COEUR d’ALENE – It’s not surprising.
According to one of those personality tests they took a few years back, Brett and Susan Sommer are “maximizers.”
That means, basically, they look at what’s around them and wonder if it’s being utilized to its very best. They see colors, designs and arrangements when they walk into a store, and consider how it might be different, or more important, better.
“You’re always thinking,” said Brett Sommer.
“You always notice things the average person wouldn’t notice,” Susan added.
Not that that’s always a good thing.
“It can be a curse,” Brett said. “You can’t just go into a store and enjoy a store.”
But being a maximizer is a blessing when you own your own stores, like the Sommers. Three of them in downtown Coeur d’Alene. Each shares common themes: Fun. Bright. Cheery. Festive.
“We build our stores for the local people,” Susan said. “I think that’s been the key to our success. We moved here and said we want something for Coeur d’Alene.”
Today, that something includes Figpickels Toy Emporium, Paper Papillon Emporium, and their newest venture, Mrs. Honeypeeps Sweet Shop.
Places, they say, you won’t find anywhere else. Places that can take you on that trip down memory lane.
“If you think of our stores, there’s really not anything quite comparable to them in the Northwest,” Brett said.
Let’s start with Figpickels, which they opened seven years ago on Sherman Avenue. It’s filled with toys, dating from 1890 to today. You wander inside and well, you want to play.
Think of an organized version of Santa’s shop.
What about that name? It came from a cookbook recipe for pickled figs left to Susan by her grandmother.
“I thought, ‘Well, this is a disgusting recipe, but it will be a great name for a store,’” she said, laughing.
Then there’s the Paper Papillon they opened two years ago in the Plaza Shops with its butterflies and colorful cards, wonderful wrapping paper and delightful designs.
And the latest addition, Mrs. Honeypeeps, also in the Plaza Shops, with a gargantuan gumball machine in the center, surrounded by scores of sweets.
“I saw this and thought, that’s the coolest thing ever,” Susan said. “It would be a great anchor for a store.”
The Sommers, married 26 years with two sons, believe in making people feel good when they shop, in making them want to shop.
So when they bought the building at 312 E. Sherman, they planned to renovate it, lease it and be landlords.
That’s one plan that didn’t work out.
“We didn’t like any of the businesses that were coming to us,” Susan said. “They were not a good fit for a downtown main street.”
“They weren’t any fun,” Brett added. “They weren’t going to help with our visitors or the locals.”
Which led them to open Figpickels. After all, what’s happier than a toy store?
“What did we like to find when we would travel somewhere?” Susan asked. “We always loved it when we found a toy store.”
It didn’t matter that they knew nothing of retail or toys, for that matter.
They came from the entertainment industry, Susan was a business manager for a film director, and Brett worked for a PR firm. They also operated their own music company in New York, and Brett was involved with Broadway shows. In fact, he created the technology used today that, in a nutshell, allows a few people to sound like groups of people.
It’s a virtual orchestra.
“It’s very helpful on tours when you can’t take a full orchestra,” Brett said.
“I kind of started the use of electronic music in the Broadway area, and so I would have to program that. Then we were doing it all over the world. I was flying to London all the time, Australia.”
Its success opened more doors of opportunity, and one led to Coeur d’Alene.
If they could succeed in entertainment in the Big Apple, they could certainly figure out how to make a toy store work in North Idaho, they thought.
Susan’s relentless research and attention to detail, such as watching people’s shopping patterns, led her to this finding: Unusual toys sell. You just have to find them, which she does by traveling far and frequently.
“Retro things you don’t see everywhere,” Brett said.
The success of Figpickels led to two more shops in downtown Coeur d’Alene, an area the Sommers strongly support and promote.
They’re surprised when they hear residents say there’s nothing downtown.
“We want them to come downtown. As the downtown goes, so does the rest of Coeur d’Alene, really,” Brett said.
So that’s where they spend their time. They firmly believe in doing what they enjoy. It’s standard stuff to find both in their shops any day of the week, greeting customers, working with employees, showcasing their products.
“People know if you put yourself into your business,” she said.
They point out that early on in their marriage and careers, they were flat broke.
“We started with less than nothing,” she said.
“There was no mom and dad trust fund,” Brett added, smiling.
They met, by the way, when they were young and both had roles in “an awful dinner theater” production in Ocean City, Md. When they were first married, they slept on acoustical foam in Brett’s recording studio because they couldn’t afford an apartment. There was no shower, just a sink and toilet.
Good times, really, that they laugh about.
“The best gift you ever gave me was a membership to the health club when it opened around the corner,” Susan said. “We could take showers.”
They chuckle when they talk about earning $13,000 a year in Manhattan, and $30,000 when they were raising two sons.
“You can start with nothing and still make it,” Brett said.
“Anybody can do it. It’s just a matter of how much you want to work.”
They are always considering different ventures.
“We’re not afraid,” Susan said.
Their projects pan out because they do their research, pay attention to details, and, one more thing, work a lot.
“More than any human being wants,” Susan laughed.
