Posted: 08 Mar 2010 11:56 PM PST

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NEWS OF THE WEEK - Orange County Business Journal

Posted: 09 Mar 2010 12:03 AM PST

Compiled by Julie Leupold

ECONOMIC INDICATORS
Flat: Businesses sold in OC as 94 deals were closed in February, compared to 92 a year earlier, according to BizBen.com.

TOP STORY
Nationwide Health Properties Inc. bought controlling interests in five medical office buildings from Pacific Medical Buildings LLC in a deal valued at $211 million. The two local acquisitions: a 140,000-square-foot building in Mission Viejo, on the Mission Hospital campus, and a 130,000-square-foot building in Orange, on the campus of St. Joseph Hospital-Orange. Nationwide said the Mission Viejo deal was valued at $67.3 million and the Orange deal at $62.3 million. The other three buildings are in Pasadena and San Bernardino.

TECHNOLOGY
Newport Beach-based chipmaker Conexant Systems Inc. sold nearly $250 million worth of bonds and stocks to pay off debt due in 2026. The company said it sold $175 million worth of bonds paying interest of 11.25% and due in 2015. It also sold 14 million shares for net proceeds of $52 million. The company plans to use the money to pay off $232 million in debt due in 2026. The bonds have an option for holders to demand repayment early next year and an interest rate of 4%.

Newport Beach-based chipmaker Mindspeed Technologies Inc. is looking to raise around $18 million in a public stock offering. Mindspeed is selling around 2.5 million of its common stock for $7.25 per share. The company said it intends to use the money it raises for operational capital as well as to refinance its debt.

An Orange County Superior Court jury late last week rejected a wrongful termination claim by a former assistant of billionaire Broadcom Corp. cofounder Henry T. Nicholas III. Katherine Nichols sued Nicholas in early 2009, alleging she was fired after she testified before a federal grand jury investigating Nicholas. Nicholas faced federal securities fraud and drug distribution charges until U.S. District Judge Cormac J. Carney recently threw out both cases.

HEALTHCARE
Irvine-based Allergan Inc. is licensing a potential pain drug for the body's nervous system to Bristol-Myers Squibb Co. in a deal that could be worth more than $400 million. The company is getting an initial payment of $40 million and potential payments of up to $373 million if the compound known as AGN-209323 is successful. Allergan also would receive royalties if the compound is commercialized. In other Allergan news, a jury in Santa Ana last week decided the company wasn't liable in the death of a 7-year-old Texas girl being treated for cerebral palsy with Botox.

The jury decided Allergan provided enough warning about the drug and wasn't liable in the death. Also, Sean Lavin of Lazard Capital Markets LLC upgraded Allergan to "buy" from a previous "hold" in a research note, citing a survey of
doctors and a "bullish meeting with management."

Aliso Viejo drug maker Valeant Pharmaceuticals International is spending $12 million for the rights to a wrinkle-reducing skin cream. Valeant said it is paying Fort Myers, Fla.-based Spear Pharmaceuticals Inc. for the rights to Refissa, and the companies are going to share profits. Valeant said that sales of the Refissa line totaled about $5 million in 2009.

APPAREL
Lake Forest-based Oakley posted double digit growth in 2009 despite the rocky economy, according to yearly results from parent Luxottica Group SPA of
Italy. Oakley's 2009 results were on top of double-digit growth in 2008, the company said, and were a result of growth in Europe and emerging markets. Luxottica did not break out specific numbers for Oakley.

February sales at Foothill Ranch-based mall clothing retailer Wet Seal Inc. rose an unexpected 4.7%, surprising analysts who were projecting a decline. Analysts were looking for a 2.9% fall in sales at stores open at least a year. Wet Seal, which runs 501 stores selling clothes for teen girls and young woman, said it saw higher same-store sales at both of its chains.

