By Al Yoon Thu Aug 30, 12:28 PM ET
NEW YORK (Reuters) - Average house prices rose 3.2 percent in the second quarter from a year ago, representing the slowest appreciation in a decade, the Office of Federal Housing Enterprise Oversight said on Thursday.
Compared with the first quarter of 2007, house prices increased by 0.1 percent, the smallest rise since the last part of 1994, the regulator of home finance companies Fannie Mae and Freddie Mac said on its Web site.
Slowing home price appreciation -- or price declines by other measures -- have fueled speculation the housing slump may inhibit economic growth to a point of recession. Downward pressure on house prices will likely continue well into 2008, given soaring numbers of homes for sale and a sharp reduction in available credit by lenders in recent months, economists said.
"Our belief is that home prices will continue to slow over the next three to four quarters," said Scott Anderson, Minneapolis-based senior economist with Wells Fargo & Co., the No. 2 U.S. mortgage lender. Rising inventories and slack demand will put pressure on homeowners to "bite the bullet" and lower prices, he said.
Another index of home prices favored by some Wall Street economists this week found that home prices suffered their worst decline in the second quarter since its creation 20 years ago. The S&P/Case-Shiller U.S. National Home Price Index, which measures purchase prices registered at county offices, fell 3.2 percent in the period.
FLORIDA, CALIFORNIA DOWN; UTAH, WYOMING UP
The OFHEO index measures purchase prices and refinancing appraisals on so-called conforming loans purchased by Fannie Mae and Freddie Mac, the largest U.S. residential mortgage financing companies. It does not account for loans above $417,000 or those that fall out of the guidelines of the two companies, including subprime loans, whose delinquencies sparked an upheaval in global credit markets.
No matter what measure is used, however, the trajectory of home prices in most regions of the United States is affecting consumers and companies that profited from the housing boom. Freddie Mac (FRE.N) on Thursday said slower home price gains were partly to blame for a 45 percent decline in its second-quarter profit.
OFHEO's index measuring only home purchase prices increased at a slower 2.6 percent rate year-over-year.
Prices fell between 1 percent and 1.5 percent in Nevada, Michigan, California, Massachusetts and Rhode Island. Declines have not occurred in as many as five states since the 1996 to 1997 period, OFHEO said.
Utah and Wyoming led states with price appreciation, with gains of 15.3 percent and 12.8 percent, respectively.
Prices were "basically flat" in the quarter, and "significant price declines appear localized in areas with weak economies or where price increases were particularly dramatic during the housing boom," James Lockhart, director of OFHEO, said in the statement.
On a more local level, 61 cities had price declines and 226 saw price appreciation over a four month period. Eighteen of 20 cities with the steepest price drops, between 4.2 percent and 8.7 percent, were located in Florida and California, it said.
Thursday, August 30, 2007
Wall Street Digest Hotline Update
This is The Wall Street Digest Hotline Update for Tuesday, August 28, 2007, at 6:00 p.m. EST.
Falling consumer confidence and declining home prices pushed stock prices lower today. At the close, the Dow plunged 280 points, closing at 13,041, while the Nasdaq sank almost 61 points, closing at 2,500. Oil closed down $0.24 to $71.73 per barrel, and gold closed down $2.70 at 673.50 an ounce.
Housing prices fell in the second quarter at the steepest rate in 20 years. Inventories of homes for sale rose to a 9.4 months supply. Falling consumer confidence also rattled the markets today. The Federal Reserve Open Market Committee (FOMC) meets on September 18. However, on September 17, the Mortgage Bankers Association will release its National Delinquency Survey for the second quarter. It is bound to be ugly and should convince the Fed to cut the Fed funds rate by 50-basis points.
Fears of a recession also pushed stock prices lower today. The Fed could cut rates before September 18 to settle the markets. The global economic boom is solid. U.S. corporate profits for the second quarter are far better than expected. Stock prices are cheap, with the U.S. stock market undervalued by 35 percent. Every chart I look at is shouting: Major Market Bottom. Stay fully invested! Do not purchase the banking or financial stocks.
Don't read too much into today's sell-off. Voulme was very light, which indicates the bullish traders are on vacation and won't return until after Labor Day.
The dollar has already lost 35 percent of its 2002 purchasing power. More rate cuts are coming and they will further weaken the dollar. The greatest economic boom and bull market is still underway. I expect new highs in most stock market indexes by year-end. Global/international investments will enhance your investment returns as the dollar declines against other currencies.
Real estate is an illiquid, high-risk investment! Do not look for real estate bargains. Renting a home or condo is cheaper than owning. When that scenario reverses, it will then be safe to buy a home or condo. Real estate analysts do not expect the housing downturn to bottom until 2009 in Florida and California.
Stay close to our telephone/e-mail/website Hotline Updates.
The next Hotline Update will be on Friday, August 31, 2007, at 6:00 p.m. EST.
Falling consumer confidence and declining home prices pushed stock prices lower today. At the close, the Dow plunged 280 points, closing at 13,041, while the Nasdaq sank almost 61 points, closing at 2,500. Oil closed down $0.24 to $71.73 per barrel, and gold closed down $2.70 at 673.50 an ounce.
Housing prices fell in the second quarter at the steepest rate in 20 years. Inventories of homes for sale rose to a 9.4 months supply. Falling consumer confidence also rattled the markets today. The Federal Reserve Open Market Committee (FOMC) meets on September 18. However, on September 17, the Mortgage Bankers Association will release its National Delinquency Survey for the second quarter. It is bound to be ugly and should convince the Fed to cut the Fed funds rate by 50-basis points.
Fears of a recession also pushed stock prices lower today. The Fed could cut rates before September 18 to settle the markets. The global economic boom is solid. U.S. corporate profits for the second quarter are far better than expected. Stock prices are cheap, with the U.S. stock market undervalued by 35 percent. Every chart I look at is shouting: Major Market Bottom. Stay fully invested! Do not purchase the banking or financial stocks.
Don't read too much into today's sell-off. Voulme was very light, which indicates the bullish traders are on vacation and won't return until after Labor Day.
The dollar has already lost 35 percent of its 2002 purchasing power. More rate cuts are coming and they will further weaken the dollar. The greatest economic boom and bull market is still underway. I expect new highs in most stock market indexes by year-end. Global/international investments will enhance your investment returns as the dollar declines against other currencies.
Real estate is an illiquid, high-risk investment! Do not look for real estate bargains. Renting a home or condo is cheaper than owning. When that scenario reverses, it will then be safe to buy a home or condo. Real estate analysts do not expect the housing downturn to bottom until 2009 in Florida and California.
Stay close to our telephone/e-mail/website Hotline Updates.
The next Hotline Update will be on Friday, August 31, 2007, at 6:00 p.m. EST.
Monday, August 27, 2007
Home re-sales fall as inventories soar
WASHINGTON (Reuters) - Sales of pre-owned U.S homes fell slightly in July but the inventory of unsold single-family properties soared to the highest in over 15 years as troubles in the subprime mortgage market continued to wreak havoc on the housing sector.
Home sales slid 0.2 percent in July to a seasonally adjusted 5.75 million unit annual rate, according to a report from the National Association of Realtors on Monday.
That brought the supply of unsold homes at the current sales pace to 9.6 months' worth, the highest on record since 1999, when the association began tracking all types of properties, such as condominiums, together with single-family homes.
The supply of single-family homes, the bulk of the inventory included in the association's data, rose to 9.2 months' worth, which was the biggest on hand for sale since October 1991.
"This shows that the housing downturn continues to intensify. It shows no sign of abating. Given the turmoil in the financial market from lending problems, the housing problem will continue in the months ahead," said Mark Zandi, chief economist at Moody's Economy.com in West Chester, Pennsylvania.
Worries over the housing market coupled with high energy costs have eroded investor confidence, with the UBS/Gallup Index of investor confidence falling for the third straight month, bringing it down to the lowest reading in a year.
