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We're talking about Bill Lerach, the retiring class-action attorney who could be on his way to jail over allegations of secret kickbacks involving the firm. This really goes back to May 2006, when a federal grand jury indicted Lerach's former firm, Milberg Weiss, and two of its partners, David J. Bershad and Steven G. Schulman. Lerach wasn't named in the indictment, but he clearly showed up under the alias "partner B." For much of the...
LA Biz Observed archive
Mark Lacter covered business, the economy and more here from 2006 until his death on Nov. 13, 2013.
The entire LA Biz Observed archive — more than 10,000 blog posts by Mark —
remains online and available.
August 2007
After jumping 6 percent in premarket trading, the Calabasas-based mortgage lender slid back during the session and finished with a 1.1 percent gain. The culprit might have been President Bush, who was long on promises and short on specifics today in saying that he would work to "modernize and improve" the Federal Housing Administration "by lowering down payment requirements, by increasing loan limits, and providing more flexibility in pricing." Douglas McIntyre at 24/7 Wall Street...
No such thing as dog days for our favorite crisis manager. L.A.-based Sitrick & Co. is now working for Democratic fundraiser Norman Hsu, the fellow who had been a fugitive from a 1992 grand larceny case in California. He also has contributed big bucks to Hillary Clinton's campaign, creating big headaches for the candidate this week (the LAT and WSJ broke pieces of the story). He was led to jail in handcuffs this morning after...
You know the ones – they’re usually shown around half time of a football game and feature pretty pictures of the campus and earnest looking folks in lab coats. A voiceover tells us about the importance of Trombone U, not just for the students and faculty, but for the entire world. Well, Stanford supposedly takes a more irreverent approach this season. Developed by West Hollywood's Dailey & Associates (part of the Interpublic Group), one ad...
In the fourth issue of New Angeles, Maxwell Harwitt examines whether developers in Hollywood and downtown really give a hoot about the city's art scene - aside from indulgent sales pitches for "artists lofts" that artists couldn't possibly afford. Why, it's all so positively bohemian! He focuses on David Houk's Park Fifth hotel/condo project at 5th and Olive, where each of the 732 condo units would come with a 5-year membership to MoCA. The $375...
Kind of. Confidentiality agreements prevent the 40 kids participating in the upcoming reality series - and their parents - from talking to the press without CBS flackery, but some of them are chatting it up with two L.A.-based groups that monitor child labor in the entertainment industry. Their big gripe? That the producers gave their kids lines to say or asked them to recast dialogue. All of which is pretty routine in the reality world...
More heat: And with it, more strain on the state's power system, though demand will probably ease up as lots of businesses shut down for the long holiday weekend. On Thursday, the DWP registered the third-largest daily usage ever - and that was with all kinds of conservation efforts. They’re calling for continued hot and muggy weather through the long weekend, with some relief along the coast. (LAT) Traffic nightmares: Think the drive to San...
No doubt the Labor Day timing was just coincidental, but the California Supreme Court have given workers a pretty big victory. It's allowing them to bring class-action lawsuits alleging labor code violations even if they had signed agreements with their employers requiring them to arbitrate any disputes. The decision centers on an agreement that Circuit City asked employees to sign. You've probably gone through the same thing: It waives your right to file a class...
Why would the CEO of a company take a leave of absence in the midst of an internal investigation? Don't expect to get any answers at International Rectifier, which announced today that Alex Lidow will be stepping aside (though he'll continue to be paid and remain on the board). "The board has determined that this action was in the best interests of the company and no conclusion has been reached by the audit committee that...
That's what the chatter suggests - and considering that the stock is trading at a whopping 10 percent below the $63-a-share buyout offer by Bain Capital, well, you have to wonder. Deal Journal raises a couple of the doubts: One is that Bain is using lots of leverage to do the deal (10.4 times estimated 2007 cash flow), and under terms of the proposed purchase, it would only have to shell out $58 million to...
Remember the couple who arranged in February to tie the knot at Sky Studios, the glam Greenwich Village property with a penthouse that was featured on "Sex and the City"? In July, they received a cancellation notice, supposedly because the guy who owned the building was selling it to L.A. billionaire Ron Burkle for $17 million, and he didn't want the deal delayed (his asking price had been $27 million, so maybe he's a touch...
This might seem like a strange time to set up a buyout fund, but Ken Moelis appears to be moving along with his L.A.-based boutique firm, Moelis & Co. Tennille Tracy, a reporter with the newsletter Private Equity Analyst, posts that Moelis has raised more than $1 billion, just months after leaving UBS as the company's investment banking president. Old-timers know Moelis for his work at Drexel Burnham during the Milken days. The new fund...
