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There are always men who consider it unpatriotic to tell the truth, if the truth is not very flattering; but, aside from the morality of the case, we never can learn how to produce a certain effect unless we know rightly what the causes were that produced a similar effect in times past. - Theodore Roosevelt Information Release Edmonds, WA " Gateway to the Olympic Peninsula" February 1, 2010 For additional information contact: Tim Raetzloff 425 670 8167 Microsoft: The Most Profitable Company in the World The title as the most profitable company in world fell upon IBM. IBM held the title until the early 1990s. From the early 1990s to 2002 the title belonged to GE, except in 2000 when it was Exxon. The Iraq war in 2003 drove up the price of oil. The most notable beneficiary of the spike in oil was ExxonMobil, based in Irving, Texas. ExxonMobil profits soared from 11.46 billion dollars in 2002 to a record 21.51 billion dollars in 2003. ExxonMobil profit nearly doubled in one year, and the profit of more than 21 billion dollars was the largest profit ever recorded by any company. ExxonMobil profits continued to soar as the price of oil soared. In 2008 ExxonMobil recorded a profit of 45.22 billion dollars. But the price of oil has declined by 50% from the peak in July 2008, and ExxonMobil profits have declined with it. ExxonMobil profit fell to 19.7 billion for 2009, and to just over 6 billion dollars for the quarter ending December 31, 2009. Will it last? Stay tuned to find out.
1 ExxonMobil
Microsoft http://www.microsoft.com/msft/earnings/fy10/earn_rel_q2_10.mspx and Exxon http://www.exxonmobil.com/Corporate/Files/news_release_earnings4q09.pdf
Information Release Edmonds, WA " Gateway to the Olympic Peninsula" January 29, 2010 For additional information contact: Tim Raetzloff 425 670 8167 Microsoft: The Most Profitable Company in the World ? According to Forbes Magazine the 10 most profitable companies in the world at the end of 2008 were 1 ExxonMobil
Thus far, IBM reported 4.8 billion in earnings, and Procter & Gamble reported 4.66 billion dollars. ExxonMobil will be closer than that, but should come in about 1 billion dollars below Microsoft. A few years ago Microsoft was the most valuable company in the world, as measured by market capitalization, the value of its stock; now Microsoft is on the verge of becoming the most profitable company in the world. Edmonds, WA " The Friendliest Town on Puget Sound " For additional information contact: Tim Raetzloff 425 670 8167 At Abarim Business Computers, Inc. And the Biggest Financial Company in the Northwest Is?? November 7, 2009 Nobody answered correctly. Who would have guessed? A company often described as conservative (in the traditional sense), even described as stodgy by some, has outlasted the go-go, trend-setting companies, and is now the largest financial institution headquartered in the Northwest. Seattle-based, but no one in Seattle thought to mention it. In September this company sold more than 300 million dollars in additional shares in a secondary offering of stock, but even the stockbrokers I asked didn’t think of it. Shares in this company are trading near their 52-week high. The market capitalization of this company is only about 20% below its all-time high market capitalization. Market capitalization is calculated by multiplying the value of one share by the number of shares outstanding. This company has more than 12 billion dollars in assets. Do you need more clues? 26 years ago the then-CEO of this company said of Washington Mutual, “If they will buy stock in that, they will buy anything.” It took 25 years, but time ultimately justified him. Any guesses now? The answer is, ta-da, Washington Federal. Boring old Washington Federal. Washington Federal that mostly just lends on fixed-rate 30-year mortgages. How last millennium. On Friday November 6, 2009, Washington Federal shares closed at $17.83 a share. Washington Federal has 112,270,330 shares outstanding as of October 30, 2009, according to the most recent 10-K (annual report) filed at www.sec.gov Put those 2 numbers together and the result is a market capitalization of just over 2 billion dollars. The market capitalization of the closest competitor to Washington Federal is about one eighth as much. Earnings are larger at Washington Federal than at any Northwest competitor, and WaFed now has more assets than any of its Northwest competitors. By national, trillion-dollar standards, WaFed is small, but, for now, it is the biggest in this part of the woods. I don’t know whether this is the classic tortoise/hare story or just a temporary fluke. Commerce and industry are dynamic; some other financial organization may grow past WaFed, but at this moment Washington Federal is easily #1.