This sentiment also held true for a panel of key business economists who in a survey released on Monday concluded that the risk of massive defaults on subprime mortgages and heavy debts is a bigger threat to U.S. economic prosperity than terrorism.
"The combined threat of subprime loan defaults and excessive indebtedness has supplanted terrorism and the Middle East as the biggest short-term threat to the U.S. economy," the National Association for Business Economics said.
That panel's conclusion was based on a survey of 258 NABE members conducted between July 24 and August 14. In that survey, only 20 percent of members said terrorism was now their top concern, compared with 35 percent surveyed in March.
U.S. Treasury debt prices rose on Monday following the housing data but trading volume in Treasury securities was particularly thin due to a market holiday in London and with many U.S. players out on summer vacation.
U.S. stocks ended down amid concerns housing market troubles would hurt the economy and corporate profits. The benchmark Dow Jones Industrial Average (.DJI) closed down more than 50 points.
HOUSING IMPACT ON ECONOMY
Even with a somewhat dismal picture continuing on the housing front, National Association of Realtors economist Lawrence Yun maintained that this key segment of the U.S. economy is still holding on.
"In the aggregate, we don't see the subprime market damaging the economy," Yun said.
Bob Moulton, president of the Americana Mortgage Group, a mortgage brokerage firm in Manhasset, New York, said there is still a steady stream of mortgage business.
"We are still writing our fair share of business. We are still seeing transactions. We still see homeowners buying houses," Moulton said, noting that declining home prices will ultimately boost home sales.
According to the latest home sales data from the Realtors association, median home prices fell 0.6 percent from a year ago to $228,900.
"Volatility creates transactions and with median home prices falling, it's great for first-time home buyers," Moulton said.
Last month's decline in existing home sales was smaller than expected. Economists polled ahead of the report forecast home resales to drop to a 5.70 million-unit pace.
(Additional reporting by Glenn Somerville in Washington and Richard Leong in New York)
Home sales slid 0.2 percent in July to a seasonally adjusted 5.75 million unit annual rate, according to a report from the National Association of Realtors on Monday.
That brought the supply of unsold homes at the current sales pace to 9.6 months' worth, the highest on record since 1999, when the association began tracking all types of properties, such as condominiums, together with single-family homes.
The supply of single-family homes, the bulk of the inventory included in the association's data, rose to 9.2 months' worth, which was the biggest on hand for sale since October 1991.
"This shows that the housing downturn continues to intensify. It shows no sign of abating. Given the turmoil in the financial market from lending problems, the housing problem will continue in the months ahead," said Mark Zandi, chief economist at Moody's Economy.com in West Chester, Pennsylvania.
Worries over the housing market coupled with high energy costs have eroded investor confidence, with the UBS/Gallup Index of investor confidence falling for the third straight month, bringing it down to the lowest reading in a year.
This sentiment also held true for a panel of key business economists who in a survey released on Monday concluded that the risk of massive defaults on subprime mortgages and heavy debts is a bigger threat to U.S. economic prosperity than terrorism.
"The combined threat of subprime loan defaults and excessive indebtedness has supplanted terrorism and the Middle East as the biggest short-term threat to the U.S. economy," the National Association for Business Economics said.
That panel's conclusion was based on a survey of 258 NABE members conducted between July 24 and August 14. In that survey, only 20 percent of members said terrorism was now their top concern, compared with 35 percent surveyed in March.
U.S. Treasury debt prices rose on Monday following the housing data but trading volume in Treasury securities was particularly thin due to a market holiday in London and with many U.S. players out on summer vacation.
U.S. stocks ended down amid concerns housing market troubles would hurt the economy and corporate profits. The benchmark Dow Jones Industrial Average (.DJI) closed down more than 50 points.
HOUSING IMPACT ON ECONOMY
Even with a somewhat dismal picture continuing on the housing front, National Association of Realtors economist Lawrence Yun maintained that this key segment of the U.S. economy is still holding on.
"In the aggregate, we don't see the subprime market damaging the economy," Yun said.
Bob Moulton, president of the Americana Mortgage Group, a mortgage brokerage firm in Manhasset, New York, said there is still a steady stream of mortgage business.
"We are still writing our fair share of business. We are still seeing transactions. We still see homeowners buying houses," Moulton said, noting that declining home prices will ultimately boost home sales.
According to the latest home sales data from the Realtors association, median home prices fell 0.6 percent from a year ago to $228,900.
"Volatility creates transactions and with median home prices falling, it's great for first-time home buyers," Moulton said.
Last month's decline in existing home sales was smaller than expected. Economists polled ahead of the report forecast home resales to drop to a 5.70 million-unit pace.
(Additional reporting by Glenn Somerville in Washington and Richard Leong in New York)
Friday, August 24, 2007
Wall Street Digest Hotline Update
This is The Wall Street Digest Hotline Update for Friday, August 24, 2007, at 6:00 p.m. EST.
Stock prices were up today, as liquidity and sub-prime worries continue to fade. At the close, the Dow gained almost 143 points, closing at 13,378, while the Nasdaq gained almost 35 points, closing at 2,576. Oil closed up $1.33 to $71.16 per barrel, and gold closed up $9.70 at $678.10 an ounce.
Another calm day on Wall Street helped reduce investor fears over liquidity and the sub-prime mortgage crisis. Also, new homes sales rose 2.8 percent in July after falling 4 percent in June. In a second report this morning, factory orders for big-ticket durable goods jumped 5.9 percent in July, the best gain in ten months. Both reports were better-than-expected.
Stay fully invested! The U.S stock market is the most oversold, undervalued stock market on the planet during a global economic boom and bull market. The 1,000-point decline in the Dow Industrial Average from 14,000 is a gift. Use this pullback to invest any remaining cash that you may have.
The dollar has already lost 35 percent of its 2002 purchasing power. More rate cuts are coming and they will further weaken the dollar. The greatest economic boom and bull market is still underway. I expect new highs in most stock market indexes by year-end. Global/international investments will enhance your investment returns as the dollar declines against other currencies.
Real estate is an illiquid, high-risk investment! Do not look for real estate bargains. Renting a home or condo is cheaper than owning. When that scenario reverses, it will then be safe to buy a home or condo. Real estate analysts do not expect the housing down turn to bottom until 2009 in Florida and California.
Stay close to our telephone/e-mail/website Hotline Updates.
The next Hotline Update will be on Tuesday, August 28, 2007, at 6:00 p.m. EST.
Stock prices were up today, as liquidity and sub-prime worries continue to fade. At the close, the Dow gained almost 143 points, closing at 13,378, while the Nasdaq gained almost 35 points, closing at 2,576. Oil closed up $1.33 to $71.16 per barrel, and gold closed up $9.70 at $678.10 an ounce.
Another calm day on Wall Street helped reduce investor fears over liquidity and the sub-prime mortgage crisis. Also, new homes sales rose 2.8 percent in July after falling 4 percent in June. In a second report this morning, factory orders for big-ticket durable goods jumped 5.9 percent in July, the best gain in ten months. Both reports were better-than-expected.
Stay fully invested! The U.S stock market is the most oversold, undervalued stock market on the planet during a global economic boom and bull market. The 1,000-point decline in the Dow Industrial Average from 14,000 is a gift. Use this pullback to invest any remaining cash that you may have.
The dollar has already lost 35 percent of its 2002 purchasing power. More rate cuts are coming and they will further weaken the dollar. The greatest economic boom and bull market is still underway. I expect new highs in most stock market indexes by year-end. Global/international investments will enhance your investment returns as the dollar declines against other currencies.
Real estate is an illiquid, high-risk investment! Do not look for real estate bargains. Renting a home or condo is cheaper than owning. When that scenario reverses, it will then be safe to buy a home or condo. Real estate analysts do not expect the housing down turn to bottom until 2009 in Florida and California.
Stay close to our telephone/e-mail/website Hotline Updates.
The next Hotline Update will be on Tuesday, August 28, 2007, at 6:00 p.m. EST.