They like what’s different. They like to create what’s not already there. Or maybe, what was there, with a twist.
Is it viable is a question they often toss out.
“It’s a creative thing. The line of creativity is what we shared,” Brett said. “No matter what arena it’s in, creative is creative.”
They welcome the chance to talk to people about any business ideas they have, and act as consultants on how to maximize a plan and achieve results.
“You do what you do and you have faith in what you do,” Susan said. “If you’ve done your homework, you can’t get into too much trouble.”
Figpickels is a good example of their talents and vision.
“Anybody could do a candy store. It’s how you put it together,” Susan said.
Learning and relaxing
They’re strong believers in education.
One of their sons recently returned from Turkey, where he was teaching English and is in the running for the Fulbright scholarship, while the other is a junior at the University of Idaho.
“You’ve got to get that education,” Brett said. “You’ve got to take it seriously because it’s going to affect you your whole life.”
It’s one of the reasons they’re often involved in fundraisers and projects that support schools.
“We’re not giving our kids the tool chest they need, the tool kits to go out and build what they need to build,” Brett said.
But bottom line, the Sommers prefer to enjoy life.
They like to, as they say, just get away.
They relax by settling in their 24-foot RV and just driving, anywhere they want. Tour the country, visit relatives, sight see, wherever the road takes them.
Forget business. Forget finances. Even forget about candy, paper and toys.
For a while, anyway.
“We can chill,” she said.
“We become very different people when we get in the RV,” Brett added.
“There’s nothing to maximize when you’re roasting a marshmallow,” Susan said, laughing.
WASHINGTON – Investors got a chance this week to weigh in on the government’s odds of recouping the full $182 billion bailout of American International Group Inc.
The response so far: Don’t count on it.
AIG shares skidded as much as 7 percent Wednesday, a day after the U.S. government sold a chunk of its stake in AIG. The stock recovered some of its losses, closing down 4 percent to $28.28. But it still trails the $28.73 average price the government needs to break even on the bailout.
By offering 200 million shares at $29 each, experts say, the government misread the market’s appetite for AIG. After Wednesday’s price swoon, they say, it might have to delay future offerings of AIG stock.
And taxpayers might have to give up on breaking even.
“Treasury clearly wants to get out, and at some point I think exiting is more important than hitting a target price,” said Clifford Gallant, an analyst at KBW Inc.
AIG received the biggest bailout during the financial crisis because it couldn’t meet its financial obligations to the world’s biggest banks. AIG sold the banks insurance-like contracts to cover losses on mortgage bonds. Once the housing bubble burst and the bonds lost value, AIG couldn’t pay up. If AIG failed, officials said, the banks would follow.
Since then, government and AIG officials have been working to settle AIG’s obligations, sell business units and repay its bailout money.
Reducing the government’s control over AIG should help the company, Gallant said, by freeing management to determine compensation and other matters without regard to taxpayer interests. But Gallant said that wasn’t enough to sway investors concerned about whether AIG can grow and generate earnings.
As more shares are created and traded publicly, Gallant said, “we have a better sense of what the market really thinks, because it’s not dominated by a small number of investors.”
As of Wednesday, investors’ assessments of AIG were mostly negative, said Scott Sweet, senior managing partner of IPOBoutique.com.
“People are selling because they don’t trust it, and they feel it’s going lower,” Sweet said. “This is going to make it exceptionally difficult to unload more shares as quickly as the government had in mind.”
Treasury officials say the deal was priced and sized appropriately. They say short-term price swings will not determine whether the government can recoup its money. Treasury can’t launch another offering until September.
So why did investors pump $8.7 billion into AIG shares Tuesday night, then dump the shares Wednesday morning?
Some never intended to hold the shares beyond Wednesday, Sweet said. He said the banks that handled the deal never determined whether “these were buyers rather than renters.”
The price would rise, these unlucky renters assumed, because of additional demand from investors who didn’t receive any of the 300 million shares sold Tuesday night. There was no such demand, Sweet said, because most investors who had wanted shares were able to buy some of the 300 million.
But generating stock profits isn’t a goal of underwriters, said John Fitzgibbon, who tracks stock offerings at IPOScoop.com. He said the banks did their job – raising money for the company and the government.
“This is the object of investment banking – to raise money for a company, not to enrich the flippers,” Fitzgibbon said. “The aftermarket is another story completely, and that’s up to the traders.”
In this case, Fitzgibbon said, the size of the offering and the price wiped out any remaining demand for AIG. That made the stock vulnerable to declines.
Still, at Wednesday’s closing price of $28.28, AIG is a bargain compared with its competitors, said Catherine Seifert, an insurance analyst with Standard & Poor’s equity research. She concedes that the government’s now-77 percent ownership adds uncertainty – about how many shares will be sold, for example, and when. Still, Seifert has upgraded the stock to a “buy.” She foresees the shares rising to $36 over the next 12 months.