Labor Day rush: The Auto Club is looking at 3.1 million Socalians taking trips during the long weekend, 80 percent of them sticking to the roadways. That's pretty much the same as last year. The top destinations will be San Diego, Vegas, the Grand Canyon, Northern California, and Baja Mexico (cruises). Be prepared for long delays if you're driving to Nocal; a single lane of Interstate 5 just north of Castaic remains closed for ongoing...
Actually, shoves is more like it. The New York senator told the Calabasas mortgage lender today to stop paying brokers higher commissions for steering borrowers to adjustable rate subprime loans - a practice that was outlined in a NYT story over the weekend. Schumer, who is chairman of the Senate Housing Subcommittee, has been laying into the mortgage biz - as well as Wall Street - for causing the current debt crisis. "Until we deal...
Never mind about the stock market being up more than 200 points - Wall Street's really big story today concerns the supposed displeasure among CNBC's female talent who don't answer to the names Maria "Money Honey" Bartiromo or Erin "Maria 2.0" Burnett. (If you haven't been following this nonsense, Burnett is the younger dish who has the biz and media guys drooling (not only beautiful, but smart, funny, blah, blah, blah...) Now according to the...
Like your typical rich guy (and we're talking $4.5 billion at last estimate), David Murdock has lots of opinions about lots of things. But he's especially passionate about healthy living - so much so that he's bankrolling both the California WellBeing Institute in Westlake Village and the 350-acre North Carolina Research Campus, where several universities plan to conduct food-related research. Anyway, Bloomberg's Seth Lubove profiles the 84-year-old Murdock, who preaches the benefits of a low-fat...
Today and Thursday have been declared "Flex Alert Days," which means setting thermostats at 78 degrees or higher, leaving drapes closed, turning off unnecessary lights and appliances, and using large appliances early in the morning or late at night. The California Independent System Operator, the outfit that manages the state's power grid, expects the hot weather to raise demand, but not to dangerous levels. Demand should reach its peak of 44,902 megawatts at about 4...
L.A. incomes rising: The local economy is in decent shape. Really. The latest numbers from the Census Bureau show that median household income in L.A. County last year was $51,315, up 6.3 percent from 2005, while the percentage of residents living in poverty dropped from 16.3 percent to 15.4 percent. Not unexpectedly, the city of L.A. trailed the county as a whole, with median household income climbing 4.2 percent, to $44,445. The poverty rate in...
If you're a Hollywood hotshot (and a guy), you might wind up in an apartment house on Ocean Avenue near Wilshire Boulevard. Nikki Finke reports that Paramount's Brad Grey, UTA's Jim Berkus, Larry David, music producer David Foster, and producer hiatus Brian Medavoy are among the residents. They’ve all either recently separated or divorced and have put off buying a new house (the wife typically holds onto the old place). From Deadline Hollywood Daily: "It's...
With Labor Day weekend fast approaching, we're seeing a bunch of end-of-summer laments about how bad airline service has been this summer - worse, in some cases, than even the dire expectations from last May. The news coverage all says pretty much the same thing: the airlines fired too many people, use too many narrow-body planes, and pack their schedules so tightly that even a minimal weather delay makes the system go kablooey. Ordinarily, the...
The Writers Guild is now making noises about working arrangements for the upcoming CBS reality show – as well as reality shows in general. “The folks who write, produce and shoot these shows were subject to illegal and unfair working conditions,” said Patric Verrone, president of the WGA (the guild has been interviewing crew members). “They don’t get paid overtime, they violate consecutive days of work [rules], they don’t get meal breaks. We’ve been saying...
Not to seem glib about it, but some companies change to accommodate customer demands and some just sit there like beached whales. Interstate Bakeries, which makes Wonder bread and which announced plans to shut down its four Socal bread bakeries, is the beached whale variety. Interstate has been getting hit two ways – at the higher end, where you have the premium, La Brea Bakery-type competitors, and at the lower-end, where competitors put out a...
Real estate agent Kirsten Kemp tells Michael Schneider (Variety, Franklin Avenue) that even in this market you can buy a property and resell it at a profit. At least that's her message on the TLC show "Property Ladder," which is all about flippers, especially first-timers. This is mighty dangerous ground for obvious reasons, though Schneider insists that the show does a decent job in illustrating how risky it is to flip a house these days....
