August 2008 Archives

WASHINGTON, (Reuters) - A former chief U.S. arms buyer urged the Defense Department on Thursday to reject a Boeing Co push for more time to bid on supplying aerial-refueling planes valued at up to $35 billion.

"I think there's a time urgency to this program," said Jacques Gansler, undersecretary of defense for acquisition from November 1997 to January 2001. "And Boeing -- if they say they're not going to bid unless they get an extra six months -- well fine, don't bid."

Read the full story.

International Rectifier Corp., the El Segundo-based maker of power management computer chips, said Friday that it rejected a buyout offer by Vishay Intertechnology Inc.
IR, as the South Bay firm is known, said Vishay's $1.6 billion offer undervalued the company.

On Aug. 15, Malvern, Pa.-based Vishay made a bid of $21.22 for each outstanding share of IR stock.

"The board believes that the proposal by Vishay does not value the company and its future prospects appropriately," IR chairman Richard J. Dahl said in a statement.
Dahl emphasized the company's plan to enhance its competitiveness in language that seemed to indicate IR's general lack of interest in a sale.

"Vishay's proposal significantly undervalues the company and its future prospects when compared to the shareholder value realizable under our recently adopted strategic plan," Dahl said.

Over the past year, IR "added considerable strength and depth to its senior management team," Dahl said. Those management changes started after former CEO Alex Lodow's October 2007 resignation following the discovery earlier that year of accounting irregularities.

On Aug. 1, IR said it completed its restatements for the periods involved in the irregularities.

The firm now is "poised to enhance its competitive position in the marketplace," Dahl said.

IR had been involved in a previous sale to Vishay. Last year, the local firm sold its power-control systems business to Vishay.

IR employs 4,500 people worldwide with about 600 in El Segundo.

Oakley Boren runs the fan blog The Temple of Fresh & Easy. She just loves Fresh & Easy Neighborhood Market.

Boren's the focus of today's Business Casual column.

One thing I couldn't fit into the column is that Boren has a very vivacious personality, which seems to come through in her blog.

BTW, she posted my photo on her blog.

This week's Business Casual Column.

I'll post a photo with it later today.

Like with the housing market, the auto industry is reeling.

This should not come as any surprise.

(CNNMONEY.com) New-vehicle sales in the U.S. for August are expected to drop 14% from a year earlier as the industry's slump continues, according to car-shopping Web site Edmunds.com.

The sales, if the estimates are meet, would be up 11% from July's dour levels. Edmunds' executive director of industry analysis, Jesse Toprak, said a major recovery isn't expected the rest of the year.

The forecast echoes J.D. Power & Associates' expectation last week for U.S. auto makers to report big declines in August domestic sales despite stepped-up incentives, though industrywide sales are expected to improve slightly from July's moribund rate.

The decline reflects sliding sales of trucks and SUVs - the longtime drivers of profits for Detroit amid surging gasoline prices, the housing-market downturn and economic worries.

Casey's Cars.com on PCH in Hermosa is selling electric golf cars.

You'll see a story in the Breeze on this in coming days.

This profile on LA Times publisher Eddy Hartenstein ran on Jan. 3, 2005, soon after he had retired as vice chairman of DirecTV Group.

A full dish - Executive made DirecTV the largest satellite provider in the U.S.

While attending Alhambra High School, Eddy Hartenstein embraced an ambitious, yet vague, vision of his future.

With the space race with the Soviet Union capturing the imagination of millions of young people, Hartenstein wanted to go into "something cutting edge, high tech."

Now 54 and newly retired as vice chairman of El Segundo-based DirecTV Group, Hartenstein leaves a legacy that is anything but vague.

He built DirecTV from an idea into the nation's biggest satellite television provider and second-largest pay television service, with more than 13.5 million customers.

"I want to experience what it feels like to not get up with an alarm clock and not have to be somewhere that morning," Hartenstein said recently during an interview in his office, where he was still packing away memories.

With white hair and a white beard framing a paternal smile, the bespectacled Hartenstein looks every bit the college professor. Yet his career has been less academic theorizing and more risk-taking business action.

During the interview, he mused about his career, the rise of satellite TV and the intersection of engineering and entertainment.

"It's been a wonderful ride," he said.

Hartenstein joined Hughes Aircraft Co. in June 1972 after graduating with a bachelor's degree in aerospace engineering and math from Cal Poly Pomona. He worked at DirecTV while studying for his graduate degree in applied physics at Caltech.

He went from working on making satellites to heading a company that would help make the high-tech devices a household word.

When Hughes created DirecTV in 1990, Hartenstein headed the new company. Eventually, Hughes sold its aerospace and satellite manufacturing operations, and DirecTV became the centerpiece of Hughes.