The stock is more likely to spike or swoon because relatively fewer shares are being traded. Because only 23 percent of AIG’s shares are trading after Tuesday’s offering, each trade at a higher or lower price has an outsize impact, Seifert noted.
Tracking the same details, Gallant takes a negative view of the stock. He sees the price falling to $23 within 12 months. At that level, taxpayers would lose about $8 billion on the 1.4 billion AIG shares Treasury still owns.
But Gallant said that’s a small loss compared with the potential disaster if the government had refused to bail out AIG at the peak of the financial crisis in 2008.
“The U.S. government did stabilize the financial system by saving AIG, and if they have losses in the single-digit billions, that will be cheap,” he said.
NEW YORK – People are paying more to fuel up these days – on coffee.
Coffee price increases have outpaced even the hike in gasoline prices the past year. A one-pound can of ground coffee sold for $5.10 in April, up 40 percent from $3.64 the year before, according to the Department of Labor. By comparison, a gallon of regular gasoline cost $3.83 on average on Tuesday, up 37 percent from a year earlier.
And while fuel prices are expected to stabilize, coffee increases could continue for some time because the prices that coffee companies pay for unroasted beans are still climbing – fast. Coffee futures were trading for $2.61 per pound Tuesday, roughly double a year earlier.
J.M. Smucker Co., the maker of grocery store stalwart Folgers and of packaged varieties of Dunkin’ Donuts coffee, said Tuesday that it is raising prices of most of its U.S. coffee products by 11 percent, its fourth increase in a year. Kraft Foods Inc., Peet’s Coffee and Tea Inc. and Green Mountain Coffee Roasters Inc. have also recently hiked their prices for coffee.
Starbucks Corp. also said Tuesday that it will raise prices on packaged coffee in its stores by an average of 17 percent in the U.S. and 6 percent in Canada. That follows a 4 percent increase in 2009. The company also raised prices in March for its packaged coffee sold in grocery stores and at other retailers.
But the drink remains essential to many.
Eboney and Tyson Owens say they’ve noticed higher coffee prices. The couple aren’t about to give up their buzz, but they’re buying different brands depending on what costs least among their top four preferred brands – Starbucks, Dunkin’ Donuts, Godiva and Seattle’s Best.
“I’m a Starbucks fan, I swear by it,” Eboney Owens, 32, said during a recent grocery trip in Portland, Ore.
However, if something else is on sale or has a coupon available, she’ll switch.
“We won’t go bottom of the barrel, though,” Tyson Owens, 31, added.
Overall coffee crops increased 8 percent last year, according to the International Coffee Organization, helped by strong supplies from Ethiopia, the Ivory Coast and other countries. But this year, some major exporters, including Indonesia, are suffering from smaller crops because of drought, flooding or other inclement weather, which is affecting prices. The rise in coffee prices also has roots in the economic growth of China, where an upwardly mobile work force is fueling demand.
Unlike many other discretionary items, coffee usually emerges from a recession relatively unscathed, economists say. That’s because when money is tight, people may buy cheaper brands of coffee, but they won’t give it up completely. Americans consumed 21.7 million 60-kilogram bags of coffee in 2008, during the depths of the recession, up from 21 million the year before, according to the ICO. That’s nearly 2.9 billion pounds of coffee.
Coffee is part of a bigger story about rising prices for household staples as diverse as food, clothing, diapers and batteries. Food prices soared 5.5 percent in 2008, then ticked up a slower 1.8 percent in 2009 and 0.8 percent in 2010 as meat and produce prices steadied. But in recent months oil and grain prices have soared, sending global food prices to their highest point in 20 years, according to the UN’s Food and Agriculture Organization.
Labor Department data showed that food prices in the U.S. increased 0.8 percent in March, the largest monthly increase in nearly three years. The pace slowed to a 0.4 percent increase in April.
U.S. Department of Agriculture economist Ricky Volpe notes that food price inflation was much higher in the ’70s, when year-over-year increases averaged 8.1 percent. While food price increases are far below that, more are expected. In the most recent quarter, 89 percent of consumer product makers tracked by FactSet said they have raised some prices or have plans to do so.
Sara Lee Corp., which sells Maison du Cafe, L’Or and Cafe Pilao, said this winter that rising green coffee costs led it to raise its prices. Kraft, which sells Maxwell House coffee, cited rising coffee prices in a broad price hike it levied this winter. Peet’s Coffee and Tea Inc. has raised its retail prices twice recently in response to raw material costs.
Starbucks said Tuesday that it has been continually monitoring the costs of green coffee, fuel and other operational costs and has made price adjustments as needed. A one-pound bag of coffee currently goes for $9.95 to $13.95 in stores. After it puts the latest price changes in place, the price will jump to between $11.95 and $14.95 a pound.
Smucker said that its latest price increase includes Smucker’s Millstone and Folgers Gourmet Selections packaged coffees. For the Dunkin’ Donuts brand, the increase affects only packaged coffee sold in grocery, club, drug and general-merchandise stores. Items sold at Dunkin’ Donuts shops are not Smucker products.
