer the assurance that principal, plus at least a little more in interest, will be returned to depositors. "Most of the people that are in these deposits right now understand that even though the rates are very low and might even go lower, they don't have any place else to put the money," Crowley said. ________________________________________________________________ Spiffs or Pay Offs---US Bancorp This is one of the most Frequently Asked Questions.
It is in our F.A.Q. section, but since this is a “fresh one,”
will run today: Kit, the following is very confidential, it
is a copy of a letter from US Bancrop to my vendor. I don’t know what information you seek but this is what I’ve go.
As you can see, they are offering low rates, 5% commission and 1%
bonus to the vendor for marketing---it amazes me that a bank owned
company can promote that type of program. As you may have guessed,
the vendor is no longer doing business with me---he goes where the money
is, and the rates and the bonus ( Name With Held ) . USBancorp Will fund an additional 5% of the total equipment payable hi one check (equipment cost 1- 5%) to *****. For
example~ cost on each lease deal tUSBankcorp
also agrees to provide Co-op Marketing Funds
to ****** on an annual
volume basis equal to 1% of
the total leasing funded by US Bancorp to
******. For example; - If ******* funds $500,000 to US Bancorp will fund up to $5,000 in Co-op Marketing Funds ( full copy of the “memo” is at: http://www.leasingnews.org/articles.doc/USBancorp.htm ) This practice is not new as CIT, among many others, years ago both had direct salesmen and a broker program ( and may have the same today ). Manifest had Lyon’s Financial, a vendor arm, for years, and it has co-existing with the broker program, and the policy has not changed at US Bancorp. This is not new. Dictaphone, Multi-Graphic, among many, pay their salesmen a 5% commission when the customer leases. Many
companies will force their salesmen only to deal with their .Several
dealers are major publicly traded
companies who “force” the lessee to use their “own
leasing company.” It is common.
They skirt the Personal Property License or
Finance Law calling it a referral fee, and it is often paid to the
company, who disburses it the sales staff or group involved in the
“sale.” Many even have a written agreement to validate
the arrangement. There is talk that the National Association of Equipment Leasing Brokers may require their funder members to change this policy, and brokers for years have wanted to unite to protect their “territory,” but nevertheless, the practice of paying spiffs is quite common in the industry, including from broker’s themselves to their vendors.
Copier Leasing Bob Rodi's experience with the copier trade, mirrors mine!! I keep getting deals from copier dealers (some as large as $300K!!) who are trying to use CHEAP money to close the deal! The primary cheap money source is DLL. The scenario is this! The copier salesman says, "I have an approval for this $300K copier deal, but the customer is not happy with the terms/rate/conditions/color of the sky and since you have done such a great job for us, can you come up with a better deal?" Me being the SUCKER that I am, I have to ask, "What is the deal I have to beat?" The copier salesman says, "Well, DLL/Bank One/GE will do 3 1/2%, no advance payments, no PG's, no signed docs, no application, no payments for 59 months with a 99% FMV purchase option with a funding out clause for any of the first 60 months and will fund 150% of invoice with 37 points to me as a spiff! What can you do?" My next question is ? "How long has the company been in business?" The copier salesman's answer is, "Its a start up!" Sincerely, Joe Leslie FCI Financial Services, Inc. FciFin@aol.com Third
Quarter Corporate Profits Off 72% By
Steve Liesman, Wall Street Journal #### ###################################### ################# US Internet Council Releases Third Annual Survey of Net Trends
WASHINGTON, - The United States Internet Council, in
cooperation with International Technology and Trade Associates, today released
the 2001 State of the Internet Report. This is the third annual survey in a
series that examines the growth of the Internet and explores key legal,
business, and social trends in the online world.
The Internet continued to grow at a very rapid pace and surpassed a half-
billion online users in 2001. In fact, the Internet is growing so rapidly
that the architecture of the Internet is being compelled to reshape itself
with a new IP structure and new Top Level and multilingual domains. The
dotcom slowdown requires that online businesses reorganize structures and
strategies to "right size" their operations for the new economy. In 2001,
e-commerce continued to grow and online business became more mainstream. The
2001 report is divided into six main sections.
Section 1, The Global Internet, provides an overview of online
demographics. In 2001 the online population crossed the half billion
milestone and online demographics began to increasingly reflect offline
realities. Significantly, native English speakers lost their dominance in
2001 and now represent approximately 45% of the online population.