Recent television appearances: Enrique Cerna Connects on KCTS October 30, 2009 http://www.komonews.com/news/67386457.html October 28, 2009 Boeing management continues to look for a scapegoat. Boeing management is the problem; this decision doesn't change that fact. Boeing has not yet gotten one 787 production line to run; does anyone really believe that they can run two? This is the same Boeing board that rubber-stamped Phil Condit, replaced him with Harry Stonecipher, and now plays golf with Jim McNerney, the present absentee CEO. I am not much of a fan of the union, but this entire charade is ridiculous. The kowtowing done by our local politicians to Boeing is embarrassing. Boeing has not created a new job in Washington in 40 years. Tax breaks given to Boeing have probably aborted tens of thousands of new jobs in the small businesses that are forced to make up for the Boeing gimmes. If the concessions that Boeing wanted, in wages, healthcare, and other benefits, had been granted, it would have probably been a larger equivalent loss to the local economy than the loss of jobs because it would have spread across all lines, not just the 787. South Carolina may discover, to their grief, that Boeing doesn't keep all of its promises. Chicago is still looking for the 500 jobs that were promised for the gimmes that Boeing got in that move.
Edmonds, WA " The Friendliest Town on Puget Sound " For additional information contact: Tim Raetzloff 425 670 8167 A Pair of 50 Billion-dollar Companies October 25, 2009 The stock market was down on Friday October 23, 2009. Amazon.com (AMZN), however, was up nearly 27% because of spectacular growth in sales and earnings. At the end of trading on October 23, AMZN had a market capitalization of 51.3 billion dollars. Market capitalization is calculated by multiplying the value of one share by the number of shares outstanding. For the first time since June 2001, Washington, and King County, has 2 companies with a market capitalization of more than 50 billion dollars. The other company is, of course, is Microsoft (MSFT - I own some of it for full disclosure), which was also up in a down market. Microsoft has a market capitalization of almost 250 billion dollars, 248.8 to be accurate. Amazon had 432,982,766 shares outstanding on October 19, 2009, according to the latest 10-Q filed at SEC, and a closing price of $118.49 a share on October 23, 2009. Microsoft had 8,879,121,378 shares outstanding on October 19, 2009, according to the latest 10-Q filed at SEC, and a share price of $28.02 on October 23, 2009. According to Forbes magazine, only 65 companies in the world had a market capitalization of 50 billion dollars or more, when the Forbes list came out 6 months ago. http://www.forbes.com/lists/2009/18/global-09_The-Global-2000_MktVal.html The last time (June 2001) Washington had 2 companies with a market capitalization of 50 billion dollars or more, the 2 companies were Microsoft and Boeing. At that time Boeing was intending to leave town 4 months later, but the stock was drifting lower. For a time Boeing shares bloomed in the new Chicago soil, but Boeing shares are worth less now than they were in June 2001. The market capitalization of Boeing shares is 36.3 billion dollars, based on 726,599,064 shares on October 16, 2009 and a closing price of $49.89 on October 23, 2009.
When Will 787 Fly - Will It Fly? Edmonds, WA " The Friendliest Town on Puget Sound " The Boeing 787 was to have made its maiden flight 4 weeks ago. It didn't and now the question is, when will it fly? Do Boeing executives have a clue? Today they say that a new schedule will be announced before October. I won't claim that I have a clue either, except that once upon a time in the West I worked for Boeing in engineering design development on a plane that had a problem with its wings. Wings are a necessity if you ever want to do more than exercise the engines taxiing at Paine Field. I remember reading about a Navy pilot in WWII who didn't like it when the first planes with folding wings arrived on the early aircraft carriers. Flying a plane with retractable wings made him uncomfortable. My experience with a new plane that had wing problems was also with a retractable wing. The SST wing was intended to retract in high-speed flight and extend when in low speed mode. Like the planes on aircraft carriers, which have used retractable wings successfully for 70 years, the SST probably would have flown as well - except for one slight problem. The engineer who designed the wing pivot (to retract the wing) made a mistake in his calculations. The wing pivot was too heavy for the aircraft. The SST required a complete redesign, and it was never built. The engineer who designed the overweight wing pivot moved to project after project until he reached the highest level of the Boeing Company. The SST was attempted in another era and it wasn't the 787, but it was a revolutionary plane that used relatively untested materials (titanium alloy compared to the composites used by the 787) to advance air transport technology. The SST was a leap forward, not just a step, and the same may be said for the 787.