The company also raised coffee prices by 10 percent in February, 9 percent in August 2010 and 4 percent last May.
The cost increases haven’t deterred Smucker from expanding its U.S. coffee portfolio. It announced last week that it purchased privately held Rowland Coffee Roasters Inc. for $360 million in cash. Rowland, based in Miami, sells Cafe Bustelo and Cafe Pilon, which are sold primarily in the Northeastern U.S. and South Florida and target Latino shoppers. Rowland is a leading producer of espresso coffee in the U.S.
COEUR d’ALENE – On its economic horizon, Kootenai County has much to look forward to enjoying. It also has plenty everyone will seek to avoid.
The unemployment rate will improve, gas prices will go down, business loan activity will increase during the second half of this year, and moderately priced homes will continue selling well.
The bad news is the unemployment level will take years to reach past lows, home building appears to be a long way off for much of the county, and future homebuyers might all face 20 percent down payments. Also, many businesses have to make up lost ground because of lousy spring weather.
The Press asked some people with their hand on the county’s economic pulse what indicators of health they’ll be monitoring and what they’re expecting to see.
Randy Barcus, chief economist for Avista, says the weak housing market in the Coeur d’Alene area won’t see a material reversal until next year.
Kim Cooper, a spokesman for the Coeur d’Alene Association of Realtors, said while seven months of inventory of unsold homes is considered healthy, North Idaho has about 16.4 months.
But that’s an improvement from 20.6 at this time last year.
“That’s a 20 percent reduction in absorbable inventory,” he said.
The bad news is it’s still 2 1/2 times what would be considered a healthy market.
Don’t look for new home construction until the market reaches that 6 to 7 month inventory level.
On the all-important jobs front, Barcus said the unemployment rate locally will improve faster and be lower than the U.S. rate.
The bad news is “it will be higher than the pre-recession level we all got used to when it was below 6 percent,” he said.
Unemployment rates will remain above 6 percent through 2017, Barcus estimated.
Barcus believes a slow and steady recovery from the recession is under way.
The U.S. Bureau of Labor Statistics has reported that Kootenai County has seen year-over-year positive employment growth for the past five months after recording declines in 25 consecutive months, he said.
In the most recent information, for March 2011, the county shows a strong 2.4 percent increase in employment, compared with 0.3 percent in neighboring Spokane County and a 1 percent increase nationally.
The monthly foreclosure rate, according to the RealtyTrac website, remains elevated in Kootenai County at about double the national rate and triple the rate in Spokane County, he said.
“Once we work through the foreclosure overhang, new home construction should begin in earnest, with the expected sharp uptick in construction beginning in 2012,” Barcus said. “However, with bank lending terms tightened for home purchases, we expect to see strong demand for multi-family rental apartments for several years.”
Business loan activity this year has been “choppy,” with ups and downs, said Rod Colwell, president and chief operating officer at Mountain West Bank.
The bank, based on momentum gained this month, is planning on the summer being better overall. Other bank officials reported slow business loan activity, but said the situation is improving.
“The arrows are pointed in the right direction,” said Kyle Hendricks, vice president of Idaho Independent Bank’s Coeur d’Alene office.
Hendricks said confidence is increasing.
Improvements in gas prices could help.
Dave Carlson, a AAA spokesman, said the organization doesn’t foresee major or rapid reductions in prices, but it does expect prices will come down this summer.
OPIS, a company that provides data to AAA, says summer prices nationally should be in the range of $3.25 to $3.75.
Colwell said the second half of the year will be better than the first for business loan activity.
In real estate, there has been momentum in mortgage originations, which have been much stronger in May than in either March or April.
Some real estate agents report being busier than last year at this time, but then many are working with investors looking to buy up distressed properties.
Colwell said Mountain West plans to match or slightly exceed last year’s purchase transaction number.
“Time will tell,” he said.
As for loan delinquency and foreclosure trends, he also expects the second half of the year to be better than the first.
Hendricks, of Idaho Independent Bank, said homes in the $150,000 to $250,000 price range have been moving well, and improving this spring.
Cooper said, “Interest rates are driving the activity right now.”
Interest rates have gone through an extended period of historic lows, including dropping this week to 4.26 percent on a conventional 30-year fixed home loan from 4.38 percent last week, he said.
He said that if rates creep above 5 percent some of today’s home shoppers might back off because they want a lower rate.
Colwell, at Mountain West, said, “The refinance business has really dropped off.”
The refinancing business likely dropped off because the people who could refinance already did so in 2010 and 2009.
He said Mountain West hopes to replace the drop off in refinance business with plenty of purchase transactions.
“People are seeing the value right now, and seeing good interest rates to finance those houses,” he said.
Eric Keck, Post Falls city administrator, said, “So far this year we have seen a significant drop in new home starts.”
Mortgage regulations, slow sales absorption of existing new and previously occupied homes, and loss of funding for federal home loan programs have contributed to the drop, he said.
Some businesses, which do well in healthy housing markets, have been hurt by the drop.
Some have also been hurt by poor spring weather.
