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Coffee Talk
Business Observer Monday, May 21, 2007 12 years ago

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Shareholders question Source Interlink acquisition: Shareholders didn't share the enthusiasm of Source Interlink's management when the Bonita Springs-based magazine distributor announced it was jumping into the publishing business.New construction company comes to town: Competition for Gulf Coast construction projects will be getting a little stiffer with the announcement that West Palm Beach-based Suffolk Construction will be opening an office in Lakewood Ranch.Florida nets four thrifts: Research firm SNL Financial recently released its annual list of the top 100 thrifts in the nation and only four Florida institutions made the 2006 rankings.Start off new employees well - or else: Coffee Talk readers are all too aware about the perils of making a bad call when hiring employees. But a new survey says that even good calls can turn bad - rather quickly - if there isn't a healthy amount of training and orientation given to the employee from the first day.Hodges boosts Naples university: International College, an independent four-year institution for working adults, received a $12 million gift from Naples funeral-business owner Earl Hodges and his wife Thelma Hodges.A new kind of letter to the editor: Time was, when you didn't like something you read in the newspaper or a magazine, you simply wrote a letter to the editor.Look for the blue, ValPak blue, that is: Largo-based ValPak Direct Marketing Systems, a pioneer in direct mail, w

Coffee Talk

+ Shareholders question

Source Interlink acquisition

Shareholders didn't share the enthusiasm of Source Interlink's management when the Bonita Springs-based magazine distributor announced it was jumping into the publishing business.

Source Interlink's stock dropped 15% to $5.79 per share the day after executives announced plans to acquire Primedia's Enthusiast Media division for $1.2 billion in cash (stock symbol SORC). Under the deal to be funded by Citigroup Global Markets, Source will acquire 70 magazines and 90 Web sites of publications such as Motor Trend Magazine, Hot Rod Magazine and Soap Opera Digest. The combined companies will generate $2.4 billion in revenues.

Analysts peppered Source Chairman Michael Duckworth with questions during a conference call following the announcement, most of which he declined to answer fully.

They questioned how the company plans to pay interest on the new debt, how much cost cutting will take place and whether Source paid too much for the magazines.

Duckworth promised more details at the upcoming quarterly earnings conference call.

+ New construction

company comes to town

Competition for Gulf Coast construction projects will be getting a little stiffer with the announcement that West Palm Beach-based Suffolk Construction will be opening an office in Lakewood Ranch.

The company has already been working in Naples for a few months, on the pre-construction phase of the mammoth Ave Maria University project. But it's been orchestrating that work from its offices on Florida's east coast, a time-consuming and costly effort, Suffolk executive Michael Beaumier tells Coffee Talk.

What's more, Beaumier says the move is a natural one, as Sarasota, and specifically Lakewood Ranch, is in the middle of the Naples-Fort Myers and Greater Tampa markets, which the company has been planning on entering for several years - even before the current condo and building slump. The only way to have sustained success in a market, says Beaumier, is to have an office near where you plan to do the work.

"Our intention," says Beaumier, "is to become a Sarasota contractor in the same way that we became a Palm Beach contractor and a Miami contractor."

Beaumier says the company's niche is essentially not having a niche. Its long-term goal has been to have work in many markets and building types, from schools to hotels to medical complexes to, of course, the Florida construction staple of condos.

"We won't build single-family homes and we won't build roads," Beaumier says, "but we'll pretty much do everything else."

Beaumier, who is in the process of moving his wife and two daughters to Sarasota from Jupiter, will be in charge of Gulf Coast operations for Suffolk. He says he's already aware of many of the construction firms on the Gulf Coast, including Naples-based Kraft, which has worked with Suffolk on some projects.

Suffolk, with offices in Boston and Irvine, Calif., in addition to Florida, had companywide revenues of more than $1.3 billion in 2006 and has more than 800 employees. The company has been operating in Florida since 1994 and had about $350 million in statewide revenues last year.