This history doesn't mean that the 787 will never fly. One Boeing executive says that the wing problem can be cured with inexpensive parts that will fit in the palm of your hand. I hope that is true. But it never seems to be that easy. When those parts that "fit in the palm of your hand" are installed the stress points will move. Tests and simulations will need to be run to learn if the stress reinforcers require additional stress reinforcers at the new points of stress. Every component that is changed carries the potential to force changes to nearby components. It may turn out that the entire fuselage/wing marriage must be redesigned. Redesigning any marriage is difficult at best. Changes may add weight and increase fuel usage, decrease range and load capacity - all the selling points of the 787. The problem isn't one of engineering. I have great confidence that Boeing engineers will get it right if they are given enough time. The problem is on the corporate side. It wasn't very long ago that Boeing executives were mocking the AirBus A380 program because it was 2 years behind schedule. The 787 is now 2 years behind schedule and counting. It will certainly be 3 years behind before it is ever flown. Boeing executives are under the Wall Street gun to get a plane in the air - any plane - 787, 787a, b, c…q. In view of the design problems, and, more importantly, the manufacturing problems in places like South Carolina, the 787 has thus far encountered, the hurry up test program that Boeing intended to implement will probably be thrown out by the FAA. It is hard to see how first flight can occur before 2010 and how deliveries can occur before late 2011. Boeing started with a 4 year lead on the AirBus A350. That lead is now down to 18 months. I have been a booster for Washington and, especially, Snohomish County, for twenty years. I realize it is important for this region that Boeing get it right. But the sad truth is that everything about the 787 program has been wrong from the start. Boeing executives can blame unions, but it appears to an impartial observer that the unions are responsible for less than 5% of the delays, and the real number may less than that. Boeing management hastily designed a Rube Goldberg construction plan that was more concerned with moving production out of the hands of union workers than it was with producing a quality airplane. It is amazing to me to see headlines blaming the union. Anyone who knows me knows that I am no fan of unions. Union blindness certainly helped destroy many industries in this country, but this time they aren't guilty. Boeing management alone caused this debacle. Boeing management pulled the trigger and shot the company. Clearly it is more serious than a wound in the foot. It remains to be seen if the wound will be mortal.
Naming Rights - The Solution to Budget Deficits Edmonds, WA " The Friendliest Town on Puget Sound " Many people are concerned about the budget deficits at the federal level and at the state and local levels. Governor Schwarzenegger in California has been talking about the possibility of selling some California landmarks to balance the budget. The possibility of just selling the naming rights has been brought up as an alternative. This isn't a new proposal. Actually it was Enron that began to make inquiries about renaming the Space Needle in Seattle a number of years ago. Enron management apparently thought they should have an appropriate With the number of billionaires in Seattle, both those who own sports When city fathers in Paris heard Obviously, if a sports venue can claim $10 million a year Apparently at some point sports franchises got into the naming rights story because it seems that the local teams are acting as consultants to Seattle and the Space Needle leasing authority. The sports teams will get an agent's commission. That might pay for one more "superstar". Just think, the Mariners could hire back Richie Sexson or bid up a new contract for Adrian Beltre from the commission they will get advising Seattle on selling naming rights. Nationally, Wal-Mart is reputedly the leader in the bidding war for the Statue of Liberty This interest in naming rights has even spread outside the US and Europe. Citigroup is so flush with TARP money that it has offered to pay the entire budget of Nepal for naming rights to Mount Everest. This has caused 2 problems. China says that Nepal can't sell naming rights to Mount Everest because China owns at least half of the mountain. The other problem is that 3rd World activists are Stay tuned and, as I learn more, I will continue to report on this innovative solution to budget deficits. Now if it were only April 1 and this wasn't real.
Washington is Still Producing Billion Dollar Companies At Abarim Business Computers, Inc. The economic downturn has certainly hurt in Washington, as it has almost everywhere. But, new companies continue to grow to replace the ones that have disappeared. Measured by market capitalization, there are 17 companies in Washington that have a value of more than one billion dollars as of the close of trading today, June 3, 2009. Market capitalization is calculated by multiplying the value of one share by the number of shares outstanding. I haven't done as well reporting on new billion-dollar companies as I have done in the past. As a catch-up, or maybe that is just a ketchup, I decided to mention a few of the newer billion-dollar companies that may have been missed. Seattle-based Dendreon has benefited from a great deal of positive coverage about its prostate cancer drug candidate, Provenge, has propelled Dendreon to a market capitalization of 2.511 billion dollars. Itron is based in Liberty Lake, WA (that is in Spokane County), and has seen its shares rise because its products monitor the use of energy, and we all know how important that is. Itron is now worth 2.189 billion dollars. Concur Technologies provides software that better enables companies to measure and control employee expense. Concur has a market capitalization of 1.526 billion dollars. Each is relatively small compared to the established companies in the region, but maybe in 20 or 30 years??
Amazon 36.812 billion dollars Starbucks 11.239 billion dollars Expeditors International 7.209 billion dollars Nordstrom 4.917 billion dollars F5 Networks 2.595 billion dollars Dendreon 2.511 billion dollars Itron 2.189 billion dollars Concur Technologies 1.526 billion dollars Washington Federal 1.151 billion dollars Potlatch 1.055 billion dollars 15 of the billion-dollar companies are based in King County, and 2 in Spokane County. All numbers are based on the 4PM New York closing price for each company and the reported number of shares for each company at the SEC from the most recent 10-Q or 10-K available on this date.