Jarrod McKee, an owner and manager at Aspen Nursery, in Post Falls, said the business is down 50 percent compared with where it normally is at year-to-date.
The business lost about five weeks of retail sales because of a cooler, wetter spring.
“Maybe we’ll have a long fall” to make up for the lost business.
He said they will be open seven days a week this summer, instead of six, to make up for the loss.
He’s predicting “steady but average sales” for the summer.
There has been plenty of good news in Post Falls, too.
“The main sector seeing growth right now, and for the immediate future, is the commercial and industrial sector,” Keck said.
The city has a number of commercial real estate projects happening, including construction of a Love’s travel center, tenant improvements for ALK Abello Source Material, and the annexation, zoning and site plan for new manufacturer UnderGround Force LLC.
There also is a steady pipeline of prospective warehouse distribution projects, he said.
“This is very encouraging as we have been in a drought of projects for some time,” Keck said.
Unemployment remains about 10 percent and needs to improve, he said. UnderGround Force will create 125 new jobs at its facility.
“These are stable, family wage jobs that will prove to be a good match for our community,” Keck said.
Hendricks said, “There’s a fair number of folks that are now recognizing that now is the time to make that investment, and get today’s market price.”
Cooper said, “We’re all hopeful that we’re climbing out of this” downturn in the real estate market.”
HOLLYWOOD, Fla. – The Association of Directory Publishers bestowed its highest distinction on Jim Hail, president and co-owner of Hagadone Directories, Inc. at the group’s recent annual meeting.
Presentation of The Wil Lewis Award to Hail took place at the Gold Book Dinner and Awards Ceremony concluding ADP’s annual convention. The award recognizes outstanding lifetime contributions to the directory publishing industry and to the effectiveness of the Association. The Wil Lewis Award is named in honor of the late Wilbur Lewis, founder of White Directory Publishers and a three-time past ADP chairman.
“I am honored and humbled to be only the 11th recipient of The Wil Lewis Award,” Hail said. “It is, I believe, imperative for small directory companies like HDI to have a voice and influence in national industry issues.”
Hail founded HDI in 1987 and is twice past chairman of the board of the Association of Directory Publishers. The Association of Directory Publishers was founded in 1898 and is the oldest trade association in North America continuously serving the interests of telephone directory publishers and the suppliers who provide products and services to the industry.
“What makes The Wil Lewis Award so prestigious is that it is bestowed not annually, but rather only when a nominee exceeds the lofty threshold set by Wil Lewis himself in the judgment of a minimum of 75 percent of the sitting Directors of the Association,” said Larry Angove, ADP president and chief executive officer.
Hail is the 11th recipient of this honor. The last Wil Lewis Award recipient was Joe Walsh, president and CEO of Yellow Book who was honored in 2008.
In presenting the award to Hail together with Rick Lewis, former president and CEO of White Directory Publishers and son of Wilbur Lewis, Angove shared comments of longtime ADP leaders who nominated Hail for consideration.
One stated, “I don’t know where to start when it comes to Jim. He has put his heart and soul into ADP. As chairman of the board, publisher, mentor and teacher, I honestly cannot think of a better choice to receive The Wil Lewis Award.”
Hail is a former newspaper editor and publisher and was publisher of the Coeur d’Alene Press and president of the Hagadone North Idaho Newspaper Group prior to founding HDI. Today HDI publishes regional telephone directories in Idaho, Washington, Montana, Oregon and California.
SAN FRANCISCO – There was an unmistakable echo of the dot-com boom Thursday on Wall Street.
LinkedIn, a trailblazer in the online networking craze, went public with a roaring stock offering. Within minutes, shares were trading at twice the value set by the company.
Buyers crowded the floor of the New York Stock Exchange, and financial news networks flashed LinkedIn’s stock price urgently all day. By the closing bell, the company had a market value of $9 billion, the highest for any Internet company since Google had its initial public offering seven years ago. Millionaires and even one billionaire were made, at least on paper.
The stock, issued at $45, went as high as $122.70 just before noon and closed at $94.25 on a trading volume of 30 million shares. All this for a company that skeptics say amounts to an online Rolodex, a place on the Internet for professionals to post resumes and connect with one another and potential employers.
It was enough to remind some people on Wall Street of the heady late 1990s and the debuts of companies like Netscape Communications – and, more infamously, long-forgotten names like Pets.com and Webvan. Investors wondered whether LinkedIn will be a precursor to another financial frenzy in Silicon Valley.
“I definitely think this will be a catalyst,” said longtime technology investor and analyst Michael Moe, CEO of Global Silicon Valley Asset Management. “Investors who like growth stocks have been stuck in a desert for a long time, and now it’s like they have found this great pitcher of water.”
LinkedIn is already worth $9 billion, or 18 times its projected revenue this year. Major Internet companies, including Google, trade at an average of about five times projected revenue, according to an analysis by Capital IQ.