Florida nets four thrifts

Research firm SNL Financial recently released its annual list of the top 100 thrifts in the nation and only four Florida institutions made the 2006 rankings.

None are based on the state's Gulf Coast, but BankUnited Financial Corp., the largest Florida-based financial institution with assets of $13.6 billion, has offices on the west coast with more locations expected to open this year in Clearwater, Cape Coral and Sarasota.

SNL Financial ranked the thrifts on six financial performance metrics. Four categories received a 20% weighting: Core return on average assets (ROAA), core return on average equity (ROAE), three-year core cash earnings per share (EPS) growth and efficiency ratio. The ratio of nonperforming assets (NPAs), including loans 90 days past due, to total assets, and net charge-offs (NCOs) as a percent of total loans were each weighted at 10%.

The other three top ranking thrifts in the Sunshine State were Sanford-based Federal Trust Corp., at 74th place, Fort Lauderdale-based BFC Financial Corp., at 89th place and BankAtlantic Bancorp Inc. at 99th. Interestingly, BFC Financial is the controlling shareholder of BankAtlantic.

BankAtlantic has several locations in the Tampa Bay area, with four to six new branches expected to open this year.

SNL Senior Analyst Maria Tor says the rankings indicate how profitable it was to be in the mortgage business in 2006, but she says the mortgage companies are now being punished in the stock market for possibly underwriting risky loans.

At a Glance

Who's Where 3-year Eff.

Rank Company Assets ROAA ROAE EPS Growth Ratio NPAs NCOs

9 BankUnited $13.6 billion .69% 12.89% 16.18% 52.49% .16% 0.00

74 Federal Trust Corp. $723 million .46% 6.65% (3.36) 67.76% 1.66% 0.00

89 BFC Financial Corp. $7.6 billion (.10%) (4.13%) 22.44% 98.70% .34% .13%

99 BankAtlantic Bancorp. $6.5 billion .32% 3.84% (36.82) 90.19% .41% .13%

Source: SNL Financial

+ Start off new

employees well - or else

Coffee Talk readers are all too aware about the perils of making a bad call when hiring employees. But a new survey says that even good calls can turn bad - rather quickly - if there isn't a healthy amount of training and orientation given to the employee from the first day.

The survey, developed by Menlo Park, Calif.-based staffing firm Robert Half International, reports that one third of workers polled in accounting, finance and technology jobs say their employers didn't offer a formal orientation program. This could be a missed opportunity, the survey states, as 87% of those who received orientations said it prepared them to succeed later on at the company.

Suggestions for setting up a successful orientation program include: keeping a consistent message; setting up a personal introduction from the chief executive or another high-ranking company official; developing an agenda for each part of the orientation that lets new hires know how important the program is and making sure the process doesn't just stop after the employee is acclimated to the company.

+ Hodges boosts

Naples university

International College, an independent four-year institution for working adults, received a $12 million gift from Naples funeral-business owner Earl Hodges and his wife Thelma Hodges.

As a result, the Naples-based college was renamed Hodges University.

The gift has several components but has no restrictions on how the funds are to be spent, says Terry McMahan, the university's president.

These include an undisclosed initial gift, annual gifts over the next three years, a charitable remainder trust that will transfer the assets to the university when the second spouse dies and a bequest in the Hodges' will. If the assets in the trust appreciate, the gift could end up being larger.

The gift eclipses any donations the young college has received so far. The International College Foundation currently has about $3.5 million in assets and the college raised about $2 million last year, McMahan says.

Hodges' gift mirrors other recent multimillion-dollar donations in Naples.

Goldman Sachs investment banking division co-chief Scott Kapnick and his family recently gave $10 million to the Naples Botanical Garden for the development of 160 acres that will include cultivated gardens at Bayshore and Thomasson drives. And Jay Baker, the retired president of Kohl's, and his wife Patty, recently said they'd give $10 million to the Naples Museum of Art.