No more Wonder Bread: Interstate Bakeries is shutting down its four Socal bakeries in Glendale, Pomona, San Diego and in Los Angeles southeast of USC. All told, about 1,300 jobs will be eliminated. Interstate has been one mess of a company for the years it has operated under Chapter 11 bankruptcy protection, so this is not a huge surprise. One piece of good news: Interstate will continue to operate two Los Angeles bakeries that make...
To be precise, $2.741 in the L.A. area, according to the latest government survey - just in time for the Labor Day weekend. Prices have been falling for much of the summer, largely because refineries stepped up production. Refinery production is a very big deal in determining how much we pay for gas – actually more important than the price of oil. The betting is that prices won't fall a whole lot further, but that...
The Business Journal's annual list of auto dealerships in L.A. County doesn't usually make for suspenseful reading. Longo Toyota in El Monte has been in the top position for as long as I've been around (and that's a looong time). But the list also shows one of the area's stalwarts, Galpin Ford, falling to third position (Longo Lexus is No. 2). Galpin's new car sales in 2006 dropped 17 percent over the last year. Longo,...
The plan is for "day-and-date" delivery in NY and other key cities along the East Coast - kind of an interesting initiative considering that anybody - East Coast, West Coast or anywhere in between - can access the Hollywood trade paper on the Web. As part of the move, The Reporter will expand its coverage of the NY markets (that seems to include more staff). Over the years, the trades haven't had much of a...
There's not much of a comparison - Circuit City is the one that fired its higher-paid workers and is struggling to survive; Best Buy is sticking to its solid sales and earnings goals for the year despite a tumultuous market (earnings in the most recent quarter fell 18 percent). Anyway, Brian White at Blogging Stocks spent the weekend comparing and contrasting the two largest consumer electronics chains in the U.S. and discovered a few differences....
Yup, that's just what this town needs – part of the proposed "density bonus" plan that would allow developers to put up taller, larger buildings as long as they include low-income units. County Supervisor Zev Yaroslavsky predicts that the density bonus would "take a wrecking ball to some of the most beautiful, quaint neighborhoods in Los Angeles." Planning Director Gail Goldberg says there wouldn't be "towering skyscrapers" as a result of the ordinance. Actually, some...
Gateway sold - again: The Irvine-based PC company is being acquired by Taiwan's Acer Inc. for $710 million. In addition, Gateway is ready to buy Packard Bell NV, which Acer would inherit. When the dust settles, Acer will become the world's third-biggest personal computer (HP and Dell are numbers one and two). It's worth noting that the per-share price Gateway is $1.90, 57 percent more than the closing price of $1.21 on Aug. 24, but...
How else do you describe the goings on at the Calabasas-based mortgage lender, at least based on Gretchen Morgenson's Sunday story in the NYT? Up until recently, Countrywide Financial has been portrayed more as a victim than a perpetrator of the subprime abuses that have led to the current mortgage meltdown. Not anymore. Here's how her piece opens: On its way to becoming the nation’s largest mortgage lender, the Countrywide Financial Corporation encouraged its sales...
No wonder the 84-year-old chairman of Viacom thinks he can live 50 years - and keep running the company. Sumner Redstone, by far LABO's favorite industry mogul (and we’re using “favorite” loosely here), is hooked on a superjuice called MonaVie. The antioxidant-rich stuff is dark-purple and laced with the Brazilian açai berry, which health nuts have been pushing for years. "It's a miracle drug," he told Fortune. "I feel great." At a recent party, Redstone...
Our friend Michelle Leder at footnoted.org has come across a weird passage in the CBS honcho’s new contract. It notes that the company will pay his state in local taxes in both NY and in L.A., where he has his main residence. That's not the weird part; companies routinely pay local taxes for executives who can certainly afford to write out a check themselves (Moonves made $24.5 million last year). What stood out to Leder...
You have to wonder which strategy is more clueless - the Bush plan for Iraq or the Villaraigosa plan for L.A. It's a pretty close call, but I'm actually on the ground in L.A. so my vote goes to Antonio. And here's the latest brainstorm from City Hall: We need more big box stores! The Business Journal reports that Villaraigosa will be releasing a plan in the next few weeks to lure the Home Depots...
They're sold under the "Genuine Sweet Baby Carrots" brand at Ralphs, Trader Joe's and other stores. Los Angeles Salad Co., based in City of Industry, recalled the packaged carrots after discovering signs of shigella, a bacteria that can cause severe diarrhea in the young, elderly and people with weakened immune systems. They had been sold in Canada. All of the packages were sold in flexible plastic bags in 7- and 8-ounce sizes with a "sell...