OTHER NEWS
Emeryville-based Peet's Coffee & Tea Inc. has extended for a second time its offer to buy Irvine-based coffee seller Diedrich Coffee Inc. in the hopes a rival buyout bid is derailed by regulators. Peet's said last week its offer to acquire Diedrich for $265 million in cash and stock is being extended for another month. The company made a similar move at the start of February. Diedrich is in the process of being acquired for $290 million in cash by Vermont-based Green Mountain Coffee Roasters Inc., which in December prevailed over Peet's in a bidding war. Peet's is keeping its offer alive in case Green Mountain's buyout runs into regulatory issues.

Fountain Valley-based Hyundai Motor America led an uptick in automotive sales for some of the county's automakers that may be benefiting from recalls and bad press of Japan's Toyota Motor Corp. Hyundai, part of South Korea's Hyundai Motor Co., saw an 11% gain in vehicle sales to 34,004 vehicles in February from a year earlier. Kia Motors America Inc. of Irvine saw sales up 9% to 24,052 vehicles in February.

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Price shouldn’t drive car buying - Everett Herald

Posted: 08 Mar 2010 11:56 PM PST

Car buyers often focus on haggling down a dealer's offer toward invoice price. That's OK, but often that's not where the real money is, says a former car dealer in his new book.

Instead of the purchase price, consumers should focus on other components of the deal, especially loans, trade-ins and their desire to buy more car than they can afford, said Mark Ragsdale, author of "Car Wreck: How You Got Rear-Ended, Run Over & Crushed by the U.S. Auto Industry."

"You'd be better off paying MSRP and paying attention to the big stuff," Ragsdale said. "But dealer profitability gets the lion's share of consumer focus and attention."

Here, Ragsdale said, are a few things to consider other than price:

That upside-down feeling. Negative equity is when you owe more on your car than it's worth. This is true of most who drive a financed new car off the lot. The vehicle can lose a quarter of its value as soon as the rear wheels hit the street. But even many people who have owned their cars for years are upside-down. It's typical to own a car three or four years before your car is worth what you owe on it. This depreciation snowballs as consumers get car fever before they have equity in their vehicle. Dealers and auto lenders can accommodate these people by essentially rolling that negative equity into their next car loan — often keeping the payments reasonable by extending the loan.

Customers trade in their cars every 39 months on average, but finance them for an average of 64 months, Ragsdale said. That leaves many upside-down by an average of $4,700, Edmunds.com said. The lesson? Don't buy a new vehicle until you pay off your current one.

Trade-in value. Many factors affect trade-in value, including a massive recall such as the one Toyota is experiencing. Among the best resources for finding the value of your car are online car-buying sites, Ragsdale said. Edmunds.com, KBB.com and your insurance agent can provide used-car prices, too, but they might not be as "real-time" as prices on cars for sale at this moment, he said.

Rule of 78s. This method of calculating loans is essentially a prepayment penalty because it front-loads the interest. You will be on the hook for most of the interest, even if you pay the loan off early or trade in the car. The figure 78 comes from the sum of the digits one through 12 — the number of months in a year — and from a time when most loans were for 12 months. You want a simple-interest auto loan.

Simple math. When you see an advertised payment of less than $400, ask yourself how reasonable that is. Simple math tells you that a $25,000 car paid over 48 months costs $521 per month — before interest, taxes, fees and negative equity.

The ideal way for many people to buy a car is to pay cash for a slightly used car and drive it for a decade. If you have caviar taste on a fish sticks budget, buy used or lease a vehicle. Leasing is more expensive than buying and holding, but it doesn't put you thousands of dollars upside-down.

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State applies for NUMMI grant - Record

Posted: 08 Mar 2010 11:56 PM PST

California employment officials hope to land a $33 million federal grant to help more than 4,700 auto workers who will lose their jobs, as well as thousands of others whose livelihoods will be jeopardized, when New United Motors Manufacturing Inc. closes its Fremont vehicle assembly plant April 1.

Besides NUMMI's own employees, it is estimated the closure is triggering business shutdowns and downsizings among the 32 direct suppliers employing 2,784 workers and at 293 indirect suppliers who employ 24,400 workers.

About 3,000 San Joaquin County residents are expected to be among those displaced.

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