Hughes went from having a handful of giant corporate clients to millions of consumer-level customers, in the process dodging a devastating slump in the satellite manufacturing industry.

"We did something that was somewhat audacious," Hartenstein said. "We have done a very successful transformation from a provider of satellites to other major corporations to a provider of TV entertainment to literally millions of customers across the nation."

Hartenstein not only helped changed Hughes, but transformed the pay-TV industry.

"He's the father of U.S.-based direct-to-home satellite TV on a mass scale," said Jim Schaeffler, senior analyst at The Carmel Group.

With new technologies and an emphasis on customer service, the upstart DirecTV gave the more conventional cable companies a run for their money and customers.

"We're the ones that made the digital in television," Hartenstein boasted. "We're the ones who spurred the whole industry to go into offering multiple-hundreds of channels. The cable industry wouldn't have done that on its own. We offered competition."

Hartenstein said his greatest asset as an executive was his ability to bring people who are "a whole lot smarter and brighter than I am, and simply creating an environment for them to do what they did best." This involved finding professionals from diverse backgrounds who were compatible with each other.

Some lessons he learned during his years at DirecTV include:

* Go with your gut; don't over-analyze.

* Promote debate, and don't surround yourself with people inclined to say what they think you want them to say.

* Once you've made a decision, get everyone on board. Yet be prepared to alter your decision as new facts arise.

* Make technology intuitive to the user. "If you have to send someone to pick through the cupboard to find the instruction manual, you've lost."

With such a trail-blazing career, Hartenstein is sure to have regrets. But his biggest regret is mostly personal.

"If I had to do it all over again, I would have tried to be more balanced and spend more time with family and good friends," he said.

The Thousand Oaks resident has a wife and two young boys. He declined to discuss his family, saying he wants to protect their privacy.

As for the future, Hartenstein notes that he doesn't fish or golf.

He plans to catch up on reading and do a "a little volunteer work here and there." He wants to encourage music and art instruction in schools. "Getting music and art back into the curriculum will only make people richer," said Hartenstein , who played woodwind instruments through elementary and high school.

"I have a sense and I don't know what it is," he said of his retirement plans. "But when I see it, I'll know it."

Hartenstein leaves DirecTV in a less influential position than when he started. After international media giant News Corp. purchased a controlling stake in DirecTV in December 2003, Hartenstein lost his position as chairman and CEO, ending up as vice chairman.

Hartenstein remained based in El Segundo, even as the company's center of gravity shifted to New York, where the top DirecTV executives are now based in order to be closer to their News Corp. counterparts.

"He's leaving because it's not his child anymore," said analyst Schaeffler. "It's gone through its adolescence and it belongs to somebody else now. So his ability to make the kinds of decisions he's always made has been greatly reduced. A guy with that much talent, he's like a horse that's waiting to get out of the gate. And under the existing News Corp. management, that horse isn't allowed to run."

Schaeffler, who has followed Hartenstein 's career for years, says the satellite TV icon will likely move on to another media project. "There's another DirecTV for Eddie Harten-stein to create," Schaeffler said. "Do not bet on him going into retirement and only doing charitable acts. He's too valuable a commodity."Business livesBusiness lives

South Bay homes continued their price slide in July amid a statewide upsurge in sales, according to a report released Monday.

The South Bay's median home price fell 13.4 percent in July to $597,250, compared to the same month a year ago, according to a report by the Los Angeles-based California Association of Realtors.

The South Bay outperformed Los Angeles County, whose median fell 27.3 percent to $400,000.

The median price is the middle figure where half of homes sold for more and half for less.
Also in July, the Los Angeles region saw a 33.6 percent increase in sales as foreclosures brought home prices within reach of many buyers.

"Deeply-discounted, distressed sales continue to drive volume in many regions of the state," CAR president William E. Brown said in a statement.

July also was the first full month that higher $729,000 conforming loan limits for federally-backed mortgages went into effect.

Selling was so brisk that Lawndale sold at least 30 homes in July, the first time the city has seen such activity since August of last year.

The CAR report does not report a community's sales if they are less than 30 in a month.

The South Bay's new martini bar.

Here's the story.

My photo is on another blog. Here's it is. It explains why.

This hotel is unionized. I wonder if the new owners will keep it that way.

The Sheraton Gateway Hotel at Los Angeles International Airport has been purchased for $97 million by Chicago-based real estate investor Harp Group and two equity partners, Fidelity Investments Real Estate Group and Blue Vista Capital Partners.

The 802-room four-star hotel at 6101 W. Century Blvd. was sold by real estate investor Kor Hotel Group based in Los Angeles.