In a matter of speaking. Forbes has come out with its annual list of Best Cities For Singles, and Los Angeles is ranked third, behind SF and NY. It's a pretty silly list, with each city being given a most eligible bachelor and bachelorette (George Clooney and Cameron Diaz? C'mon guys, can't you come up with something a little fresher?). But lists are pretty silly to begin with, and since our fair city manages to...
Countrywide's savior?: There's still all kinds of discussion about the effectiveness of Bank of America's $2 billion investment in the giant mortgage lender - for Countrywide as well as the mortgage biz in general. One big question involves the $30 billion worth of riskier mortgages (known as option adjustable-rate mortgages) that Countrywide holds. Defaults on those have more than tripled in the past year. All of which suggests that Countrywide will still have to slash...
I'll be out of pocket for at least the day....
Variety is reporting this afternoon that giant concert promoter Live Nation will not be renewing its deal with Ticketmaster, a huge blow for the West Hollywood-based ticket service (it relied on Live Nation for up to 20 percent of its business last year). Talks between the two companies have broken down - not a huge surprise to those in the concert promotion biz. (LABO). In an internal memo cited by the trade paper, Ticketmaster said...
We all know that the wealthy among us - and we're talking filthy rich here - operate in a different orbit, but it's not always apparent how far off that orbit can be. For that, we rely on the magazine Celeb Staff (subscription required) to provide a guide on what it costs to staff mansions of various sizes. As highlighted by the Wealth Report's Robert Frank, a 3,000- to 5,000-square-foot "small" mansion would run a...
Yesterday the baseless speculation centered on Warren Buffett, but the WSJ, citing sources, just reported that the bank giant will purchase $2 billion worth of preferred Countrywide stock yielding 7.25 percent - and that can be converted into common stock at $18 a share. (The stock closed today at $21.82.) That will probably provide additional comfort to those concerned about Countrywide's financial situation. Earlier today, Bank of America and three other major U.S. banks disclosed...
The new boss of the LAT - and of all Tribune for that matter - was at the paper last week, and he apparently had a bunch to say about the future, much of it positive. Publisher David Hiller summarizes the off the record session in a memo to staff. Among Hiller's scribbles: --High energy straight-talking business owner looking for same in us --Committed and confident in the deal getting done (don’t focus too much...
Anderson had been publisher of the Register, but also a key executive for the paper's parent, Freedom Communications. He'll be replaced by Terry Horne, publisher of the East Valley Tribune in Mesa, Ariz., which is Freedom's third-largest paper. Judging from his background, Horne looks like a business guy - unlike Anderson who came to the Register as editor. Actually, Anderson had been expected to turn the publisher duties over to Marti Buscaglia, but she told...
State of the market: To cut or not to cut - that is the question. After lots of buzz on Tuesday about an interest rate cut being imminent, "Fed officials" (whoever they are) are telling the WSJ that they're cautiously optimistic the steps they've taken so far will do the trick. They cite stable stock prices (the market is up solidly in early trading) and a pickup in the issuance of jumbo mortgages. Just two...
The financial folks are having some fun today over the vague possibility that Warren Buffett might want a piece of Countrywide Financial. There's no indication that such a deal is in the works - or even contemplated - but merely the suggestion of Countrywide CEO Angelo Mozilo working for Buffett is too delicious to pass up. Posting in Reuters DealZone, Tim McLaughlin wonders what their shorthand moniker might be. BuffAngelo? Warzilo? It's interesting about these...
It wasn't pretty, but they finally agreed on a $145 billion spending plan. Now the state can begin paying billions of dollars to healthcare clinics, nursing homes and day-care facilities. Among the concessions made by Democrats was a prohibition against using global warming concerns in lawsuits to block transportation projects authorized by voters last year. Democrats have said such lawsuits are not a threat to any projects. Republicans gave up on several demands, including one...
This time, Disney is under the gun. The advocacy group China Labor Watch today cited the Mouse House as among the companies using toy manufacturers that operate like sweat shops. The working conditions "remain devastatingly brutal, with long hours, unsafe workplaces and restricted freedom of association, and in blatant violation of Chinese and international labor law,” according to the report, citing its survey of eight Guangdong factories. Guangdong's average manufacturing wage was $2,374 last year,...
One of today's big stories is the jump in July foreclosures, as measured by the Irvine-based firm RealtyTrac. It's important to mention where the numbers are coming from because RealtyTrac's data has been under fire for being, well, exaggerated. Just what we need in these overheated times - an overheated report on foreclosures. As noted a few months back, the government does not track any aspect of the foreclosure process, so several private firms are...