Monday, August 20, 2007
Mountain House community: From boom to bust on Bay Area's edge
REAL ESTATE DOWNTURN SINKS HOMEOWNERS' FORTUNES IN NEW PLANNED COMMUNITY
By Katherine Conrad
Mercury News
Article Launched: 08/20/2007 01:31:55 AM PDT
At Mountain House, visionaries carefully planned streets, schools, sewers - everything needed to create a thriving community of 16,000 homes in the middle of San Joaquin County's farmland.
Build it and they will come. And they did.
Starting in 2003, thousands of Silicon Valley residents desperate for a house, two-car garage and back yard made the hour-plus commute from the job-rich Bay Area over the Altamont Pass to Mountain House, where home prices started in the low $300,000s.
But then the real estate boom went bust. Last month, DataQuick reported that San Joaquin County mortgage holders were among the most likely in the state to default on their payments; San Joaquin County has the highest foreclosure rate among the nation's 100 largest metropolitan areas, RealtyTrac recently reported.
Mountain House, where Bay Area transplants are 80 percent of the population, is a dramatic illustration of a development that was built as a solution to Silicon Valley's overpriced housing market. Now, it finds itself hurt by high gas prices, ever-worsening commutes and a growing desire among South Bay residents for housing close to Silicon Valley jobs - even if it's condominiums and townhouses.
The trend of building high-density housing projects in the Bay Area's urban communities has taken off in the past several years, the result of land-use policies that allowed developers to build condos and townhomes on former industrial property. This option wasn't widely available when buyers began moving to Mountain House.
It's all taken a toll.
"It is as bad as it looks," said Susan Patteson, an agent with Fox Realty and a Mountain House resident since late 2003. "Homes that two years ago sold at the peak of the market now sell for $200,000 less. We rode the high; now we're suffering the low."
Just four years into the development, about 6,000 residents live in roughly 2,000 homes. Of those, about 60 are in foreclosure, according to Sean O'Toole, founder of ForeclosureRadar.
Yet the major home builders at Mountain House - Pulte, Lennar, Centex and now Shea Homes - say the community is one of their best-performing markets. Given the Central Valley market, where sales are off by more than one-third compared with a year ago, according to the Ryness Report, that's not saying much.
Trouble signs
A sure sign of decline at Mountain House is a dying lawn. A closer look reveals trash, ad fliers shoved under the door, and the clincher: a foreclosure notice or, worse, auction announcement, taped to the window.
These are the same homes that in 2004, 2005 and as late as June 2006 were sold by lottery to crowds of 300 pre-qualified buyers, many of whom camped overnight just for the chance to own a home.
Now they're languishing in a weak housing market.
"The loans are worth more than the house," said Jim Lamb, a Realtor who lives in Mountain House.
Real estate agents say buyers are reluctant to move to outlying regions such as Mountain House and nearby Tracy because homes that had appreciated as much as 25 percent a year are no longer holding their value.
But Paul Sensibaugh, head of the Mountain House community services district, said residents are still very happy with their community and its highly rated school - even if it still lacks a grocery store and companies haven't arrived bringing jobs.
The biggest problem for home sellers in Mountain House is they must compete with brand-new houses still going up. Meanwhile, builders are slashing prices, offering upgrades at little or no cost, and promising to fix anything that goes wrong with the house in the first year. Some builders are even doubling buyers' real estate agents' commission to a previously unheard-of 6 percent.
"You've really got to be in love with a used house to buy it instead of a new house," Lamb said. "People who are here long term will do great. They bought beautiful houses in nice neighborhoods. The real estate market won't stay bad for more than 10 years."
Among the homeowners who are hurting is John Basso, a project manager for Applied Materials. Basso paid $503,000, and spent more than $100,000 on upgrades and a pool.
Basso sold his townhome in Sunnyvale in 2003 and bought a 3,000-plus-square-foot dream house for his family. He and his wife, Yvette, and three children loved the new community, especially the new school. His commute was eased by taking the Altamont Commuter Express train, and the family settled in for the long haul.
"We upgraded our house significantly. We put in a swimming pool with the solar heat and a five-foot-high waterfall," he said. "The only reason was because we had every intention of staying there."
Then earlier this year, Basso was transferred to Austin. The house went on the market in June for $675,000, then $649,950, and now it's dropped to $624,950. "We're not trying to get every dollar out of it," he said. "We're just trying to complete the transaction."
The same can be said by the home builders - all publicly owned except Shea - that are doing what it takes to sell their houses. Pulte, Centex and Lennar are multibillion-dollar companies with deep pockets that presumably can ride out the downturn, as they have in previous cycles.
`Difficult market'
"It is a difficult market for all of us," said Les Lifter, Lennar's vice president of marketing. But, "considering the market, we're still having sales."
Kevin Peters, managing director of Shea Mountain House, said there's no question that 2007 has seen significantly fewer sales than 2006. But, he said, "It's a cyclical business. This is a long-term project. While it's not the most fun time to be in the market, there's not a better project to be associated with."
Nonetheless, building has slowed in Mountain House. Only 577 permits were issued from July 2006 to June 2007 compared with 837 permits taken out from July 2005 to June 2006.
With a glut of houses on the market, why are they building at all? The developers have little choice. They paid millions of dollars to buy the home sites and are obligated to pay for the streets, sewers, water treatment plants and schools before houses can be built. The only way to recoup their costs is to sell homes.
While experts believe the Bay Area housing market will be rocky for the next three years, they aren't guessing how long it will last in the Central Valley, where builders simply have constructed too many houses.
As far as Mountain House resident and Realtor Patteson is concerned, it's a no-win situation.
"If they stop building, the town stops growing. If they continue building, our resales are low," she said. "The market will come back. I would hate to see progress stop on behalf of the resale market. We need our community built."
Master plan for Mountain House
Mercury News reporting
Article Launched: 08/20/2007 01:31:57 AM PDT
MASTER PLAN FOR MOUNTAIN HOUSE
Size: Almost 5,000 acres
Planned by: Trimark Communities
since 1985
Construction began: 2000
Build out: 20 years
Capacity: 16,000 homes
for 43,500 residents
First residents moved in: 2003
Commercial projects: 700 acres designated
Parks: 750 acres set aside
Education: Plans for 12 kindergarten-to-eighth-grade schools, one high school and one community college satellite campus
Infrastructure cost: $2 billion
Contact Katherine Conrad at kconrad@mercurynews.com or (408) 920-5073.
Tuesday, August 14, 2007
Web scam: Pssst... wanna buy a house?
Scammers turning to online property forums to collect personal information about users
By Jeremy Kirk, IDG News Service
August 07, 2007
Web scammers are turning to online property forums to collect personal information about users for later attempts to swindle them out of money, according to a security researcher.
Renters and buyers often post phone numbers, instant messenger nicknames, and e-mail addresses on forums along with specific descriptions of the kind of property they're looking for.
This makes it easy for scammers to write proposals that will elicit further information, said Chris Boyd, security research manager for FaceTime Communications, a security vendor.
"They basically treat these Web sites as a gold mine of information," Boyd said.
The scammers then contact the property seeker, offering them a similar property to what they have described, complete with photos, Boyd said. The potential victim is also often asked a range of other personal questions, such as their occupation, marital status, and even if they have a pet.
But there's a catch: the scammer usually asks for a deposit before the seeker can see the property. The requested deposit is usually below market price, another way the scammer tries to lure the victim, Boyd said.
The e-mail pitches are similar to so-called 419 scams, which offer some greater reward in exchange for money in advance. A user on one property forum posted part of an e-mail from one scammer illustrating an unsuccessful swindle.
Reading the "header" of such an e-mail, the part of the message documenting its route over the Internet from sender to receiver, to determine who really sent it is one way to spot a scam. It is possible to fake some header information, but other parts can't be changed.
Although the property promised in this message is in the U.K, the e-mail's header reveals that it originated from an IP (Internet protocol) address belonging to Nigerian Telecommunications -- a big red flag.
