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Coffee Talk
Business Observer Friday, Mar. 17, 2006 14 years ago

Coffee Talk

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Another Sarasota 'original': Crisis management experts and media flacks are easy to find today, with the 24-hour news cycle churning out a new celebrity, well, every 24 hours.PCM'S newspaper stocks continue to lag: When McClatchy Co. agreed to buy rival newspaper chain Knight Ridder for about $6.5 billion last week, it appeared Naples-based Private Capital Management had scored a victory for shareholders.Freedom to expand: Followers of Gerald L. Anthony's career won't be surprised that the veteran Manatee County banker wants to grow his latest creation - and grow it fast. Miva's future still in question: Fort Myers-based Internet company Miva has hired Deutsche Bank Securities to explore a possible sale of the company, but the subject was barely mentioned in a March 13 conference call with analysts announcing fourth-quarter results.Will anybody follow WaMu?: Washington Mutual Inc. has presented customers in Florida and elsewhere with seven more reasons to drop their loose change into a new account at the Seattle thrift.Commercial market cools off, rents heat up: A big player in Tampa commercial real estate is predicting the market will even out over the next year and property owners will look to reap the benefits.
by: Adam Hughes Staff Writer

Coffee Talk

+ Another

Sarasota 'original'

Crisis management experts and media flacks are easy to find today, with the 24-hour news cycle churning out a new celebrity, well, every 24 hours.

Alas, there's another new entrant into the crowded field: Jimmy Dean, former group publisher of Sarasota and Gulfshore Life magazines.

Dean has begun offering his media expertise on a new Web site he is calling the "Original Media Guru." On the site, he's hawking "a lifetime of multimedia experience for clients who are obsessive about getting it right." Among the specialties: "voiceover production" (a fallback to his radio days), "event specialist" (he has certainly attended his share) and "crisis management" (talk about first-hand experience).

Dean, who along with partner Dan Denton sold the group's magazines to CurtCo Media more than a year ago, was dismissed from the company after telling an off-color joke on a cable television program.

+ PCM'S newspaper stocks continue to lag

When McClatchy Co. agreed to buy rival newspaper chain Knight Ridder for about $6.5 billion last week, it appeared Naples-based Private Capital Management had scored a victory for shareholders.

Bruce Sherman, PCM's chief executive officer whose firm controls 18% of Knight Ridder's shares, led the charge last fall to force the newspaper company's board to sell, as its stock price languished in the $50 range. Sherman got his wish on March 13 as McClatchy offered to pay $67.25 per share for Knight Ridder.

But PCM investors who hoped that the deal would lift all newspaper stocks in their portfolio may be disappointed. Overall, the value of PCM's newspaper stocks have barely budged since last fall. Besides Knight Ridder and McClatchy, securities filings show PCM owns stock in six other newspaper companies, including Belo Corp., Lee Enterprises, New York Times Co., Gannett, Tribune Co., and Media General.

In late October, as Sherman started publicly urging Knight Ridder to put itself up for sale, PCM's combined stake in the newspapers totaled about $3.79 billion, based on closing stock prices on Oct. 31. On March 13, the day McClatchy announced its purchase of Knight Ridder, PCM's newspaper stake was estimated at $3.75 billion, a 1% drop. (Coffee Talk's calculation was based on holdings listed in a securities filing as of Dec. 31, so positions may have been slightly different in October and March.)

But don't expect Sherman to exit newspaper stocks anytime soon. Although he has a policy of not speaking publicly, Sherman says in a recent letter to shareholders that he's still bullish on the industry. "From a fundamental standpoint, the newspaper companies in your portfolio are moderately leveraged, produce massive free cash flow and yield operating margins approaching those of the best software or pharmaceutical companies," he writes. "We believe that it will become increasingly apparent that the Internet, as a distribution conduit, and the local newspaper media company, as a content producer, can and will coexist profitably and symbiotically."

+ Freedom to expand

Followers of Gerald L. Anthony's career won't be surprised that the veteran Manatee County banker wants to grow his latest creation - and grow it fast.

Freedom Bank opened in Bradenton only last May. It should not be confused with a different bank that opened a month earlier in St. Petersburg called Freedom Bank of America.