Tribune deal approved: By shareholders, that is. They're selling their shares as part of an $8.2 billion buyout that's led by Sam Zell. Now, the question is whether enough money can be borrowed – and at the right price - to complete the deal. Most likely it can, but given the company's poor performance and the current credit crunch, Wall Street is divided on whether Tribune has much of a future. Here's a news flash...
So does DreamWorks. The decision to bypass the more popular Blu-ray format came as a surprise among the folks who follow this stuff, and it certainly shakes up the ongoing battle of the formats (for the uninitiated, HD DVD and Blu-ray players produce much sharper pictures than conventional DVD players). Up to now, Paramount and DreamWorks, along with Warner Brothers, had been using both formats. Universal Pictures releases films exclusively in HD DVD, while Sony...
The Calabasas-based mortgage lender was downgraded to "underperform” by KBW Inc., which said in a note that a liquidity crisis has spread to the company's bank. But the evidence seems flimsy, at least based on a Bloomberg story. KBW analyst Frederick Canon sent a team member to a Countrywide branch to monitor customers who were looking to withdraw money (the team member saw a grand total of nine people waiting to see two bank employees...
Stocks are down, based both on the banks putting aside more money for sour loans, and on the perception that Korean banks take more risks with their loan portfolios. As reported by the Business Journal, analysts began downgrading the top five Koreatown banks, after the largest, Hanmi, reported a drop in earnings for the first two quarters of the year. “It’s humbling,” said Joanne Kim, executive vice president and chief lending officer at Wilshire State...
OC Register columnist Jon Lansner compares the current market with the disastrous 1989-91 stretch and finds, well, some unsettling patterns, starting with this: It's been more than 22 months since there were more OC homebuyers closing deals compared with the previous year-earlier periods. The last time there was such a lengthy losing streak was... right, 1989-1991. Don’t get too nervous – there are big differences between then and now. The earlier downturn was part of...
The week after: The market was mostly flat this morning as Wall Street tries to stabilize after the last few weeks of volatility. It won't be easy because credit-related nervousness is still apparent. Not helping matters is that the second quarter, which generated decent but not great earnings, could prove to be the year's high point. In Hong Kong, a feng shui master was asked about where the market would go next. The master's advice,...
How bad? An engineering consultant told the Downtown News that it's "seismically sick." Others warn that an earthquake could bring it down. Repairs to the 1932 structure, which carries 11,000 cars a day, aren't expected to begin until 2011, which is a long time to hope that something bad doesn’t happen. During a public meeting last Tuesday, a fellow from Parsons, the big engineering and design company in Pasadena, said “the Sixth Street Viaduct has...
I know, I know – we’re supposed to be ticked off at the Fed for easing the discount rate and, in effect, insinuating itself into the debt crisis. Fortune’s Allan Sloan describes the central bank as enabling those rich and greedy Wall Street investors who thought nothing of “happily sucking up hundreds of billions of dollars’ worth of suspect mortgages from marginal U.S. borrowers – and begging mortgage makers to create more of them.” So...
It’s kind of a watching-paint-dry report, with July joblessness falling to 4.8 percent from 4.9 percent in June. Statewide, the rate was 5.3 percent, up from 5.2 percent in June. One interesting nugget: construction employment was virtually unchanged in July, and over the last 12 months it has declined by only 3,000 jobs. How could that be happening in a homebuilding slump? The conventional explanation is that L.A. County has lots of big projects in...
Sanford C. Bernstein analyst Michael Nathanson says that those revenues are moving over to national media. In retail advertising, for example, TV stations, newspapers and radio are losing out to network TV, magazines and cable networks. Overall, outdoor and online advertising are benefitting, with second-quarter online advertising increasing 28.6 percent from a year earlier, to $3.5 billion. Total ad growth slowed in the second quarter, down 3.5 percent from the previous three months. The biggest...
Now we have Banc of America analyst Robert Lacoursiere upping his rating on the troubled mortgage lender to "neutral" from "sell." That might not sound like much, but at this point Countrywide will take whatever it can get. In his research report, Lacoursiere said that the company's problems were overblown, although he does expect the volume of loan originations to decline (not a big surprise). All told, he says there's a 39 percent chance that...
Wall Street reacts to Fed: The Dow skyrocketed more than 300 points on news of the Fed's decision to lower the discount rate it charges banks. But after 90 minutes of trading, two-thirds of that gain has been erased. Perhaps it's because investors wanted the Fed to go all the way by cutting the federal funds rate, which has held steady at 5.25 percent for more than a year. Of course, there are those who...