By Jeremy Kirk, IDG News Service
August 07, 2007
Web scammers are turning to online property forums to collect personal information about users for later attempts to swindle them out of money, according to a security researcher.
Renters and buyers often post phone numbers, instant messenger nicknames, and e-mail addresses on forums along with specific descriptions of the kind of property they're looking for.
This makes it easy for scammers to write proposals that will elicit further information, said Chris Boyd, security research manager for FaceTime Communications, a security vendor.
"They basically treat these Web sites as a gold mine of information," Boyd said.
The scammers then contact the property seeker, offering them a similar property to what they have described, complete with photos, Boyd said. The potential victim is also often asked a range of other personal questions, such as their occupation, marital status, and even if they have a pet.
But there's a catch: the scammer usually asks for a deposit before the seeker can see the property. The requested deposit is usually below market price, another way the scammer tries to lure the victim, Boyd said.
The e-mail pitches are similar to so-called 419 scams, which offer some greater reward in exchange for money in advance. A user on one property forum posted part of an e-mail from one scammer illustrating an unsuccessful swindle.
Reading the "header" of such an e-mail, the part of the message documenting its route over the Internet from sender to receiver, to determine who really sent it is one way to spot a scam. It is possible to fake some header information, but other parts can't be changed.
Although the property promised in this message is in the U.K, the e-mail's header reveals that it originated from an IP (Internet protocol) address belonging to Nigerian Telecommunications -- a big red flag.
VMware surges with much-anticipated IPO
By MICHAEL LIEDTKE, AP Business Writer 1 hour, 37 minutes ago
SAN FRANCISCO - Shares of rapidly growing software maker VMware Inc. increased more than 70 percent Tuesday morning in one of Silicon Valley's most anticipated stock market debuts since Google Inc. mesmerized Wall Street three years ago.
Eager buyers quickly sent VMWare's shares soaring to nearly $50 per share from an initial public offering price of $29.
Reflecting the intense interest in VMware, the IPO price already was a 21 percent premium above the $24 per share target set before management gave a series of presentations to money managers during the past two weeks.
The so-called road show apparently wowed investors, enabling VMware to boost its offering price despite the recent downturn in the stock market.
After expenses, Monday's sale of 33 million shares raised about $900 million for VMware, listed on the New York Stock Exchange under the ticker symbol "VMW." The IPO also generated a big payoff for its controlling stockholder, EMC Corp., a data storage specialist that bought the Palo Alto-based VMware for $602 million in January 2004.
Hopkinton, Mass.-based EMC is retaining an 87 percent stake in VMware, worth $9.5 billion, based on the IPO price. VMware's market value stood at $10.9 billion after the IPO.
Analyst Paul Bard of Renaissance Capital's IPOhome.com considered VMware "one of the most compelling high-tech companies to go public since Google."
Propelled by the online search leader's moneymaking prowess, Google's stock has increased by more than six-fold since its IPO priced at $85 in August 2004.
VMware's products help make corporate data centers operate at a lower cost by enabling a single computer function like multiple machines — a process known as "virtualization."
The market has been booming, with VMware raking in most of the business.
With 3,000 employees worldwide, VMware is on pace to hit $1 billion in annual revenue for the first time in its 10-year history. The company's sales through the first half of 2007 totaled $555.5 million, nearly doubling from $285.5 million at the same time last year. VMware profit through the first half of this year more than doubled to $75.3 million.
In the year before the EMC acquisition, VMware earned just $4.6 million on revenue of $74.2 million.
VMware's success enticed Silicon Valley heavyweights Intel Corp. and Cisco Systems Inc. to buy a piece of the action.
Santa Clara-based Intel last month agreed to pay $218.5 million, or $23 per share, for 2.5 percent of VMware's common stock. Shortly after that deal was worked out, EMC sold 6 million shares to San Jose-based Cisco for $150 million, or $25 per share.
The hot demand for virtualization software also has attracted the attention of Microsoft Corp., which has indicated that it plans to enter the market. But Bard doubts that threat will hurt VMware during the next year. "They look like they have the market pretty well locked up through 2008," Bard said.
Like a lot of rapidly expanding companies, VMware apparently has had trouble managing its growth. In its IPO papers, VMware disclosed that its independent auditor had found "material weakness" in the company's internal controls as of December 2006, warning the problems could result in a misstatement of its financial results.
As of June 30, VMware said it believed it had fixed the problems by hiring additional accounting workers and increasing management oversight. VMware hired former Amazon.com Inc. executive Mark Peek as its chief financial officer four months ago.
EMC's large stake in VMware also could alienate some investors who feel uncomfortable ceding so much control to another high-tech company whose interest could eventually conflict with VMware's.
Joseph Tucci, EMC's chief executive officer, is VMware's chairman and one of its largest stockholders with 8.9 million shares.
VMware's CEO is Diane Greene, who has held the job since she founded the company in 1998. Her husband, Mendel Rosenblum, is VMware's chief scientist.
SAN FRANCISCO - Shares of rapidly growing software maker VMware Inc. increased more than 70 percent Tuesday morning in one of Silicon Valley's most anticipated stock market debuts since Google Inc. mesmerized Wall Street three years ago.
Eager buyers quickly sent VMWare's shares soaring to nearly $50 per share from an initial public offering price of $29.
Reflecting the intense interest in VMware, the IPO price already was a 21 percent premium above the $24 per share target set before management gave a series of presentations to money managers during the past two weeks.
The so-called road show apparently wowed investors, enabling VMware to boost its offering price despite the recent downturn in the stock market.
After expenses, Monday's sale of 33 million shares raised about $900 million for VMware, listed on the New York Stock Exchange under the ticker symbol "VMW." The IPO also generated a big payoff for its controlling stockholder, EMC Corp., a data storage specialist that bought the Palo Alto-based VMware for $602 million in January 2004.
Hopkinton, Mass.-based EMC is retaining an 87 percent stake in VMware, worth $9.5 billion, based on the IPO price. VMware's market value stood at $10.9 billion after the IPO.
Analyst Paul Bard of Renaissance Capital's IPOhome.com considered VMware "one of the most compelling high-tech companies to go public since Google."
Propelled by the online search leader's moneymaking prowess, Google's stock has increased by more than six-fold since its IPO priced at $85 in August 2004.
VMware's products help make corporate data centers operate at a lower cost by enabling a single computer function like multiple machines — a process known as "virtualization."
The market has been booming, with VMware raking in most of the business.
With 3,000 employees worldwide, VMware is on pace to hit $1 billion in annual revenue for the first time in its 10-year history. The company's sales through the first half of 2007 totaled $555.5 million, nearly doubling from $285.5 million at the same time last year. VMware profit through the first half of this year more than doubled to $75.3 million.
In the year before the EMC acquisition, VMware earned just $4.6 million on revenue of $74.2 million.
VMware's success enticed Silicon Valley heavyweights Intel Corp. and Cisco Systems Inc. to buy a piece of the action.
Santa Clara-based Intel last month agreed to pay $218.5 million, or $23 per share, for 2.5 percent of VMware's common stock. Shortly after that deal was worked out, EMC sold 6 million shares to San Jose-based Cisco for $150 million, or $25 per share.
The hot demand for virtualization software also has attracted the attention of Microsoft Corp., which has indicated that it plans to enter the market. But Bard doubts that threat will hurt VMware during the next year. "They look like they have the market pretty well locked up through 2008," Bard said.
Like a lot of rapidly expanding companies, VMware apparently has had trouble managing its growth. In its IPO papers, VMware disclosed that its independent auditor had found "material weakness" in the company's internal controls as of December 2006, warning the problems could result in a misstatement of its financial results.
As of June 30, VMware said it believed it had fixed the problems by hiring additional accounting workers and increasing management oversight. VMware hired former Amazon.com Inc. executive Mark Peek as its chief financial officer four months ago.