Using another measure, price-to-earnings ratio, which compares a company’s market value with its profit, LinkedIn finished the day at a staggering 554 – a number reminiscent of the late 1990s tech bubble. By comparison, the average P/E ratio of technology companies in the Standard & Poor’s 500 index like Google and Apple is 15.
Two-thirds of LinkedIn’s revenue comes from the fees it charges to help companies find and hire workers. Francis Gaskins, president of IPOdesktop.com, said that makes the company more like Monster, an employment firm where business depends a lot on the health of the job market.
“Can we stop asking if we are in a bubble now?” venture capitalist Mitchell Kertzman said after hearing that LinkedIn stock was trading above $100. “We are clearly in a valuation bubble.”
If the stock market is thirsty for more businesses that connect people on the Internet, there’s a backlog of privately held companies that might one day satisfy it.
The short list includes Twitter, the 140-characters-or-fewer messaging service; Zynga, which makes online games like FarmVille; Groupon, the coupon site; and, of course, Facebook, the social network with more than 500 million users.
None of those companies has revealed specific plans for going public. Facebook has at least dangled the possibility of filing for an IPO before May 2012. A private investment led by Goldman Sachs Group Inc. valued Facebook at $50 billion in January.
“If people are this excited about a professional networking service like LinkedIn, you can imagine what kind of frenzy there is going to be when Facebook goes public,” said eMarketer analyst Debra Aho Williamson.
The 109 percent first-day gain for LinkedIn, based in Mountain View, Calif., nearly mirrored Netscape’s first day when it went public on Aug. 9, 1995. Netscape rose that day from $28 to a close of $58.25, or 108 percent.
Netscape co-founder Marc Andreessen’s venture capital firm, Andreessen Horowitz, has invested in Twitter, Groupon, Zynga and Facebook.
As an individual, Andreessen was also an early investor in LinkedIn and is among the more than 102 million people who have posted their resumes and profiles on its website, a buttoned-down version of Facebook’s online playground.
It may be as much fun as playing games, chatting and posting pictures on Facebook, but LinkedIn has steadily grown since it started in 2003 and it’s now adding about a million accounts a week.
In a key distinction from the dot-com days, it also makes money – $3.4 million last year on revenue of $243 million. Its revenue more than doubled during the first three months of this year, putting it on pace to bring in about $500 million in 2011 from advertising and fees.
Kertzman, managing director of Hummer Winblad Venture Partners, was CEO of Liberate Technologies, a maker of software for TV set-top boxes, during the height of the dot-com boom. In 2000, its market value soared to $12 billion.
“I knew something was wrong because I knew we weren’t worth that much and it scared the hell out of me,” Kertzman said.
Aaron Levie, CEO of an Internet storage service called Box.net, sees things differently. Levie, who is 26 and was in high school during the dot-com boom, thinks it’s a good sign that LinkedIn, Facebook and other companies are taking their time to build companies that make money before going public.
“You can tell this is a very different period than the late ’90s,” Levie said. “Silicon Valley is definitely back, and much healthier.”
LinkedIn’s CEO, Jeff Weiner, said he doesn’t plan to dwell on high investor expectations.
“It’s exciting, but it’s a point in time,” Weiner said a few hours after he rang the opening bell at the stock exchange, where LinkedIn’s shares traded under the symbol LNKD. “One day’s trading is not going to be too meaningful, and the same holds true for the next few days and the next few months. I know it sounds a little like a cliche, but we are in this for the long haul.”
Weiner, a 41-year-old former Yahoo executive who became head of LinkedIn two years ago, still took some time to celebrate the IPO in a meeting that was beamed to all of LinkedIn’s roughly 1,300 employees from the company’s offices in the Empire State Building.
Many of LinkedIn’s employees are now millionaires, at least on paper. The richest is co-founder and executive chairman Reid Hoffman. Already considered one of the smartest and best-connected people in Silicon Valley, Hoffman joined the ranks of the world’s billionaires Thursday. Hoffman, 43, owns a 20 percent stake in LinkedIn, good for about $1.8 billion.
That value could wildly fluctuate, based on how other hot technology IPOs have performed through the years.
Until LinkedIn came along, software maker VMware Inc. had boasted Silicon Valley’s biggest one-day gain among IPOs completed during the decade after the dot-com bubble burst. VMware stock rose 76 percent on the first day of trading in August 2007. Thirteen months later, it had fallen below its IPO price of $29.
VMware’s experience also serves as a reminder that what goes up and comes down can go up again. The company’s stock closed Thursday at $93.89.
AP Business Writer Tali Arbel and AP Technology Writer Barbara Ortutay in New York contributed to this report.
Lone Wolf Harley-Davidson will close its Coeur d’Alene and Spokane stores and open one mega store in the Spokane Valley, the dealership announced.
“We’re going to have more room for events, as well as a huge showroom for bikes, motorcycle clothing, parts and accessories,” said Beth Ernst, dealer principal for Lone Wolf and Timber Wolf Harley-Davidson.
The new store is expected to open in June, with 70,000 square feet of space at 19011 E. Cataldo, Spokane Valley, a building previously occupied by United Coatings. The stores to be consolidated are in Coeur d’Alene and Spokane.