Try Countrywide bonds, which Deal Journal reports are being priced at between 25 percent and 35 percent. Of course, they don't come due for another 12 months, and goodness knows what will be of the Calabasas-based mortgage lender by then. Bond yields that high are usually for companies on death's door - except that in Countrywide's case, the end may not necessarily be near. A number of analysts say that the company's troubles are overblown,...
Shaky market: There are reports that the Federal Reserve is again pumping more money into the system, so we'll see if that stabilizes things. For now, everything is down, with the Dow off more than 100 points after two hours. Countrywide is making big news with its efforts to shore up the amount of cash it has on hand by getting a group of 40 banks to provide an $11.5 billion credit facility. "Everyone is...
The nation's largest mortgage lender drew down an $11.5 billion credit facility to boost its cash position. The move, announced this morning, is the result of Countrywide not having access to unsecured commercial-paper, which is a big problem if you're in the mortgage lending business. "As we have previously discussed, secondary market demand for non-agency mortgage-backed securities has been disrupted in recent weeks," said President David Sambol. The Calabasas.-based firm also plans to move all...
In its headline, the London Telegraph puts it indelicately, but accurately: "Bankruptcy scare for Countrywide, biggest US home lender, as mortgage securities shunned." Shares of the mortgage giant plunged 13 percent today after a Merrill Lynch analyst laid out a scenario under which the company could be forced into bankruptcy. In case you're wondering, such an event would be... well, you really don't want to go there. That’s why the market got all hot and...
CEO Kevin Sharer was trying to put the best face on today's news of a 12 percent to 14 percent workforce reduction - plus the closing of facilities, plus the taking of a $600 million to $700 million restructuring charge, plus a cut in the 2007 earnings estimate. “These kinds of things happen cyclically," he told the WSJ. "Genentech Inc. in 1995 went through their own discontinuity with Roche buying (a majority share). Virtually any...
Tribune says it's all good: The company insists that the financing to go private is set, despite a stumbling stock price and a Lehman Brothers analyst who put the odds of the deal going through at only 50-50. The buyout is backed by JPMorgan Chase, Bank of America, Merrill Lynch and Citigroup, and they're contractually committed to the loans unless Tribune's 2007 profit misses certain targets. So far, that hasn't happened. There is still the...
When companies get into big trouble, there are established rules for containment. You must act quickly, act cohesively and try not to point the finger at anyone. Mattel will be faced with lawsuits and financial charges, of course, but the key is to minimize the damage, especially with the holiday season just around the corner. Law Blog caught up with Victor Schwartz, head of the public policy practice at Shook Hardy & Bacon, to pick...
There are two separate recalls. One is for 436,000 die-cast cars worldwide that contain levels of lead paint considered impermissible. The toys feature the Sarge character from the movie “Cars.” The other is an expansion of a November 2006 recall of toys that contain magnets that can be swallowed by children. That recall, which now covers 18.2 million magnetic toys globally, include Polly Pocket dolls and Batman action figures. Magnets have been used in toys...
So what else is new, right? L.A. County home sales fell 23 percent in July from a year earlier, which is at least better than the huge drops in Riverside and San Bernardino (41.9 percent and 42.6 percent, respectively). All told, Socal home sales last month were down 27 percent, which is the slowest July since 1995. It’s worth noting that in 1995 L.A. was struggling to get out of a prolonged recession, while this...
You have to at least wonder, considering that the stock is down this morning almost 4 percent - and has been on a downward course for the last couple of trading days. Tribune, parent of the LAT, is now trading at $24.75, and just to remind everybody, the Sam Zell-led deal to go private was for $34. In May, Tribune closed on $7 billion to fund the first half of the deal at higher prices...
Mattel announces recall: And it's a big one, although different stories have different figures. The WSJ says more than 9 million; Bloomberg says 18.6 million. The recall includes Barbie, Polly Pocket and Batman toys with magnets, and 436,000 die-cast vehicles that contain lead. This appears much bigger than the Mattel's recall of 1.5 million Fisher-Price preschool products, including Chinese-made Sesame Street and Dora the Explorer toys. Mattel began an ad campaign today in an effort...
And the unnamed toy in question may contain excessive amounts of lead paint. Yikes. The AP couldn't get many specifics, other than it doesn't involve the Chinese supplier implicated in the worldwide recall two weeks ago. An SEC filing earlier this month mentioned "other small product recalls" that involved design problems. Today's big news: The head of a Chinese company that made the recalled toys committing suicide. From the NYT: Experts here say many Chinese...