EMC's large stake in VMware also could alienate some investors who feel uncomfortable ceding so much control to another high-tech company whose interest could eventually conflict with VMware's.
Joseph Tucci, EMC's chief executive officer, is VMware's chairman and one of its largest stockholders with 8.9 million shares.
VMware's CEO is Diane Greene, who has held the job since she founded the company in 1998. Her husband, Mendel Rosenblum, is VMware's chief scientist.
Tuesday, August 7, 2007
SOARING PLANS FOR TRANSBAY TERMINAL
The West Coast's tallest building: 3 competing ideas show audacity that adds to the city's rising skyline
John King, Jonathan Curiel, Chronicle Staff Writers
Tuesday, August 7, 2007
Three competing proposals for what would be the tallest building on the West Coast were unveiled Monday in San Francisco amid architectural fanfare and political buzz.
There's no guarantee that any of the towers will be built, or that the design to be selected next month by public officials will reach the heights envisioned by the development teams. But the audacity of the designs - and the favorable response from elected officials - showed that the recent startling changes to the city's skyline are only a prelude to what could lie ahead.
"There they are," San Francisco Mayor Gavin Newsom said with a wave of his right hand as black mesh was pulled from three lavish large models. The event was held in a crowded event room at City Hall filled with dozens of people and several television crews. "Today is an historic day."
The three proposals range in height from 1,200 feet to 1,375 feet - each extending well past the 853-foot Transamerica Pyramid, the tallest tower in San Francisco. And each is accompanied by a transit terminal that is intended to become a major civic gateway.
The competition is being held by the Transbay Joint Powers Authority, a regional government body created in 2001 to bring about the construction of a new transit terminal in San Francisco that backers say could become the regional equivalent of Grand Central Station.
The authority would sell or lease the tower site to a developer, with the proceeds helping pay the estimated $983 million cost of the terminal and related elements such as new bus-only ramps from the Bay Bridge.
After the unveiling, the hearing where each team made its presentation attracted an overflow crowd to the Board of Supervisors chambers in City Hall, with more than 100 people watching a video hookup in another room.
But public officials aren't stressing the architectural flourishes as much as the transportation payoff of the new terminal located one block from Market Street and BART.
"Through this facility, we can create a statement to the rest of the world while creating a seamless transportation network connecting the Bay Area to the rest of the region and state," said San Mateo County Supervisor Jerry Hill, who chairs the Transbay authority's Board of Directors.
Long-term plans for the transit complex include extending commuter rail lines from where they now stop at Fourth and King streets. The design would also allow for high-speed rail service from Southern California, although Gov. Arnold Schwarzenegger has delayed putting a bond for the service on the ballot.
In the early planning for the new terminal, it was assumed that any tower alongside it would climb no higher than 550 feet. Now, though, public officials say the extra height is merited - not just to boost the land sales, but to show that San Francisco continues to measure itself against other cities of global status that are seeing super tall towers proposed or built.
The three proposals are similar in several ways: Each cloaks the terminal in glass, and each tops the tower with a translucent or open crown with wind turbines tucked inside it. Each would be roughly the height of the Empire State Building, which is 1,250 feet high.
Also, with an eye toward environmental issues, each project emphasizes sustainable design elements such as the turbines, which would generate power for the complex.
Finally, each team played its presentation to the hilt - with elaborate models and videos as well as with assurances that a new civic landmark waited off stage.
"In a single stroke, this design will redefine for the world San Francisco's architectural, urban and environmental intentions," said architect Craig Hartman of Skidmore Owings & Merrill, echoing a theme struck by the other teams.
The Skidmore firm joined with Rockefeller Group Development Corp. to propose a 1,200-foot tower that would twist and fold as it rose, while a glass "crown" would extend another 175 feet. On the ground, the tower would be punctuated by an open-air passage 70 feet wide and 103 feet tall leading to the terminal concourse.
By comparison, the design by Pelli Clarke Pelli Architects for Houston-based developer Hines is a 1,200-foot-high obelisk-shaped office tower with a sleek silhouette. The most dramatic element is a 1,300-foot-long park, designed by Berkeley's Peter Walker and Partners, that would sit atop the terminal at the sixth-floor level and measure more than five acres.
The third proposal is from a team including Rogers Stirk Harbour + Partners with developers Forest City Enterprises and McFarlane Partners. The metal tower includes exposed elevators for a sense of movement, and rises 1,100 feet - but the steel frame would continue another 125 feet and enclose a wind turbine that would be visible on the skyline.
For all the hoopla connected to the tower, there's no guarantee that any of the visions unveiled on Monday will be built - or even that they'll be the deciding factor in determining which team wins the right to conduct exclusive negotiations with the authority.
Each proposal was evaluated in private last week at Fort Mason by an appointed jury that includes architects and engineers as well as a transportation expert and a real estate analyst. The jury will present its recommendation to the authority board on Aug. 30.
In evaluating the three proposals, jury members are directed to base 60 percent of their evaluation on the design for the transit station and on "functionality and technical issues," according to the evaluation sheet. As for the tower, economics are every bit as important as aesthetics, with such directives as: "The jury will focus on the timing and amount of revenue to the TJPA."
Another unresolved issue: how tall the tower will be allowed to be.
City planning officials aren't shy about wanting an extremely tall tower, and they encouraged the boldness seen in the three proposals. But a full environmental study is needed before zoning can be changed - and the planning work to test such heights only now is getting under way.
Whatever proposals do emerge will be scrutinized by potential foes in a city long wary of high-rises. Indeed, a voter-approved proposition from 1984 makes it difficult to erect any tower that cast shade on a public park.
Still, support for the tower is considerable.
Besides public officials, it includes a number of environmental groups who in the past have fought for height limits but now see mass transit as a critical issue for the region. There's also support from civic groups that want to concentrate development in the core of the city - the same impulse that prompted the residential towers now rising between Mission Street and the Bay Bridge.
But the tallest such tower - One Rincon, which was recently topped off at Harrison and Fremont streets - is 605 feet tall. That's less than half the height of what the three development teams are proposing.
The Transbay authority is scheduled to vote on Sept. 20 to select the development team. The goal is to have the new transit station in operation by 2014.
The models and other details of each proposal will be on display today from 8 a.m. to 6 p.m. next to the rotunda in San Francisco City Hall.
Online resources
For more information about the Transbay Terminal competition:
links.sfgate.com/ZOG
PLAN A
The proposal: An 82-story tower topped by a wind turbine that includes offices, housing and a hotel next to a transit center that would have fresh food markets and cultural facilities.
The architects: Rogers Stirk Harbour + Partners. The London firm's current projects include a tower for the World Trade Center site in New York City. Founder Richard Rogers is the winner of the 2007 Pritzker Architecture Prize, the profession's highest honor. Assisting the Rogers team is SMWM, a San Francisco firm.
The developers: Forest City Enterprises with MacFarlane Partners. Cleveland-based Forest City was a developer of Westfield San Francisco Centre. McFarlane Partners is headquartered in San Francisco and is working with Forest City on the Uptown housing project in Oakland.
PLAN B
The proposal: A mixed-use obelisk-shaped tower along a transit terminal that would be topped by an open-air, 5.4-acre rooftop park with vast skylights that allow sunlight to shine onto the floor below.
The architects: Pelli Clarke Pelli Architects. The Connecticut firm's work includes 560 Mission St., a 31-story tower in San Francisco. Founder Cesar Pelli is best-known for such high-rises as Petronas Towers, the tallest buildings in the world from 1998 to 2004. Pelli is working with WRNS Studio of San Francisco, which also is involved with the Contemporary Jewish Museum in San Francisco.
The developer: Hines. Based in Houston, Hines has developed a number of high-rises in San Francisco during the past 25 years, including 101 California St. and 560 Mission St.
PLAN C
The proposal: A 1,200-foot-tall tower with a torqued shape. The first floor would be raised 100 feet above the ground to allow for a public plaza next to a full-block park.