With one Freedom Bank already in Pinellas County, Anthony, who is president and chief executive of the Bradenton bank, is expanding southward.

Anthony's Freedom Bank is set to add a second office in Sarasota this month. Freedom Bank intends to get regulatory approval for three more branches by the end of the year. After that, the bank wants to open another four offices during the next two years.

Freedom raised $16.2 million in startup capital last year. But Anthony is seeking up to another $17.5 million to finance the branch network.

The last two startups did not turn out well for the 62-year-old Anthony, who is making $135,000 a year in his present job. Anthony departed both American Bank and Coast Bank of Florida when profit growth didn't keep up with asset growth.

Anthony's new bank accumulated nearly $90 million in assets during 2005, but finished the partial year with a net loss of $987,115, excluding stock option expense for executives.

Freedom managers anticipate turning their first quarterly profit early next year, a typical timetable for a young bank.

Yet much of Freedom's asset growth has come in the form of commercial real estate loans. Those are riskier credits than residential loans. At the end of 2005, Freedom had more than $38 million tied up in commercial real estate. That was 58% of the bank's entire loan portfolio. Still, the bank is well capitalized by regulatory standards and reported no delinquent loans or foreclosures as of Dec. 31.

+ Miva's future still in question

Fort Myers-based Internet company Miva has hired Deutsche Bank Securities to explore a possible sale of the company, but the subject was barely mentioned in a March 13 conference call with analysts announcing fourth-quarter results.

In response to an analyst's question near the end of the presentation, Miva Chairman and Chief Executive Officer Craig Pisaris-Henderson acknowledged the board of directors is exploring a sale but he declined to disclose anything more.

In the meantime, shares of Miva fell 20% to $3.72 on March 14, the day after it announced a net loss of $130 million for the year. More worrisome, the company says revenues fell 27% in the fourth quarter to $43 million, while operating expenses rose 25% to $24.6 million.

Despite the losses, Pisaris-Henderson says the company is turning the corner and will report better results in 2006 as it launches new products and continues to cut costs.

+ Will anybody follow WaMu?

Washington Mutual Inc. has presented customers in Florida and elsewhere with seven more reasons to drop their loose change into a new account at the Seattle thrift.

But the array of seven free services doesn't impress Punk Ziegel & Co. bank analyst Richard X. Bove enough for him to upgrade WaMu's stock.

WaMu is still heavily invested in unconventional mortgages. That is bound to reduce earnings as long-term interest rates and loan defaults rise.

WaMu claims to be the first financial institution in Florida to offer free wire transfers, annual forgiveness for one bounced check and free cash withdrawals from all automated teller machines, including those of the competition.

Roughly one quarter of WaMu's 240 Florida offices are located in the Tampa Bay area. Whether the new account program pressures local rivals to follow suit is open to question.

WaMu is supposedly for sale. The account program may be a quick and, according to Bove, relatively inexpensive way for WaMu to make the thrift more attractive to potential buyers. Tampa-based Bove predicts the new free services will still increase deposit fees across WaMu's national footprint by 10% in 2006.

Many depositors bounce three or four checks a year, for example. Even if depositors get one free overdraft, Bove reasons, WaMu still collects $25 or so for each of the other bounced checks.

WaMu stock rose 2.4% during the first day of trading after the announcement. But Bove, who rates the stock only "market perform," attributes some of the gain to the sale talk, fueled by Capital One Financial Corp. buying a New York bank.

+ Commercial market cools off, rents heat up

A big player in Tampa commercial real estate is predicting the market will even out over the next year and property owners will look to reap the benefits.

Stevens Tombrink, executive vice president and managing director of the Tampa office of Grubb & Ellis|Commercial Florida, said the commercial property investments market was strong through 2005.

"Investment in commercial property in the Tampa Bay region in 2004 and 2005 was just red hot," said Tombrink. "I doubt the pace this year will match last year, however, we do not expect any major losses, only a plateau."

Tombrink said that's good news for property owners because a decrease in transactions, even a small one, is enough to slow construction down. And with fewer buildings on the market, he anticipates higher rents.

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