Home sales freeze?: August could be very slow - perhaps the slowest month on record - because mortgage lenders have gotten so stingy in approving loans and because consumers are just too nervous about buying a home. Not only are sales expected to drop, but pending home purchases may fall out of escrow and be canceled. From the LAT: Home buyers and sellers are caught in the vise. Eager buyers who thought they had secured...
Have some non-LABO work to attend to. Be back in a few days....
Shares of the El Segundo-based company are down 1.5 percent in early trading, another zig in a choppy trading pattern since Mattel's Fisher-Price division recalled 967,000 Chinese-made toys because they may have contained excessive levels of lead paint. Of course, the entire market has been zig-zagging, so it's hard to know how concerned investors are about sales ramifications (most of the toys were pulled before they reached shelves). Meanwhile, Lee Der Industrial Company in Guangdong...
L.A.’s "cram 'em in" City Council decided today that downtown needs larger developments, denser developments - developments so tight that there's no space between buildings. They're calling it urban-style planning principles; I'm calling it crowded and crazy. Well, maybe not so crazy, given the $lobbying$ by developers and downtown business interests. Here's more from the LAT: The vote is a major victory for Mayor Antonio Villaraigosa and others who have argued that Los Angeles needs...
Former Brocade Communications Systems CEO Gregory Reyes becomes the first CEO to be convicted by a jury as part of a broad crackdown on the backdating of stock options - and of course it will raise questions about ongoing federal investogations, some involving local companies. "Total shock,'' said defense attorney Richard Marmaro when asked for reaction. You can understand why: the government was believed to have a weak case - so much so that U.S....
By now, this is old news in the hotel world, but Ali Kasikci has resigned as managing director of the Peninsula Beverly Hills (his last day was July 31). Normally, this kind of departure is hardly newsworthy, but Kasikci's attention to detail when dealing with the rich and famous - plus his savvy awareness of how to handle the media - made him stand out. And it made the Pen stand out. (LABO). No explanation...
L.A.-China flights: More nonstop service from Los Angeles to Shanghai would be a very big deal for the increasing numbers of folks doing business with China. United Airlines is pushing an LAX-Shanghai route, but other domestic carriers have proposed different cities as they battle for the limited number of rights to fly from the U.S. to China. Among the cities in the mix: Philadelphia, Chicago and Atlanta (Philadelphia?) At stake is an estimated $200 million...
Redundancy is a dangerous thing in today's media world. I'm sure Broadcasting & Cable and Multichannel News have separate missions for covering the television industry, but apparently they're not separate enough for owner Reed Television Group (parent of Variety). A news release describes "a new editorial structure" that will advance growth in new online media. As part of the overhaul, Tom Steinert-Threlkeld will oversee both publications. B&C editor-in-chief Max Robins has left his position after...
That's what Nikki Finke is reporting on Deadline Hollywood - and it might explain why she was a no-show at last week's family get-together at NY's Il Postino. And yes, this is the same Mrs. Redstone (aka Paula Fortunato) who Redstone was crazy about a couple of years back – so much so that some Viacom insiders speculated on her future ascension at the company. But sources are telling Finke that Redstone wants out of...
Time to regroup?: Well, perhaps, but credit worries that have plagued the markets these last few sessions are not going away. The weekend brought with it a batch of discouraging punditry, but this morning a number of analysts have upgraded financial stocks. In the first 90 minutes of trading, the Dow is up a couple of points. One Wilshire sold: The downtown office building that's one of the nation's largest communications switching hubs (handling traffic...
Those are the lighter-side-of-the-news features that have been a hallmark of the WSJ since 1941 (credit goes to Barney Kilgore, father of the modern Wall Street Journal, and Bill Kerby, the Journal’s first Page One editor). They appeared in the middle column of the front page (that's before the redesign; now, they're often down page), and as cited in Floating Off the Front Page, the stories can be about feuding nudists or makers of high-quality...
Is it any surprise that the industries relying on undocumented workers aren't thrilled by the government's hard-headed orders to have business owners play immigration cops? We're talking about all the usual suspects - restaurants, farms, construction - that rely on newly arrived immigrants as a source of low-skilled labor. Industry reps told the LAT - quite sensibly by the way - that the government’s plan makes little sense and would throw a monkey wrench into...