The designer: Skidmore Owings Merrill. The architects are in the San Francisco office of this storied firm. They include Craig Hartman, the lead designer of the International Terminal of San Francisco International Airport, and Brian Lee, the designer of two towers taller than 1,000 feet in China, both under construction.
The developer: Rockefeller Group Development Corp. The name is synonymous with urban icons - think Rockefeller Center - but the firm now is owned by Japan's Mitsubishi Estate Co.
E-mail John King at jking@ jking@sfchronicle.com.
This article appeared on page A - 1 of the San Francisco Chronicle
Wall Street Digest Hotline Update
This is The Wall Street Digest Hotline Update for Tuesday, August 7, 2007, at 6:00 p.m. EST.
The Fed left rates unchanged today, while maintaining a bias against inflation. At the close, the Dow rose 35 points, closing at 13,503, while the Nasdaq gained 14 points, closing at 2,561. Oil closed up $0.34 to $72.40 per barrel, and gold remained unchanged at $683.30 an ounce.
The Fed is walking a very fine line; inflationary pressures on one side, with serious deflationary problems on the other. Government agencies must make mortgage money available to all who need to refinance five-year arm mortgages. Mortgage money must also be available to assist those who must sell their homes to avoid bankruptcy. If mortgage money isn't available, the banks and mortgage lenders will end up owning more homes and condos than they did during the 1990's real estate crisis. The Fed will say what it has to every six weeks to stabilize the finance markets, while also doing what it must behind the scenes to solve the problem. You can bet that government mortgage agencies are scrambling 24/7.
Economic growth is slowing. When job growth begins to slow, the Fed will begin to cut rates--probably before year-end. Meanwhile, global liquidity climbed to yet another record high of $5.67 trillion in May, up 22.76 percent year-over-year and more than doubling since the start of the decade. Emerging nations held a record $4.2 trillion in international reserves in May. The benefits of free trade are enormous. The global/international markets are enjoying the greatest boom of all-time, while the U.S. stock market is undervalued and oversold.
I believe the stock market will continue to rise into year-end. Fed Chairman Bernanke does not expect housing to bottom this year. Real estate is an illiquid, high-risk investment! Do not look for real estate bargains. Renting a home or condo is cheaper than owning. When that scenario reverses, it will then be safe to buy a home or condo.
The dollar has fallen to an all-time low against the euro, and a 26-year low against the British pound. A falling dollar will continue to enhance the return of your offshore investments. Consequently, you should remain fully invested, with at least 50 to 75 percent of your portfolio allocated to our recommended global/international investments. Stay close to our telephone/e-mail/website Hotline Updates.
The next Hotline Update will be on Friday, August 10, 2007, at 6:00 p.m. EST.
The Fed left rates unchanged today, while maintaining a bias against inflation. At the close, the Dow rose 35 points, closing at 13,503, while the Nasdaq gained 14 points, closing at 2,561. Oil closed up $0.34 to $72.40 per barrel, and gold remained unchanged at $683.30 an ounce.
The Fed is walking a very fine line; inflationary pressures on one side, with serious deflationary problems on the other. Government agencies must make mortgage money available to all who need to refinance five-year arm mortgages. Mortgage money must also be available to assist those who must sell their homes to avoid bankruptcy. If mortgage money isn't available, the banks and mortgage lenders will end up owning more homes and condos than they did during the 1990's real estate crisis. The Fed will say what it has to every six weeks to stabilize the finance markets, while also doing what it must behind the scenes to solve the problem. You can bet that government mortgage agencies are scrambling 24/7.
Economic growth is slowing. When job growth begins to slow, the Fed will begin to cut rates--probably before year-end. Meanwhile, global liquidity climbed to yet another record high of $5.67 trillion in May, up 22.76 percent year-over-year and more than doubling since the start of the decade. Emerging nations held a record $4.2 trillion in international reserves in May. The benefits of free trade are enormous. The global/international markets are enjoying the greatest boom of all-time, while the U.S. stock market is undervalued and oversold.
I believe the stock market will continue to rise into year-end. Fed Chairman Bernanke does not expect housing to bottom this year. Real estate is an illiquid, high-risk investment! Do not look for real estate bargains. Renting a home or condo is cheaper than owning. When that scenario reverses, it will then be safe to buy a home or condo.
The dollar has fallen to an all-time low against the euro, and a 26-year low against the British pound. A falling dollar will continue to enhance the return of your offshore investments. Consequently, you should remain fully invested, with at least 50 to 75 percent of your portfolio allocated to our recommended global/international investments. Stay close to our telephone/e-mail/website Hotline Updates.
The next Hotline Update will be on Friday, August 10, 2007, at 6:00 p.m. EST.
Monday, August 6, 2007
Google Sets Sights on $10 Billion Mobile Ad Market
Jennifer LeClaire, newsfactor.com 1 hour, 26 minutes ago
The Wall Street Journal got the GPhone rumor mill churning. Now London's Telegraph is adding grist to the mill, reporting that Google services including search, e-mail, and interactive maps will come preloaded on the device that the company has yet to admit exists.
Anian, a Reuters company that keeps an eye on industry trends for institutional investors, is at the root of the rumor. Anian reported that Google has enlisted Taiwan's HTC to design a Linux-based phone. T-Mobile would be Google's U.S. partner, Anian maintains, while France Telecom's Orange would push the GPhone in Europe. The launch date, Anian said, will be during the first quarter of 2008.
The potential opportunities for Google entering the mobile market with an ad-subsidized phone are clearly vast. Frost & Sullivan figures the mobile advertising market in the U.S. alone will generate $2.12 billion in revenue by 2011 compared to $301 million in 2006. The Shoesteck Group estimates $10 billion globally by 2010, while EJL Wireless Research pegs the worldwide mobile advertising market at $9.5 billion by 2011.
Huge Revenue Stream
"Google clearly sees mobile search as a huge potential revenue stream, so much so that the company is exploring many different ways of getting in the game," said Avi Greengart, a mobile devices analysts at Current Analysis.
Indeed, Google already has been working with wireless carriers, trying to get more of its software on existing handsets. And Google is considering spending billions of dollars in the upcoming auction for wireless spectrum. Now, the rumor mill suggests, Google is looking at becoming a handset vendor.
"Google sees the future of search moving to mobile, but they are not sure how to get there," Greengart said. "If you bet on every horse, you are sure not to lose. So they are placing bets, partnering with manufacturers, carriers, and others."
Google's Intentions?
Google's true intentions remain unclear. The Wall Street Journal offers plenty of particulars, but cites "people familiar with the plans" and "people who have been briefed on it" as sources.
Google has invested millions of dollars in the secret cell phone project, the Journal reported, and has made overtures to operators including both T-Mobile and Verizon Wireless. According to the Journal, Google will have multiple manufacturers make the devices to its specifications and will offer the handsets through multiple carriers.
Google could not immediately be reached for comment. But as analysts and others speculate over the reality and viability of a GPhone, few are questioning whether Google wants to pursue mobile advertising opportunities.
Google has already demonstrated that it is intent on developing software and services for the mobile market. At the All Things Digital conference in May, Google Chief Executive Eric Schmidt said, "What's interesting about the ads in the mobile phone is that they are twice as profitable or more than the nonmobile phone ads because they're more personal."
The Wall Street Journal got the GPhone rumor mill churning. Now London's Telegraph is adding grist to the mill, reporting that Google services including search, e-mail, and interactive maps will come preloaded on the device that the company has yet to admit exists.
Anian, a Reuters company that keeps an eye on industry trends for institutional investors, is at the root of the rumor. Anian reported that Google has enlisted Taiwan's HTC to design a Linux-based phone. T-Mobile would be Google's U.S. partner, Anian maintains, while France Telecom's Orange would push the GPhone in Europe. The launch date, Anian said, will be during the first quarter of 2008.