Section 2, Net Society, surveys how people use the Web and how government
is adapting policy to address the impact the Internet is having on issues such
as free-speech, privacy, access, taxation, and copyright protection.
Section 3, Technology, reviews technological innovations that are changing
the shape of the Web and pushing the capabilities of the medium.
Section 4, Electronic Business, assesses the aftermath of the dotcom
downturn and considers why some online business venture failed, while others
took root and continue to growth.
Section 5, Online Government, focuses on the widespread global adoption of
e-government around the world.
In Section 6, Looking Forward, the United States Internet Council
recognizes that it will be very difficult in the coming years to reconcile
competing visions of Internet jurisdiction and development. The Council
offers four basic principles for Internet leaders and policymakers, which we
believe will hold true over the coming years.
I. The Council is certain that Internet services for the free and
developed nations of the world will continue to bring far more benefits than
problems for governments and the citizens they serve.
II. The Council believes that the best approach to Internet policy is one
that allows the freest possible flow of information and the most unfettered
access for all people to the benefits of the medium.
III. The Council recognizes that like newspapers, radio, television,
movies, and other mass media that have transcended geographic boundaries in
the past, the Internet in years to come will mirror the same cultural,
economic, social, and political fault lines that underlie all international
relations.
IV. The Council does not anticipate that these fault lines will nullify
the unmistakable benefits of the Internet for most of the world's people. But
we do urge more serious academic study than has heretofore been conducted on
how those who manage the architecture of the Internet might best accommodate,
on a voluntary basis, those cultures that feel threatened by outside
influences and still remain true to the first principles of free speech.
Copies of the report are available for purchase at $29.95 per copy plus
shipping and handling and may be ordered online at
http://www.usinternetcouncil.org and http://www.itta.com .
This year's report is the third edition of the State of the Internet and
builds upon the progress reported in past years. Last year's report has become
a cornerstone document for understanding Internet trends and has been cited by
publications such as Foreign Policy and the White House's 2000 Working Group
report on e-commerce.
##### ############################ ####### Downturn dictionary By Scott Kirsner, Boston Globe The weather in the tech sector is changing, and so are the words we choose to describe it. The endless summer of the dot-com boom has turned into a ''nuclear winter,'' where companies are totally consumed with issues of survival. The jargon, aphorisms, and metaphors that trip off the tongues of entrepreneurs and investors these days are every bit as piquant as they were back in the heyday. They've just been dialed down a bit. Hyped-up bloviation is out; irony, hard-headed pragmatism, and gallows humor have taken over. Matt Harris, the chief executive of Williamstown-based Village Ventures, observes that ''in the late 1990s, `filing' meant an IPO and `doing another round' meant another financing, probably an uptick. `Filing' now means Chapter 11 or 7, and `doing another round' inevitably means layoffs.'' The lexicon of the tech sector has been humbled a bit, though hints of the old swagger remain. ''The events of [Sept. 11] accelerated the process of getting back to reality,'' says Geoffrey Nunberg, a linguist who works at Xerox's Palo Alto Research Center and has just published a book of essays, ''The Way We Talk Now.'' ''People were using the language of revolution over the past few years: `We're going to change the way you do business.' Now, a lot of the most visionary talk about technology has disappeared, in part because a lot of the magazines that carried it don't exist anymore. There's a sense that hype itself engenders a kind of suspicion, and people are a little bit more skeptical.'' So how is tech talk different today? Technology executives used to contend that ''a rising tide lifts all boats'' when they were trying to make the case that favorable conditions in their sector would benefit many companies, not just the leader. Lately, the nautical image of choice is about a ''perfect storm,'' where numerous negative economic conditions have converged to make survival difficult for tech companies. ROI and RIF are the acronyms du jour. Struggling technology companies are desperate to prove to potential customers that their hardware, software, or services can deliver an immediate and measurable return-on-investment. But in the desperate scrum to secure new customers, the acronym ROI is being battered by overuse. It's on the verge of becoming a cliche, a term that must be uttered by salespeople and displayed prominently on the homepage of every Web site. RIF is another acronym whose usage has unfortunately been increasing of late. You've been ''RIF-ed'' when you lose your job. (RIF stands for ''reduction in force.'') Investors keep track of how much money their portfolio companies have on hand, and how long they can survive without