Information Release Edmonds, WA " The Friendliest Town on Puget Sound " April 14, 2009 For additional information contact: Tim Raetzloff 425 670 8167 Shares outstanding March 5, 2009 98,201,864 Amazon More Valuable Than Boeing Act II Edmonds, WA " The Friendliest Town on Puget Sound " March 4, 2009 For additional information contact: Tim Raetzloff 425 670 8167 At Abarim Business Computers, Inc. On February 22 I reported that Amazon.com was more valuable than Boeing by one billion dollars in market capitalization as of the close of trading on February 20, 2009. Market capitalization is calculated by multiplying the value of one share of common stock by the number of shares outstanding and provides a snapshot of value. In the 8 trading sessions since February 20, the market has declined about 7%. Amazon has gone up. As of March 4, 2009 Amazon has a lead of almost 6 billion dollars over Boeing. Amazon is worth 27.8 billion dollars, up 1.5% since February 20. Boeing is worth 22 billion dollars, down 16% over the same span. Boeing is a component in the Dow Jones Industrial Average; Amazon is not. According to the most recent filings at http://idea.sec.gov/idea/searchidea/companysearch_idea.html Boeing has 726,127,813 shares as of February 6, 2009, and Amazon has 428,583,135 shares as of January 22, 2009. Amazon closing price on March 4 was $64.81 a share; Boeing closing price was $30.31.
Amazon More Valuable Than Boeing Edmonds, WA " The Friendliest Town on Puget Sound " February 22, 2009 For additional information contact: Tim Raetzloff 425 670 8167 At Abarim Business Computers, Inc. Amazon.com gained $1.91 a share to close at $63.86 a share on Friday, February 20, 2009. That was a gain of 819 million dollars. On the same day Boeing lost $1.26 a share to close at $36.31, a loss of 915 million dollars. At the end of trading on Friday, February 20, 2009, the market capitalization of Amazon was 27.369 billion dollars; Boeing market capitalization was 26.366 billion dollars. Market capitalization is calculated by multiplying the value of one share by the number of shares outstanding. When trading began on Friday, February 20, 2009 Boeing was more valuable than Amazon by 730 million dollars; by the end of trading Amazon was more valuable by more than a billion dollars, a change of almost 1.75 billion dollars in one day. According to the most recent filings at
Boeing has 726,127,813 shares as of February 6, 2009, and Amazon has 428,583,135 shares as of January 22, 2009. There is another interesting bit of information at the SEC web site. The web site has recently been updated to make it easier to use. It is now possible to do searches by state and by just the first letter of two of the name. If you enter Boeing and IL, there are no matches. If you enter Boeing and WA, there is information on Boeing Co, Boeing Capital, and Boeing Capital Securities. 8 years after Boeing supposedly moved to Illinois, the SEC, the official arbiter of such things, says that Boeing is still a Washington company. Fortune 500, are you paying attention? This is actually the 2nd time that Amazon has been more valuable than Boeing. At the end of the Internet Insanity Bubble 9 years ago Amazon was more valuable than Boeing for a few days. That value was based on hope, expectation, and just plain foolishness. This time the valuation looks like it may be permanent.
Information Release Edmonds, WA " The Friendliest Town on Puget Sound " April 18, 2005 For additional information contact: Tim Raetzloff 425 670 8167 Shares of Western Wireless were down a little more than 1% in the week ending Friday April 15, 2005. Usually that would be cause for disappointment, but this was an unusual week. The S&P 500 was down more than 3%, and many companies were down more than 3%. Of the 1500 largest companies on the New York Stock Exchange more than 100, over 7%, were down 10% or more. Of the top 1000 NASCAQ companies more than 100, over 10%, were down 10% or more. Western Wireless held most of its ground while dozens of companies fell past it. As of the close of trading on April 15, 2005, Western Wireless is one of the top 500 companies in the U.S. as measured by market capitalization. Market capitalization is calculated by multiplying the value of one share by the total shares outstanding. The Seattle-area now has 15 companies in the top 500 measured by market capitalization. This is the largest number since early 2000. The Seattle-area companies ranked in the top 500, and the market capitalization as of the close of trading April 15, 2005 are: # 3 Microsoft $266.1 billion * Note: Boeing counted as a Seattle-area company because SEC filings continue to show Boeing principal business address as Seattle, 4 years after Boeing supposedly left. ** Usual Note: I own shares of Washington Mutual and have no financial or business interest in any other company in this release. This result is reversed from the experience of the last 2½ years, and probably represents a move to the safety of the largest companies. Over 2½ years since the bottom of the last bear market the platinum circle has gained more than 28% in market capitalization, the gold circle has gained 46%, and the silver circle has gained 62%. The smaller companies have gained value more quickly than the largest companies. The largest companies have been very active in buying back shares to support stock values. Since the relaxed rules for buybacks following 9/11 many of the largest companies have spent billions of dollars supporting the value their shares. Cisco has been the most active, buying back over 820 million shares, or $14 billion at current value. Oracle as bought back 400 million shares. ExxonMobil has bought back the largest dollar amount, 370 million shares, or $20 billion. Repurchases of 100 - 200 million shares have been common in the platinum circle. The net effect has been an appearance of a stronger market among the largest companies. During a bull market companies usually issue more shares as options are redeemed and investors reinvest dividends. This bull market has been unusual as shares have been bought back rather than issued. The Dow roughly measures the movement of the platinum circle and is up about 34% since the bottom of the market, while the market capitalization is up only 28%. The difference is the large number of shares repurchased by the largest companies.