Greg and Beth Ernst purchased the 11-acre Spokane Valley property in 2010. Sterling Savings Bank has the loan on the building and improvements, and Polin & Young Construction are responsible for the remodel.
“This will be a great new home for our customers,” Beth Ernst said.
Plans include a large customer lounge with a cafe and WiFi, pool table and foosball. The service department will have bays for 14 technicians, along with the latest diagnostic technology. Lone Wolf is also planning winter motorcycle storage for its clients.
Lone Wolf was recognized by Harley-Davidson Motor Company with the prestigious Gold Bar & Shield Circle of Excellence Award for performance and customer satisfaction for 2010, one of just four dealers in the West to receive that honor.
Although the store will open in June, Lone Wolf plans a grand opening celebration Aug. 20-21. Information: (208) 667-7433.
COEUR d’ALENE – Joyce Rand is hoping “Colorful Wishes” turns into some green for Birds of Prey Northwest.
The artist and businesswoman is unveiling new T-shirts with her designs from 11 a.m. to 1 p.m. Saturday at the Art and Home Center, West Lee Court and Appleway Avenue.
“Clothing with a cause,” Rand said.
Kids and adults can learn about the environment, birds, pick up a shirt and benefit Birds of Prey all at the same time. Jane Cantwell, director of Birds of Prey, will be on hand with several birds, including a hawk, eagle and owl, on Saturday.
White T-shirts – “wearable art,” with a drawing outline that can be colored – are $12, which includes washable markers.
T-shirts with designs are $19. Proceeds go to Birds of Prey.
Colorful Wishes, started four years ago, is a “unique redesign of the traditional hospital gown of yesterday for children, woman and men.
“The founders were inspired by personal experience of spending time in the hospital with loved ones,” according to a flier.
Rand, who recently moved to the North Idaho area from West Virginia, teamed up with fashion designer Janelle Funari of Orangia Collection to create “fun, bright and innovative line of hospital wear.”
She estimates they have sold about 2,000 hospital gowns so far and believes they will sell many more.
“We’re just getting started,” Rand said.
She believes children will have fun with the “color me” T-shirt and gown. They can color the shirts over and over again, making changes and using their imaginations.
DALTON GARDENS – The name, fittingly enough, seemed perfect.
Turns out, 25 years ago, it was. And still is.
“We were just having lunch, trying to think of a name we liked when we came up with it,” said Judy Carlson-Karlgaard, owner of “The Perfect Fit.”
Of course, such a name can make work a little challenging at times.
“People, they hold us to it,” Carlson-Karlgaard said with a laugh.
Not that she minds.
The Hayden woman has been sewing as a job for a quarter of a century. She plans to celebrate at 7791 Aqua Circle with an open house 8:30-5:30 p.m. Wednesday through Friday, with coffee, cookies and door prizes. She wants to show off the increased and remodeled work space, but is really hoping to let people know what they can do at The Perfect Fit and how well they do it. There are some gift items, too.
“We can take care of whatever people’s needs are,” she said.
Carlson-Karlgaard and four others, daughter Rita Serwat, JoAnne Fortier, Julie Darlas and Diane McGwier, have 130-plus years of experience at alternations and any other sewing changes and creations.
“We do all kinds of alterations,” she said.
They work on wedding dresses, leather, home interior items and more.
“We actually do about everything,” she said. “We can take care of whatever people’s needs are.”
Carlson-Karlgaard, born and raised in Dalton Gardens, began sewing when she was a youngster and in 4-H. She stayed with it and sewed at home while raising a family. She later decided to open her own shop.
“I finally decided to take it out of my house,” Carlson-Karlgaard said.
She has continued to enjoy the work and people who come to her for sewing support. Need a dress hemmed? A zipper replaced? Jeans shortened? Carlson-Karlgaard and friends are the right folks for the task.
As owner, she’s strict about service and maintaining office hours.
“I won’t put a sign on the door with a sign saying ‘Will be gone 10 minutes,’” she said.
Even after 25 years, Carlson-Karlgaard has no plans to retire.
“We’ll just keep working as long as the business keeps coming our way,” she said.
WASHINGTON – After weeks of pain at the gas pump and the grocery store, the worst appears to be over.
Oil prices have fallen, with gas soon to follow. Demand for farm commodities, like the corn used in everything from cereal to soda, has dropped. And businesses remain slow to pass along higher costs because customers aren’t getting raises and might walk away.
Inflation may be approaching its peak.
“I think the bulk of the big price increases are over,” said Gus Faucher, an economist at Moody’s Analytics.
Lower prices – or at least a break in their steady rise – will come as a big relief. Consumer prices rose 3.2 percent for the year ending in April, the most since October 2008. Higher food and gas prices drove the gains.
Excluding those two categories, prices rose 0.2 percent in April. They rose 1.3 percent over the past year, below what the Federal Reserve considers healthy. Economists study this figure, known as core inflation, because food and energy prices are volatile.