an additional infusion. This is the MTBU - ''maximum time to belly-up'' - or the ''fume date.'' ''The best phrase I've heard, and been using, on the subject of keeping a company's burn rate low until things start to pick up,'' writes Mike Hirshland of Polaris Venture Partners in Waltham, ''is that `surviving is a precondition to succeeding.''' At the MIT Enterprise Forum earlier this month, Rob Guttman, one of the founders of Cambridge software company Frictionless Commerce, observed that successful companies ''sell aspirin, not vitamins.'' A vitamin, in this scenario, is technology that's good for your company in some vague way; an aspirin is technology that dulls a specific pain. Afterward, I found myself wondering if Guttman's remarks needed an update. Many companies that buy technology are in such dire straits right now that they're willing to put up with the kind of minor aches that aspirin deals with, and are only spending on nitroglycerine - technology that keeps their hearts beating. (Ironically, Guttman recently left Frictionless after the company underwent a RIF.) ''Old school'' and ''gray hair'' used to be pejorative terms in the tech community. Everyone celebrated young entrepreneurs with fresh ideas. But in 2001, an ''old school'' emphasis on improving the efficiency of operations and locating customers with deep pockets is back in vogue, and a tech company's investors breathe a sigh of relief when a ''gray hair'' (or a ''no hair'') CEO is in charge. ''In the 1960s, we said, `Never trust anyone over 30,''' says Ken Morse, director of MIT's Entrepreneurship Center. ''Today, it's hard to get a venture capitalist to trust anyone under 30.'' The acronym B2B used to mean ''business-to-business.'' Now, it stands for ''back to basics'' or, in some contexts, ''back to business school'' for jobless twenty-something entrepreneurs. P2P once meant ''peer-to-peer,'' a promising new architecture for software. Now, it almost always represents ''path to profitability,'' the plan or timeframe for getting a money-losing company out of the red. Executives at tech companies frequently complain about not having good ''visibility'' - that is, they can't tell how much demand there will be for their product or service in the coming months, explains Andrew Collins of HotRoof, a Great Barrington company. Collins adds that one saying that has survived the dot-com implosion is, ''Are the dogs eating the dog food?'' Investors and potential partners want to know if a company's customers are actually paying cash for and using its product. Some tech companies are better off in 2001 than they were in 2000, angel investor Sung Park told me recently, because there aren't as many well-funded competitors ''all peeing into the same pool.'' ''Patience'' is a new addition to the vocabulary of venture capitalists, who can now afford to conduct more thorough due-diligence investigations into the prospective recipients of their funding. ''Sometimes, not investing in a bad deal is the best thing you can do all week,'' says Howard Anderson of Cambridge's YankeeTek Ventures. But anxious entrepreneurs have a different term for the new circumspection. They call it paralysis, not patience. In later rounds of funding, a company's initial investors are frequently being told they have to ''pay to play.'' That is, if they don't ante up more money, the likelihood that they'll someday profit from their original investment will diminish, especially if what's happening is a ''down round,'' where the company's valuation (as set by the investors) is declining. Much of the new phraseology emanates from venture capitalists for two reasons. First, venture capitalists are in frequent contact with a broad range of entrepreneurs, big company executives, and other investors, so they serve as central nodes for collecting and distributing vernacular. Second, they have a real passion for talking the latest talk - and a compulsion to convey the impression that they're always in sync with (or ahead of) the latest trends. But if VCs help to propagate new sayings, it's the PR people who lay the old ones to rest. Public relations practitioners try to use up-to-the-minute language in their press releases, and so they're especially sensitive to when it's time to decommission old buzzwords and adopt new ones. At the Needham office of the public relations firm RF Binder Partners, retiring terminology that is past its prime is as much of a ritual as hanging up an aging hoopster's jersey at the FleetCenter. On the fuzzy wall of one of the office's cubicles, they've created a jargon graveyard for terms that deserve to be laid to rest. Beneath a cut-out tombstone are terms like ''whiteboard it,'' ''secret sauce'' [which refers to the competitive advantage that a company's product or service boasts], ''end-to-end solution,'' ''bandwidth'' [meaning a person's time or attention], and ''drinking from a fire hose'' [being overwhelmed by information], reports Nancy Moss, the office's managing director. Marketing consultant Mikko Von Ronne offers a few burnt-out buzzwords of her own: sweet spot, value prop, first-to-market, scalable, data point, and killer app. In the tech community, the lingo becomes obsolete almost as fast as the hardware and software does. Perpetual upgrades are necessary to remain a well-spoken member in good standing. |
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