March 10, 2005 5 years ago we talked about the top of the stock market. Ever skeptical, you asked me to let you know the next time I thought the market was near a top. I think we are there. We are near 4 year highs today, and the market is still 10% - 20% below the last top, depending on which index you follow; but I think that we will see a break down into a new bear market soon, and at the absolute outside before Thanksgiving. I also think that we will see a break in the hot real estate market (big shock !!!) at the same time. This will be the first time since 1969 that the stock market and real estate market turn down together. I expect this to be a normal bear market of shorter duration and less depth than the one we suffered through from 2000 through 2002. My guess is a decline of 30%-35% in the S&P over 18 months. I don't know what the trigger will be but there are certainly plenty of possibilities. The collapse of the dollar has benefited the earnings of companies that have overseas operations, but the growth rate in overseas earnings will slow even if the dollar continues to drop and that will lower earnings expectations and acceptable multiples for earnings. In plain language stock prices of multi-nationals won't hold. Interest rates are certainly headed higher. Another President from Texas gave us "guns and butter" 4 decades ago. It couldn't be done then and it can't be done now. Interest rates have remained remarkably stable in the face of massive deficits. Expect that to change. I expect mortgage rates to climb to 8% for a 30-year fixed by the end of 2007, up from 5½% just a few weeks ago. When interest rates go up it will destroy the entire dynamic of the current housing boom. People who need to buy houses will still buy houses, but the mania will come to an end. Expect the builders to have overbuilt just as they did during every upturn in the 60s and 70s. Expect inflation to creep back into our daily lives. That will actually mitigate the housing market so that it doesn't collapse. The term stagflation will be resurrected into daily jargon on the news. The age of boomers seems to be considered in health care, but not in relation to investing. The leading edge of boomers turn 59½ in less than 4 months. They don't have to begin taking distributions from their tax-deferred accounts, but they can, and certainly they will think more about what is in those accounts. For those who have enough to be secure and don't want to risk it further, look for a move out of stocks into interest-bearing investments. If younger workers are permitted to put some social security investments into private accounts it will not be enough money, quickly enough, to stave off this bear market, but it will fuel the next bull market. Then there is oil. I don't understand how folks who are so worried about reducing taxes don't recognize that the tax of higher oil prices is far more devastating to regular folks than an income tax will ever be. Maybe the blindness is caused by the reality that the tax goes to friends in Texas, Oklahoma, and Saudi Arabia, who will finance the next campaign. Every time oil has reached record high prices in the past it has tanked the stock market and the economy. I keep hearing Wall Street types say that this time is different. Maybe it is different, but that is the same thing they were saying about technology stocks 5 years ago. I can't see any reason why it should be different this time. There just aren't very many like you driving hybrids, and the more money that goes for gasoline and heating oil is less money for food, clothes, and entertainment. Maybe the trigger will be China when they stop buying our bonds and financing the fiscal foolishness in DC. This also amazes me - where are the real conservatives? Are there any left who care about fiscal responsibility? When foreign counties decide to stop financing our debt maybe it will be a wake-up call, but it would also trigger a bear market. And there are terrorists. I regard this as the least likely scenario. It took Bin Laden and friends 8 years to organize their 2nd attack on the World Trade Center. I expect it may take them many more years to arrange a major attack. Nevertheless we continue to spend billions destroying our own airline and travel industries with excessive measures. There were adequate safeguards to stop terror before 9/11, but no one paying enough attention to detail. I expect that the multiple layers of bureaucracy that has been put in place since 9/11 actually makes us less likely to halt a terror attack but it certainly uses more resources. The terrorists may never need to make another attack. The weight of the anti-terror force may be enough to wreak economic devastation of its own. Maybe there won't be one trigger that causes the new bear market to start, but a combination of things. The biggest thing that I notice is that the charts of many stocks are getting top-heavy. It is only a matter of time before that corrects itself. It always does. The sky isn't falling but it may lower expectations when we have another bear market so close on the heels of the last one. Information Release Edmonds, WA " The Friendliest Town on Puget Sound " March 7, 2005 For additional information contact: Tim Raetzloff 425 670 8167 Abarim Business Computers Thoughts About Harry On December 1, 2003 I wrote the following: [ "I have been a vocal critic of Boeing management, offending some who receive these releases. The news that Phil Condit has "resigned", following the firing of Mike Sears, should be good news. It isn't. The appointment of Harry Stonecipher is a step backwards. Mr. Stonecipher said that Boeing has thousands of talented employees. At least he got that right. Mr. Condit talked