The potential opportunities for Google entering the mobile market with an ad-subsidized phone are clearly vast. Frost & Sullivan figures the mobile advertising market in the U.S. alone will generate $2.12 billion in revenue by 2011 compared to $301 million in 2006. The Shoesteck Group estimates $10 billion globally by 2010, while EJL Wireless Research pegs the worldwide mobile advertising market at $9.5 billion by 2011.
Huge Revenue Stream
"Google clearly sees mobile search as a huge potential revenue stream, so much so that the company is exploring many different ways of getting in the game," said Avi Greengart, a mobile devices analysts at Current Analysis.
Indeed, Google already has been working with wireless carriers, trying to get more of its software on existing handsets. And Google is considering spending billions of dollars in the upcoming auction for wireless spectrum. Now, the rumor mill suggests, Google is looking at becoming a handset vendor.
"Google sees the future of search moving to mobile, but they are not sure how to get there," Greengart said. "If you bet on every horse, you are sure not to lose. So they are placing bets, partnering with manufacturers, carriers, and others."
Google's Intentions?
Google's true intentions remain unclear. The Wall Street Journal offers plenty of particulars, but cites "people familiar with the plans" and "people who have been briefed on it" as sources.
Google has invested millions of dollars in the secret cell phone project, the Journal reported, and has made overtures to operators including both T-Mobile and Verizon Wireless. According to the Journal, Google will have multiple manufacturers make the devices to its specifications and will offer the handsets through multiple carriers.
Google could not immediately be reached for comment. But as analysts and others speculate over the reality and viability of a GPhone, few are questioning whether Google wants to pursue mobile advertising opportunities.
Google has already demonstrated that it is intent on developing software and services for the mobile market. At the All Things Digital conference in May, Google Chief Executive Eric Schmidt said, "What's interesting about the ads in the mobile phone is that they are twice as profitable or more than the nonmobile phone ads because they're more personal."
Friday, August 3, 2007
"I don't care if I'm richest in world..." His family or personal life was more important than his wealth
By Chris Aspin 1 hour, 15 minutes ago
MEXICO CITY (Reuters) - Mexican telecom tycoon Carlos Slim, who is estimated by some calculations to be wealthier than Microsoft founder Bill Gates, said Thursday he did not care if he was the world's richest person.
"It's water off a duck's back to me," the cigar-smoking Slim told foreign correspondents. "I don't know if I'm No. 1, No. 20, or No. 2,000. It doesn't matter."
In July, a journalist who tracks the fortunes of wealthy Mexicans said Slim was worth an estimated $67.8 billion and had overtaken Gates as the world's richest person.
Slim hit the No. 1 spot after a recent surge in the share price of his America Movil, Latin America's largest cell phone company, according to Eduardo Garcia of the online financial publication Sentido Comun.
Garcia said that made him close to $8.6 billion wealthier than Gates, whose estimated worth was $59.2 billion.
Slim, 67, told foreign journalists at a luncheon on Thursday that making sure his job was compatible with his family or personal life was more important than his wealth.
Forbes magazine reported in April that Slim had overtaken billionaire U.S. investor Warren Buffett for the No. 2 spot in the world's richest stakes, but it is not scheduled to recalculate Slim's wealth until next year.
Slim, known for his Midas touch in turning struggling businesses into profit-making machines, told Reuters this year he did not calculate his fortune on a regular basis.
In Mexico, a small elite holds most of the country's wealth and about half the population lives on less than $5 a day.
Slim said Thursday his charitable foundations planned to invest $300 million in the next few years to build 100 schools in poor regions of Mexico that will focus on digital education. The plan would later be expanded throughout Latin America.
By MARK STEVENSON, Associated Press Writer Fri Aug 3, 12:02 AM ET
MEXICO CITY - Billionaire Carlos Slim said he doesn't care if he is the world's richest man and promised to donate hundreds of thousands of laptop computers to Mexican children.
ADVERTISEMENT
The Mexican telecom mogul pledged Thursday to donate 250,000 low-cost laptops to children by the end of the year and as many as 1 million in 2008, saying "digital education" holds the key for Mexico's poor.
Slim is listed by Forbes as the world's second-richest man with holdings worth US$53 billion (euro38.79 billion), but some financial analysts say he may have overtaken Microsoft founder Bill Gates as the world's richest.
Speaking to foreign correspondents on Thursday, Slim said the ranking meant little to him.
"That's water off a duck's back to me," Slim said. "I don't know if that (the ranking) is correct, if I'm first, 20th, or 2,000th. It doesn't matter. It's all the same."
"I think that what's important is to see that a professional or business activity isn't incompatible with personal or family life," he said.
He also expressed no interest in competing with Gates in philanthropy, saying he hoped their efforts would "complement each other." The Bill and Melinda Gates Foundation has channeled its efforts into reducing hunger and fighting disease in developing countries.
Slim said he wants to focus on building specialized preschools, handing out computers and supporting health care.
He said he would devote about US$70 million (euro51 million) this year to the low-cost laptop program. With an estimated cost of US$250 (euro183) to US$300 (euro220) per machine, Slim would have to devote US$300 million (euro220 million) to reach a goal of 1 million per year. He predicted, however, that costs for the machines would fall further.
Slim, who controls Mexico's largest fixed-line telephone company, Telefonos de Mexico, or Telmex, said the plan would initially put the laptops in libraries and schools, which would eventually give them outright to students.
"The scheme in public libraries would be for them to lend them out, like books," he said, noting his companies would help set up wireless networks for the machines to connect.
He said that within four years, he wants to build about 100 "early stimulation" preschools to give poor children training at a young age in math, language and computers.
He said the world economy is experiencing "a stage of world euphoria" of easy credit, and that Latin America should take advantage of that to invest in infrastructure.
Slim said there is no conflict between his role as businessman — in which he has been criticized for holding a near-monopoly control over the telephone market — and philanthropist.
"The best investment one can make is to reduce poverty," he said, noting that wealthier citizens are better consumers.
Thursday, August 2, 2007
Terabitz's Tools, Features Help Gather Real-Estate Info
By Lauren Baier Kim
Note: This is the sixth installment of "The Smart Surfer," a feature that reviews real-estate Web sites and tools available online for home buyers/sellers and investors.
Web site: At www.Terabitz.com, users can create, save and share custom "mashups" or Web pages containing data about a particular neighborhood in the U.S. The Web site, a Palo Alto, Calif., startup, launched last month and is geared to home buyers, sellers and those searching for a rental.
The Web site collects publicly available information such as census data, crime statistics from the Federal Bureau of Investigation and government records. Additional data comes through partnerships with Google Base, some Multiple Listing Services and Craigslist.
In addition to real-estate information, Terabitz layers in data that would be of interest to those looking to purchase or rent a home in a particular neighborhood: such as area photos, demographics, and the locations and phone numbers of local stores, places of worship, banks and post offices.
Coolest functions: Individuals can drag and drop "Bitz" (or windows) of information on their pages -- including data and tools such as a home-value calculator, real-estate listings, recent home sales, crime statistics and area attractions like restaurants, cinemas and schools.
How it works: Visitors who log in can click on the "Take Snapshot" tab to save the pages ("dashboards") they create and share them with others through email or instant message. This month Terabitz plans to extend its offerings, adding features like for-sale-by-owner properties, new construction listings, and rental and foreclosure properties.
Pluses: Terabitz's real-estate listings come from a variety of sources, increasing the likelihood of fuller, more complete coverage. It's easy to drag and drop elements onto the dashboard. The site lets users integrate pertinent neighborhood and housing information in one place in an eye-pleasing format that can be easily revisited and shared with others. Terabitz offers a short step-by-step tutorial for newbies to the site.
Drawbacks: As with other real-estate sites of its kind, Terabitz's availability of information varies across ZIP Codes and geographical areas, with the West Coast covered more heavily than other parts of the U.S., so some users may be disappointed with its offerings. However, the site plans to ramp up its coverage through relationships with regional real-estate brokers and national listings aggregrators.