Shares of the Calabasas-based mortgage lender plunged another 6.6 percent. The stock closed at $25, which is as low as it's been in three years. Other mortgage lenders, such as Pasadena-based IndyMac, also took big hits. Here's the problem: defaults are starting to spread beyond the subprime mortgage arena. That has everyone scared that the credit crunch can no longer be contained in one corner of the market. When mortgage companies like Countrywide lend money,...
The stretch between noon and 1 p.m. really shouldn't be so painful. Grab a sandwich and take a break, right? So why has Wall Street chosen this 60-minute block of time to make life so miserable for investors? In case you haven't heard, the Dow tumbled 281 points today, about 200 of that coming in the closing hour or so of the session. Actually, this last-hour craziness has been an equal opportunity trading pattern; Wednesday...
Relations between Sumner and his daughter Shari were apparently cordial enough for the two to have dinner the other night at NY's Il Postino. The NY Post is calling it "an apparent make-up session," but the two sat at opposite sides of the table in between a bunch of other people - and Sumner left without giving Shari so much as a hug (how do they come up with this stuff?). He then flew back...
Lukewarm jobs report: Nonfarm payrolls increased just 92,000 in July, down from 126,000 in June and well below the average 132,000 since the start of the year. Job losses in manufacturing, construction and government offset gains in many service industries. The unemployment rate was up a touch, to 4.6 percent. Wall Street had been expecting a job gain of 130,000, so it's no surprise that the market is down this morning (93 points in the...
How dare I raise the specter of companies actually benefiting from yesterday's bridge collapse in Minnesota. But there's a reason that the stocks of two local companies, L.A.-based Aecom Technology and Pasadena-based Jacobs Engineering, rose sharply in today's trading. "It certainly raises awareness to the need for spending in our country on improving our highways and bridges and transit systems," Steven Fisher, an analyst at UBS securities, told Bloomberg. (Aecom rose 4.4 percent; Jacobs 3.1...
Going beyond this week's terrible earnings report, Michael Perry sent out an email to employees of the Pasadena-based mortgage lender in which he presents a gloomy but not hopeless picture. "Unfortunately, the private secondary markets (excluding the GSEs and Ginnie Mae) continue to remain very panicked and illiquid," Perry wrote in the company's IMB Report. He said that unlike past hiccups, the current problem "appears broader and more serious, might take longer to correct itself....
Well, it's only the recall of nearly a million toys by El Segundo-based Mattel, one of Socal's biggest public companies. They're only Chinese-made toys that have too much lead paint (kind of a problem with Chinese stuff these days). Guess that didn't merit enough attention by the Spring Street folks, who saw fit to bury the news on page three of this morning's business section (wire story, natch). Not that they pay attention to this...
Figuring out the market: Good luck. Just as Tuesday's session took a nosedive in the last hour or so, Wednesday's trading trended lower for most of the day when, out of nowhere, the Dow made a quick turnaround, gaining 150 points (roughly what it lost the day before). It's the same story: generally positive earnings results clashing with ongoing worries about the depth of Wall Street's credit problems. After almost two hours of trading, the...
CEOs aren't the only executives who report suspiciously high compensation packages. Let's take Brian Hodous, who joined Santa Monica-based Activision late last year from the UK as something called "chief customer officer." I'm not sure what all that involves, but he's listed as one of the company's senior executives – and that means his comp package is laid out in the just-released Activision proxy. Ever-watchful Michelle Leder at footnoted.org found that among Hodous's perks were...
The local guy has sold it to the Bev Hills developer. Money problems, or so they're saying. Gary Dwight, a fourth-generation San Pedran, had proposed an 18-story, $110 million development with a smaller section of brownstones at 550 S. Palos Verdes St. Plans had called for 320 residential units and 4,000 square feet of retail space, a promising project in a town that could use all the development it can get. Dwight is selling the...
Well, what do you expect when mortgage lenders were practically begging to cut a deal - even if you really couldn't afford to own a house? And now that home values are dropping - and mortgage payments are rising - it's not very surprising to see a jump in foreclosures in what had been one of the fastest growing cities in the Inland Empire. RealtyTrac reports that 336 properties were up for auction and that...
Tough day?: Stocks are fluctuating in early trading, with bargain hunters looking for deals and everyone else worried that problems in the credit markets are spreading beyond subprime mortgages. The latest headache: Bear Stearns has prevented investors from taking their money out of a hedge fund that put $850 million into mortgage investments. That's Bear's third hedge fund in trouble. Oh, and keep in mind that for 13 of the last 20 years, stocks have...
Mark Lacter
Mark Lacter created the LA Biz Observed blog in 2006. He posted until the day before his death on Nov. 13, 2013.The multi-talented Mark Lacter
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