about the great accomplishments of Boeing. He got that right also. Virtually nothing else that I heard in the press conference made any sense at all. The Senate investigation will now be even more thorough, and nearly certain to take a year or more. That puts the Everett 767 production line in jeopardy. Unless Boeing gets new 767 orders between now and the end of 2004, it may be impossible to keep production going long enough for the tanker contract to begin. If the Air Force really needs tankers, the planes ordered may not be 767s. This sudden action removing Mr. Sears and Mr. Condit makes it appear that the hands of the CEO were not clean in the tanker contract scandal. Mr. Sears appears ready to defend his actions as approved by his superior, and, probably, by the board. I don't think I need to remind anyone that this is an election year, and political advantage will determine what finally happens with the tanker contract. Boeing may finally get the contract because there are few alternatives, so the company may not ultimately suffer at all; but, for the workers on the 767 production line, that determination may not come soon enough to save their jobs. My very strong opinion is that the Boeing board has been asleep. Phil Condit's conduct of Boeing has been in question for more than 5 years, ever since the production snafu in the commercial airplane division. A prominent Seattle business columnist wrote in 1998 that Mr. Condit would not survive long in the job. Unfortunately that prediction was wrong. The problems at Boeing are not limited to commercial airplanes. Every Boeing division has had at least one crisis in the last year. This indicates serious problems at the very top, of which the tanker scandal is little more than the proverbial tip of the iceberg. As layers are disclosed in the investigation no good for Boeing can come from it. The frustrating part of the entire process is that the responsible parties seem certain to retire in wealth, while the employees pay the full bill of management failures. The State of Washington should be reviewing the $3 billion giveaway to keep Boeing 7E7 production in Washington. If the tanker process has been tainted, is there any reason to believe that Boeing has operated any differently in the 7E7 decision? The $3 billion in "incentives" to Boeing will be made up by every other business in the state. Is the damage done to those other businesses worth the "gain" of 7E7 jobs, and does that make Washington a more "business-friendly" environment? Wouldn't Washington be more "business-friendly" if the $3 billion was spread around to every other business in the state by small across-the-board reductions in the B&O tax? If the state is willing to give up $3 billion to be more "business-friendly", why not spend the money where it will really generate more jobs? This crisis in Boeing management gives Washington the opportunity to review the "incentives" and use the money in a more rational, and more productive way." ] Today I have to add that the board has finally awakened and done its job. That is very good news for the ultimate health of Boeing. However, the excuse for firing Harry Stonecipher sounds bogus, just like almost everything associated with Harry Stonecipher has been bogus right along. Harry's great skill has been the ability to bs Wall Street and administration officials. How ironic that the government should return Boeing to its good graces on Friday, in recognition that Boeings ethics woes are behind it, and on Sunday the board of directors should find it necessary to dismiss CEO Stonecipher for a lapse in judgment and ethics. I believe there is more to the firing than an affair. Almost certainly the board had more reason to request the resignation. There is, at least, a suspicion that investigators are getting closer to Harry in the Darlene Druyun investigation, and other ethics investigations of government contracts improperly awarded to Boeing. Sadly, this new cloud makes it almost certain that the 767 line in Everett will be shut down. It also will strengthen Boeing opponents in Congress. How much better if the board had done its job 15 months ago and cleaned house at the top. Boeing must fully cooperate with government investigators to remove the last of the suspicion. It is time to reconcile Boeing and Seattle. The individuals who were the cause of the friction are now gone. There is much to be gained for Boeing and the region if we find that we can again work together and salvage as much as possible from the situation. Information Release Edmonds, WA " The Friendliest Town on Puget Sound " July 18, 2004 For additional information contact: Tim Raetzloff 425 670 8167 No this isn't a pipe dream. I realize that Boeing made a huge production out of the move of the headquarters to Chicago, probably the biggest such move of the last decade; but check out Boeing's file at the SEC. Boeing's files at the SEC indicate that Chicago is the company mailing address, and that Seattle is the actual business address. It is not uncommon for a company to use 2 addresses for a year or more while moving the company headquarters. Burlington Resources kept Seattle as a mailing address for more than a year when BR moved to Texas 10 years ago. Potlatch kept San Francisco as a mailing address for more than a year when moving to Spokane 5 years ago. What is unusual (in fact the only case I found while checking companies that have moved headquarters in the last few years, there may be another but I didn't find it) is that Boeing did not keep Seattle as the mailing address, but installed a mailing address in Chicago and maintained the business address in Seattle. What is also unusual is the length of time - Boeing is using