Some inflation can be healthy for the economy because it encourages people to spend and invest rather than sitting on their cash. More spending drives corporate growth, which makes businesses more likely to hire people.
Inflation was a much bigger concern in March. Oil prices were rising steadily because of the unrest in the Middle East. Some feared gas could reach $5 a gallon, leaving Americans much less money to spend on cars, appliances and vacations. That kind of drop in spending would squeeze corporate profits, delay hiring – maybe even tip the economy back into recession.
But last week, oil prices sank by the most in two and half years. Americans drive less when gas prices get high enough, and concerns about slowing energy demand sent oil prices tumbling – from $114 at the start of May to about $97 on Friday.
Now the nationwide average for gas has leveled off. On Friday it was just under $4 a gallon, where it’s been for the past week. Many analysts say it could drop to $3.50 as soon as next month.
The prices of milk, bread and chicken won’t fall as fast – it could take six months or longer, analysts say – but they could decline by the end of the year. That’s because the price of corn and other grains have fallen. Overseas ranchers are using less corn for feed, and U.S. farmers have planted more.
Food prices had risen in March at the fastest rate in three years.
Changes in grain and corn prices take longer to filter down to grocery stores than changes in oil prices do to the gas pump. That’s because grains and other commodities represent a smaller fraction of food costs in the U.S. than in other countries. By contrast, oil prices are the biggest factor in the cost of gas.
There was evidence in Friday’s government report on consumer prices that food inflation will slow by year’s end. Gas prices rose 3.3 percent in April, a steep rise but the smallest since November. Food costs rose 0.4 percent, half as fast as in March.
Gas accounted for about half of overall inflation in April. So a decline in the price of oil should hold down the increase in consumer prices for May.
Slower inflation would leave Americans with more money to spend to stimulate the economy, including keeping more of a cut in Social Security taxes that took effect in January. Economists expect the increased spending to raise overall economic growth to an annual rate of 3 percent in the second half of this year. In the first three months of this year, it was 1.8 percent.
The oil price drop should bring prices down for a range of products, including chemicals, plastics, even roofing materials. Higher diesel fuels had contributed, for example, to a sharp increase in commodity costs for Procter & Gamble. In response, the company raised prices for Gillette razors, Duracell batteries and Bounty paper towels.
Falling corn prices should also help. Corn is widely used as an animal feed, so when it became more expensive, meat and dairy prices went up, too. Corn is also used in sweeteners for soft drinks and snacks, so those could become less expensive.
Prices of corn, wheat and other grains jumped last summer after bad weather damaged harvests in countries from Russia to Australia to Brazil. Demand for corn from producers of ethanol, a corn-based fuel, also rose. The price of a bushel of corn reached a record high of $7.76 on April 11.
But supply worries have since eased. An Agriculture Department report this week predicted that U.S. corn supplies will rise later this year, based on the drop in demand overseas and the larger crop expected next year. They had earlier been forecast to fall.
Demand from fast-growing developing countries such as China and India may also slow as their central banks raise interest rates to try to slow inflation. That should also slow their growth and, in turn, may cool their demand for commodities.
It takes about six months for changes in commodity prices to affect consumers. Consumer food prices didn’t start to increase until January, well after commodity costs began rising last summer.
Analysts also say many companies were slow to pass along those increases for fear of spooking price-sensitive shoppers. Wage growth has been weak. Average hourly pay rose an anemic 1.9 percent in the last 12 months, less than the rate of inflation.
Some companies probably won’t lower prices much, if at all. Airlines, for example, lost money because of the steady rise in the price of oil. If you bought a plane ticket three months ahead of time, your flight was much more expensive for the airline when you flew than when you bought.
“They will resist any pressures to reduce fares or fuel surcharges,” says independent airline analyst Robert Mann.
The average price of a round-trip ticket during the first three months of this year was $341 before taxes. That was up 10 percent from the same period last year. Airlines paid 27 percent more for fuel from January through March than they did a year earlier.
But there will be relief in the prices of other things. The cost of new and used cars rose in April, but some of those increases were related to temporary parts shortages caused by the earthquake and nuclear disaster in Japan.
Inflation will remain a risk. Commodity prices are volatile and subject to global turmoil. As recently as last winter, economists were worried that inflation was too low. In October, the core price index had risen only 0.6 percent in a year, and the Fed expressed concern about the risk of falling prices.
AP Business Writers Sarah Skidmore in Portland, Ore., and Scott Mayerowitz in New York contributed to this report.
Wholesale prices rise
due to pricier gas, food
WASHINGTON – Companies paid more for raw materials and factory goods in April, mostly because energy prices jumped for the seventh straight month.
The Labor Department says the Producer Price Index, which measures price changes before they reach the consumer, rose 0.8 percent last month. That’s slightly above the 0.7 percent gain in March. Excluding the volatile food and energy categories, the core index increased 0.3 percent, the same as the previous month.
In the past 12 months, the index has increased 6.8 percent, the biggest gain in nearly three years.