+ A new kind

of letter to the editor

Time was, when you didn't like something you read in the newspaper or a magazine, you simply wrote a letter to the editor. These days, though, with e-mail blasts and Internet blogs a ubiquitous part of life, you can just send out a press release to, well, anyone.

That's what the folks at Lakewood Ranch-based Compress Technologies did recently in response to a blurb in Forbes magazine that they believed had a negative slant. It's the same approach Fort Myers based-Radiation Therapy Services took late last year when executives at the radiation treatment center operator thought they were dissed by Forbes.

Compress responded to an item in the magazine's Informer column in the May 21 issue that questioned how the company's shares quadrupled to 81 cents - and a $63 million market cap - in four months, without any revenue or operating cash flow. The Forbes article also refers to how Compress has reported income through licensing fees, although company executives didn't provide many details of the deals.

In its statement, Compress writes that it's already received $500,000 for "product applications currently under development" and can bring in an additional $1.5 million under the agreement. Compress, which says its focus is on licensing technologies to make radio and TV software and hardware more efficient, is traded over the counter under the ticker CTLG.

Look for the blue,

ValPak blue, that is

Largo-based ValPak Direct Marketing Systems, a pioneer in direct mail, was named one of the best places to work for entry-level job seekers by the 2008 Princeton Review.

Yep, the company that sends out "the blue envelope of savings" was among 114 companies that made the grade, including Google, Boeing and Proctor & Gamble. The Princeton Review interviewed hundreds of companies to find the best.

ValPak hires several hundred new graduates annually to sell marketing and direct-mail services to business owners. The new hires receive extensive sales training.

Best Entry-Level Jobs, 2008 Edition, is an employment resource for college seniors.

 

Niche expander

RedVector.com's recent acquisition of another online education company more than tripled its target customer base to three million from 800,000.

The Tampa-based company moved into the growing healthcare continuing education field recently with the acquisition of Care2Learn.com of Bradenton. It was the first acquisition for RedVector, founded in 1999, and it marks the company's first foray outside of online education primarily targeted at architects, engineers and contractors.

RedVector Chief Executive Officer Tom Wallace says Care2Learn will continue to operate separately from RedVector, but the companies will share knowledge and technology.

Both organizations offer online continuing education courses to professionals as well as customized e-learning solutions to corporations.

Old Winn-Dixie building

finally shows dividends

The commercial real estate venture undertaken by Tampa-based broker Steve Kossoff to fill an abandoned Winn-Dixie warehouse in Sarasota has been downgraded from a massive migraine to merely a headache with the recent announcement that Beall's Inc. will be leasing 200,000 square feet of the 950,000-sqaure-foot facility.

And Kossoff tells Coffee Talk that within a few weeks, the headaches could be completely gone. Kossoff, who owns the Tampa-based Meridian Development Group, says he has two more tenants lined up for the complex. One is a Fortune 1000 warehouse company that will occupy double the amount of space Beall's has leased, while another warehouse firm plans to lease about 75,000 square feet. Kossoff declined to name the perspective tenants.

The headaches started in January 2006, soon after Meridian bought the building and the surrounding 60 acres on Palmer Ranch in Sarasota County for $30 million. There were several governmental delays, including one centering on the slow-moving speed of what was supposed to be a project on a county-mandated fast track. (See 12/29/06 Review).

There were also several snickers from other brokers in the commercial real estate community, who wondered if the complex, deserted since 2004, would ever be a hit. Meridian spent $400,000 on consulting and legal fees, and Kossoff persevered with the project.

The perseverance paid off with the May 14 Beall's announcement. A spokesman for the Bradenton-based retailer says the deal will provide the $1.2 billion company growth space without going too far from its headquarters and main distribution center. Neither Beall's or Meridian officials would disclose the lease terms.

But Kossoff did say the lease is in line with the current market, which would put it at about $1 million a year. Says Kossoff: "I feel like this vindicates me for what people had said about the project not being able to work."

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