Seattle as its business address nearly 3 years after the "move". I can't find another example of dual addresses used that long. If you want to check for yourself go to: http://www.sec.gov/edgar/searchedgar/companysearch.html Less than half the expected 500 jobs landed in Chicago. It looks like Chicago got the CEO and some support staff, but a lot of what is considered to be executive functions remain in Seattle. I can only guess at why. An absentee CEO is not all that uncommon. You need only go as far as Redmond to AT&T Wireless where John Zeglis has been missing in action since AWE was spun from AT&T. Then there was notorious case of Bill Agee (Mr. Mary Cunningham) who would never go to Idaho to the headquarters of Morrison Knudsen, of which he happened to be CEO. There are literally hundreds of cases of absentee CEOs. Before I digress too much it appears that what Chicago really got was an absentee CEO and his entourage. The real headquarters remains in Seattle and is so indicated in the SEC filings. I can't blame Mr. Reed for believing that Chicago was cheated. I found only 1 other top 100 company in the country which uses a mailing address in one state and a business address in another state. That company is First Data, which moved from Atlanta to Greenwood Village, CO about 2 years ago. During the process of leaving Atlanta, a mailing address in Omaha was set up and is still on the SEC filings, but the business address is in Colorado where the company is really relocated. Fortune magazine lists First Data as a Colorado company, which is certainly correct. Using the same criteria, Boeing is still a Seattle company. I have decided that I will include Boeing in reports about Seattle companies until Boeing begins to use Chicago as its business address. Information Release Edmonds, WA " The Friendliest Town on Puget Sound " March 17, 2003 For additional information contact: Tim Raetzloff 425 670 8167 Abarim Business Computers 2 Years Since Boeing decided to Leave When Boeing announced that it was leaving Seattle 2 years ago, the city had barely stopped shaking from the February earthquake, and was still psychologically shaking from the Fat Tuesday riots a few weeks before and the WTO riots a year before. That timing probably made the Boeing announcement even more startling, and caused even more doubt and discussion than it would have at any other time. Boeing had been the economic engine of Seattle for 60 years, and Boeing was going away. Would the lights really go out this time? The lights didn't go out. After 2 years the Seattle area share of the market capitalization of the United States not only hasn't gone down, but it has gone up slightly, despite the loss of Boeing and 2 other large companies, as the region has clearly out-performed many other areas of the country. On March 16, 2001, the last Friday close before the Boeing announcement, there were 12 Seattle companies in the top 500 in the US when measured by market capitalization. The value of Seattle companies was $489.560 billion, 4.557% of the US total of $10.7425 trillion. Boeing was a little less than 10% of the Seattle total. In the 2 years since, Seattle lost the headquarters of Boeing, and also VoiceStream Wireless (now T-Mobile a part of Telekom), and Immunex (now a part of Amgen). The value of those 3 companies was $79.76 billion (17%) of the 2001 Seattle total, which should have reduced the Seattle portion of the top 500 to 3.8%. Yet on Friday March 14, 2003, there were again 12 Seattle companies in the top 500. The total market capitalization of Seattle companies had declined to $378.446 billion, a loss of 22.697%. Over the same period of time, the total market capitalization of the 500 most valuable companies in the US had declined to $8.0306 trillion, a loss of 25.245%. The Seattle portion of the total is now 4.713%, a higher percentage than it was 2 years before. 3 new companies that had never been in the top 500 in 2001 are now on the Seattle list: Expedia, Plum Creek, and Expeditors International. Of the old companies, the value of Amazon, Starbucks, PACCAR, and SAFECO have gone up. Washington Mutual and Weyerhaeuser are virtually unchanged. Microsoft and Costco Wholesale have both declined less than the national average. Of the largest Seattle area companies, only AT&T Wireless has declined more than the national average. The Seattle area doesn’t seem to have been damaged at all by the Boeing move. The biggest losers in the process seem to have been Boeing itself and the New York Stock Exchange. The value of Boeing shares has declined by 52.465%, and the total market capitalization of Boeing has declined by 57.197%. Boeing was the 52nd most valuable company in the US in 2001, and is now #80. Much of that loss can be attributed to September 11, and the devastation to commercial airlines. But there is anecdotal evidence that small Seattle area investors have quietly abandoned Boeing shares, and Chicago area investors have not filled the gap. Boeing shares were the foundation of many Seattle area portfolios for decades, through good times and bad. That attachment is now broken, and Boeing is probably a little the worse for it. Boeing was the largest New York Stock Exchange company in the Seattle area for 50 years. NYSE companies were 26.7% of the Seattle total in 2001, but the NYSE share has declined to 16.3% in 2003. The momentum that NYSE had built up in the late 90s by listing Washington Mutual and Nordstrom is now gone. Seattle is once again firmly NASDAQ territory. Boeing left Seattle, but the Seattle area is still among the dynamic areas of the country. Boeing’s arrival in Chicago didn’t do a thing for Chicago, but put the spotlight on the declining fortunes of the Windy City.
