O.C. execs see turnaround coming

O.C. execs see turnaround coming


January 28th, 2010, 1:44 pm · 8 Comments · posted by Mary Ann Milbourn, OC Register

Four Orange County executives representing banking, fast food, high tech and housing said today that they had retrenched during the recession but have positioned themselves for a turnaround which they expect this year.
Paul Folino, executive chairman of Emulex Corp., the computer storage networking company in Costa Mesa, summed up the stories of all four panelists.

"You have to retrench, get a new business model and hunker down," he told about 160 breakfast guests of Cal State Fullerton's Mahaylo College of Business and Economics. "But what you (also) do need to do is prepare to win, to prepare for success so you don't end up being in the bleachers and unable to be in the game (when it's over)."

The panel, the first of a series by the business school, focused on "The new landscape of Orange County." The speakers were asked to discuss how their companies survived the recession and their expectations for the future.
Joining Folino on the panel were:
•Dan Young, president of The Irvine Co.'s Irvine Community Development Company LLC
•Glenn Gray, president of Sunwest Bank,
•Bill Sanderson, president of fast-food service company Golden State Service Industries, Irvine.
Here are their company stories:
Folino said that during the worst of the recession, Emulex's revenues were down 20% to 25%.
Last month, however, the company, which serves IBM, Hewlett Packard and Dell, reported its first quarter over quarter growth in two years. Folino sees bright prospects for the entire high tech sector this year, barring a double-dip recession.
"Tech will help lead the way out of this recession," he said.
Although the banking industry has had it's issues "like a total meltdown," as Sunwest Bank's Gray put it, he was optimistic.
He noted federal regulators continue to have a list of between 522 and 1,200 banks that are financially troubled and may fail.
"The good news is most of them are not going to be in Orange County," Gray said. "Orange County actually looks pretty healthy right now."
As for Sunwest, he said the 40-year-old bank had its best year ever last year and has doubled in size to 10 branches. It is now the third-largest California-based bank.
His advice: "If you keep your powder dry and don't do a lot of stupid things — like subprime loans — you'll be able to take advantage. I actually do see a bit of a turnaround this year."
Golden State Foods, which is a supplier to McDonald's and other fast food businesses, actually has benefited from the downturn as the public traded down to less expensive food outlets.
The company added 100 people to its liquids business operations in Vernon and is growing a new business to supply Starbucks.
"We see the recession as an opportunity," Sanderson said. "Some of our competitors in some business segments stepped away from their knitting and pared down. We've very active in the market for strategic acquisitions."
The Irvine Co. used the dark days of what Young described as "the housing depression" to study the market to determine what would be the next trend in home buying, then decided to get out in front of that market.
"It's been about as bad as it can get, " Young said, "But we are going to step out in this market."
The company is opening 21 new model homes this weekend — the biggest, Young said, since 2005 — and already has 600 buyers prequalified for loans.
Anil Puri, dean of the Mihaylo College, said all four companies taught an important lesson for businesses:
"Innovation is the key to growth."

Southern CA Prices May Increase 10% in 2010

1/16/2010, OC Register, Jonathan Lansner and Jeff Collins

Southern California Rising in 2010

Lawrence Yun, the chief economist for the National Association of Realtors, said he wouldn't be surprised if Southern California home prices increased as much as 10% this year--a departure from his earlier predictions that prices would increase in the 3% to 5% range...."I do anticipate job creation to come around in the later half of 2010..." Asked to comment on UCLA's forecast that Orange Count home prices would rise 16% this year, Yun once said that it was "bubblish" but now, "if it were to happen anywhere in the country, it would be in Southern California."

Positive News about New Homes

Irvine: 400 buyers lined up for new project


January 18th, 2010 · OC Register· posted by Jeff Collins

The Irvine Co. announced that it now has enough buyers approved to buy nearly two-thirds of the homes planned for new developments being launched later this month in north Irvine’s Woodbury and Woodbury East neighborhoods.

Four hundred interested home shoppers have gone through an approval process with lenders and received qualification letters, said Dan Young, president of the Irvine Co.’s residential development arm.

New Home Co.

“Of the (700) homes we’re going to build and haven’t opened yet, we have 400 qualified buyers,” Young told a Building Industry Association dinner last week. “So, folks, we’re back.”

The Irvine Co. revealed plans for its 2010 New Home Collection a year ago using designs developed from extensive new marketing research …

Twenty-one model homes have been built. The project offers home shoppers 25 floor plans that feature such new concepts as “California rooms” to bring the outdoors in, while large kitchens and great rooms are combined into entertainment areas.

The land developer hired six builders to construct homes in eight projects.
Rather than sell the land to the builders, who normally would then build the homes and sell them to consumers, the Irvine Co. will retain ownership of the homes until they are sold to consumers and pay the builders fees.

Young reportedly was on hand last weekend when more than 200 potential bidders showed up for an auction of eight left-over homes from a failed development launched two years ago. “(Young) was very impressed by the process and appreciative of the prices achieved,” said Taylor Grant, a court-appointed receiver

Builders Moving Toward Better Times

Daily Real Estate News
January 14, 2010
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Builders Moving Toward Better Times

Lots of signs point to a recovery in the construction industry.

With help from a federal tax break, both Lennar Corp. and KB Home posted fourth-quarter profits – the first time since 2007 that either has been in the black.

KB Home CEO Jeffrey Mezger said in a statement: "There are indications that housing market conditions may be stabilizing in some regions, reflecting, among other things, relatively high levels of affordability.”

Other signs that things are getting better:

Residential investment increased 18.9 percent in the third quarter on a seasonally adjusted basis compared with the second quarter, according to the U.S. Commerce Department’s Bureau of Economic Analysis. It was the first increase in residential investment since the fourth quarter of 2005, the government said.
Both KB Home and Lennar are buying land.
As sales increase, both have reduced incentives they have been offering buyers.

Mezger says KB is increasing prices.

Source: The Los Angeles Times, Alejandro Lazo (01/13/2010)