House hunters can narrow down the parameters for real-estate searches on the site (e.g., search within a particular price range), but the function (an edit button located under the city, state and ZIP search field) is small and hidden. Mousing over a listing or location on the dashboard highlights its pushpin on a Google map, but the change in the pushpin's appearance may be too subtle for some users to identify.
Insider tips: To pull up any snapshots you've saved on the Web site, log in and hit "My Snapshots" in the top right-hand corner of the Web page. Click on the "Map" tab on the top right of the dashboard to pull up a larger map. Click on a real-estate or place listing to find its location on the map.
-- Lauren Baier Kim is a senior editor at RealEstateJournal.com.
Email your comments to lauren.kim@wsj.com.
-- August 02, 2007
Note: This is the sixth installment of "The Smart Surfer," a feature that reviews real-estate Web sites and tools available online for home buyers/sellers and investors.
Web site: At www.Terabitz.com, users can create, save and share custom "mashups" or Web pages containing data about a particular neighborhood in the U.S. The Web site, a Palo Alto, Calif., startup, launched last month and is geared to home buyers, sellers and those searching for a rental.
The Web site collects publicly available information such as census data, crime statistics from the Federal Bureau of Investigation and government records. Additional data comes through partnerships with Google Base, some Multiple Listing Services and Craigslist.
In addition to real-estate information, Terabitz layers in data that would be of interest to those looking to purchase or rent a home in a particular neighborhood: such as area photos, demographics, and the locations and phone numbers of local stores, places of worship, banks and post offices.
Coolest functions: Individuals can drag and drop "Bitz" (or windows) of information on their pages -- including data and tools such as a home-value calculator, real-estate listings, recent home sales, crime statistics and area attractions like restaurants, cinemas and schools.
How it works: Visitors who log in can click on the "Take Snapshot" tab to save the pages ("dashboards") they create and share them with others through email or instant message. This month Terabitz plans to extend its offerings, adding features like for-sale-by-owner properties, new construction listings, and rental and foreclosure properties.
Pluses: Terabitz's real-estate listings come from a variety of sources, increasing the likelihood of fuller, more complete coverage. It's easy to drag and drop elements onto the dashboard. The site lets users integrate pertinent neighborhood and housing information in one place in an eye-pleasing format that can be easily revisited and shared with others. Terabitz offers a short step-by-step tutorial for newbies to the site.
Drawbacks: As with other real-estate sites of its kind, Terabitz's availability of information varies across ZIP Codes and geographical areas, with the West Coast covered more heavily than other parts of the U.S., so some users may be disappointed with its offerings. However, the site plans to ramp up its coverage through relationships with regional real-estate brokers and national listings aggregrators.
House hunters can narrow down the parameters for real-estate searches on the site (e.g., search within a particular price range), but the function (an edit button located under the city, state and ZIP search field) is small and hidden. Mousing over a listing or location on the dashboard highlights its pushpin on a Google map, but the change in the pushpin's appearance may be too subtle for some users to identify.
Insider tips: To pull up any snapshots you've saved on the Web site, log in and hit "My Snapshots" in the top right-hand corner of the Web page. Click on the "Map" tab on the top right of the dashboard to pull up a larger map. Click on a real-estate or place listing to find its location on the map.
-- Lauren Baier Kim is a senior editor at RealEstateJournal.com.
Email your comments to lauren.kim@wsj.com.
-- August 02, 2007
Real estate investor pleads no contest to fraud that cost locals almost $18M
By JENNIFER SQUIRES
Sentinel staff writer
A Santa Clara real estate investor may spend the rest of his life in prison for one of the biggest fraud cases in Santa Cruz County history.
Michael Schneider, 44, pleaded no contest Tuesday in Santa Clara County Superior Court to 173 felony charges for residential burglary, elder financial abuse, embezzlement, grand theft and forgery.
Schneider took more than $43 million from investors, including seven Santa Cruz County residents who collectively lost almost $18 million, according to Santa Cruz County prosecutor Bill Atkinson.
Schneider was arrested in June 2006 when a Santa Cruz investor reported the fraud to the District Attorney's Office. The case snowballed when investors across the San Francisco Bay Area surfaced and Santa Clara County sheriff's deputies got involved.
"It just took on a totally different life," Atkinson said of the case.
Schneider solicited clients to invest in what he advertised as secure real estate loans through his company, California Plan Inc. Prosecutors say Schneider was keeping the money for himself while sending his clients phony statements leading them to believe they were earning income from their investments. Many of the investors were retirees who lost millions. One said some clients lost their life savings.
Tuesday's no-contest plea applied to all charges from Santa Cruz and Santa Clara counties.
"Michael has never denied what he did was wrong," defense attorney Dan Horowitz said. "Even before he was arrested, he told investors what he'd done"
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Horowitz had another explanation of how the investments vanished. He said Schneider, who bought California Plan in 1995, was trying to cover bad loans made by the company's previous owner by playing the real estate market and was on the verge of making enough money to cover people's investments when housing prices leveled off.
"He just kept balancing things to try to keep everybody happy," Horowitz said. "He was doing everything. He was doing good loans. He was dong bad loans. Ultimately, a slow down in the legitimate market that [caused him to] hit a wall"
Schneider tried to hand over his assets — reportedly worth $8 million to $14 million — to clients prior to his arrest, but eventually bankruptcy and investors' attorneys began liquidating his estate, according to Horowitz. Clients may recover 25-40 percent of their losses, but attorney's fees may eat up more than $2 million of that restitution payment, Horowitz said.
Schneider, who has been held in Santa Clara County Jail since his arrest, is scheduled to be sentenced in November. He faces 169 years in state prison.
MediaNews contributed to this report.
Contact Jennifer Squires at jsquires@santacruzsentinel.com.
Sentinel staff writer
A Santa Clara real estate investor may spend the rest of his life in prison for one of the biggest fraud cases in Santa Cruz County history.
Michael Schneider, 44, pleaded no contest Tuesday in Santa Clara County Superior Court to 173 felony charges for residential burglary, elder financial abuse, embezzlement, grand theft and forgery.
Schneider took more than $43 million from investors, including seven Santa Cruz County residents who collectively lost almost $18 million, according to Santa Cruz County prosecutor Bill Atkinson.
Schneider was arrested in June 2006 when a Santa Cruz investor reported the fraud to the District Attorney's Office. The case snowballed when investors across the San Francisco Bay Area surfaced and Santa Clara County sheriff's deputies got involved.
"It just took on a totally different life," Atkinson said of the case.
Schneider solicited clients to invest in what he advertised as secure real estate loans through his company, California Plan Inc. Prosecutors say Schneider was keeping the money for himself while sending his clients phony statements leading them to believe they were earning income from their investments. Many of the investors were retirees who lost millions. One said some clients lost their life savings.
Tuesday's no-contest plea applied to all charges from Santa Cruz and Santa Clara counties.
"Michael has never denied what he did was wrong," defense attorney Dan Horowitz said. "Even before he was arrested, he told investors what he'd done"
Advertisement
Horowitz had another explanation of how the investments vanished. He said Schneider, who bought California Plan in 1995, was trying to cover bad loans made by the company's previous owner by playing the real estate market and was on the verge of making enough money to cover people's investments when housing prices leveled off.
"He just kept balancing things to try to keep everybody happy," Horowitz said. "He was doing everything. He was doing good loans. He was dong bad loans. Ultimately, a slow down in the legitimate market that [caused him to] hit a wall"
Schneider tried to hand over his assets — reportedly worth $8 million to $14 million — to clients prior to his arrest, but eventually bankruptcy and investors' attorneys began liquidating his estate, according to Horowitz. Clients may recover 25-40 percent of their losses, but attorney's fees may eat up more than $2 million of that restitution payment, Horowitz said.
Schneider, who has been held in Santa Clara County Jail since his arrest, is scheduled to be sentenced in November. He faces 169 years in state prison.
MediaNews contributed to this report.
Contact Jennifer Squires at jsquires@santacruzsentinel.com.
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