Appended Statistics: Largest Seattle area companies on March 16, 2001, market rank, market capitalization, share price, and shares outstanding: # 2 Microsoft $290,932,360,000 $54.56 5,332,338,000 shares # 52 Boeing $ 47,754,130,000 $53.75 888,449,000 shares # 57 AT&T Wireless $ 42,504,000,000 $18.40 2,310,000,000 shares # 86 WashingtonMutual $ 29,945,810,000 $51.49 581,585,000 shares #112 VoiceStream Wireless $ 20,581,650,000 $90.31 227,900,000 shares #135 Costco Wholesale $ 16,638,030,000 $37.13 448,102,000 shares #192 Immunex $ 11,421,940,000 $21.25 537,503,000 shares #207 Weyerhaeuser $ 10,616,060,000 $49.88 212,832,000 shares #257 Starbucks $ 8,243,000,000 $43.81 188,158,000 shares #456 Amazon.com $ 3,914,500,000 $11.00 355,864,000 shares #480 Nextel Partners $ 3,579,380,000 $14.75 242,670,000 shares #493 PACCAR $ 3,429,130,000 $44.81 76,526,000 shares
Largest Seattle area companies on March 14, 2003, market rank, market capitalization, share price, and shares outstanding:
# 1 Microsoft $266,036,430,000 $24.86 10,701,385,000 shares # 53 Washington Mutual $ 31,052,130,000 $33.53 926,100,000 shares #109 AT&T Wireless $ 16,037,580,000 $ 5.92 2,709,050,000 shares #123 Costco Wholesale $ 13,487,210,000 $29.59 455,803,000 shares #150 Weyerhaeuser $ 10,622,280,000 $48.51 218,971,000 shares #171 Amazon.com $ 9,593,480,000 $24.71 388,243,000 shares #177 Starbucks $ 9,403,350,000 $24.26 387,607,000 shares #282 PACCAR $ 5,612,360,000 $48.43 115,886,000 shares #327 SAFECO $ 4,710,140,000 $34.42 136,843,000 shares #349 Expedia $ 4,301,930,000 $37.14 115,830,000 shares #366 Plum Creek Timber $ 3,974,510,000 $21.50 184,861,000 shares #387 Expeditors International $ 3,615,570,000 $34.74 104,075,000 shares
Dow Jones Industrial Average March 16, 2001 9823.41 March 14, 2003 7859.71 Percent change - 19.99
S&P 500 March 16, 2001 1150.53 March 14, 2003 833.27 Percent change - 27.58
NASDAQ Composite March 16, 2001 1890.91 March 14, 2003 1340.33 Percent change - 29.12
Top 500 Market cap March 16, 2001 $10,742,542,740,000 March 14, 2003 $ 8,030,618,340,000 Percent change - 25.24
Seattle top 500 companies March 16, 2001 $ 489,560,190,000 March 14, 2003 $ 378,446,970,000 Percent change - 22.70
Boeing share price March 16, 2001 $53.75 March 14, 2003 $25.55 Percent change - 52.47
Boeing market capitalization March 16, 2001 $47,754,130,000 March 14, 2003 $20,439,440,000 Percent change - 57.20
And I suppose I should again provide the disclaimer. I do own shares of Washington Mutual. Neither I nor Abarim Business Computers have any financial interest in any of the other companies, except to the extent that local companies doing well is good for the local economy.
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