Read the full story.

Dropping out may be a face-saving measure that could help win Boeing added sympathy on Capital Hill. Support from Congress is a very valuable asset, as any lobbyist can tell you.

Here's the AP story:

WASHINGTON (AP) -- Boeing Co. is considering bailing out of the politically-charged bidding for a $35 billion contract to build aerial refueling tankers for the Air Force, if it does not receive an additional four months by the Pentagon to put together a competitive offer.

The aerospace manufacturer said Friday it also weighing filing a protest on the final
bids request -- expected to be released early next week -- which could even further delay an award by the Defense Department. No final decision will be made until
Boeing has a chance to review the final bids request, said Daniel Beck, a Boeing spokesman Friday.

Boeing lost the initial contract in February to Northrop Grumman Corp. and its partner Airbus parent European Aeronautic Defense and Space Co., but the bidding is being reopened. A Boeing decision against submitting another bid could jeopardize efforts by
the Pentagon to maintain a two team competition to replace 179 Eisenhower-era refueling planes.

Data Linkage Software, Inc., a Torrance-based software development firm, received American Honda Motor Co.'s "Premier Partner Award" for excellent service in providing dealer management systems and support.

This is the fifth time Data Linkage Software has won the award.

Data Linkage Software provides comprehensive paperless management solutions for the automobile, manufacturing and franchise industries, as well as general software consulting and development services.

In today's Business Casual column:

I remember my mother telling me of her childhood encounter with a fortuneteller.

Read the full column.

OSI Systems Inc., the Hawthorne-based maker of airport security scanners, said Thursday that it was awarded a contract worth about $27 million.

The contract, from an undisclosed international government agency, is for multiple Rapiscan Eagle Mobile Cargo and Vehicle Inspection systems. The contract includes installation, warranty service and other charges provided by the company's local distributor.

The South Bay firm expects the systems to be installed by local customs officials at land border crossings for the inspection of inbound and outbound cargo for duty evasion and contraband.

Skechers USA Inc., the Manhattan Beach-based maker of trendy footwear, said Thursday it will continue its efforts to acquire shoemaker Heelys Inc.

Heelys recently rejected Skechers' $142.8 million offer to buy the company.

In a statement Thursday, Skechers chairman and CEO Robert Greenberg said: "We are very interested in continuing our dialogue and, as discussed in Skechers' letter of August 13, we may also be prepared to refine our proposal if additional value can be identified during the due diligence. The company's interest remains genuine and along with our advisors, we will continue to explore all of our options."

Greenberg also said that Skechers is "particularly disappointed" that Heeleys did not agree to discuss the offer with the Manhattan Beach company or even allow Skechers to view Heeleys' financial records.

We do not believe that such a refusal is in the best interests of Heelys' stockholders," Greenberg said.

El Segundo-based Mattel, the world's biggest toy maker, is one of the best places to work in LA, according to a list to appear in next week's Los Angeles Business Journal

Mattel ranked No. 9 on the annual "Best Places to Work in Los Angeles."

In 2007, Mattel ranked 13th.

"This honor reflects Mattel's strong commitment to providing a great work environment for its employees, because it is their creativity and talent that enables Mattel to design, develop and market fun and innovative toys," said Alan Kaye, Senior Vice President of Human Resources, in a statement.

Even the most optimistic people wearing rose-colored glasses have to be worried by this.

Large U.S. bank collapse ahead, says ex-IMF economist

SINGAPORE (Reuters) - The worst of the global financial crisis is yet to come and a large U.S. bank will fail in the next few months as the world's biggest economy hits further troubles, former IMF chief economist Kenneth Rogoff said on Tuesday.

"The U.S. is not out of the woods. I think the financial crisis is at the halfway point, perhaps. I would even go further to say 'the worst is to come'," he told a financial conference.

"We're not just going to see mid-sized banks go under in the next few months, we're going to see a whopper, we're going to see a big one, one of the big investment banks or big banks," said Rogoff, who is an economics professor at Harvard University and was the International Monetary Fund's chief economist from 2001 to 2004.

Read the full story.

It's hard to believe, but Eddy Hartenstein, who spearheaded the creation of DirecTV, will be the LA Times' new publisher.

I interviewed Hartenstein a few years ago after he had retired from DirecTV. He was personable, articulate and forthright. Maybe he'll make a good publisher. I don't know.

One thing is for sure, Hartenstein is ambitious and a risk-taker. That's probably what's needed to revive the flagging LA Times as well as the rest of the newspaper industry.

Below is a short AP piece on Hartenstein.

(AP) -- The Los Angeles Times is getting a new publisher.

The paper's Web site says Eddy Hartenstein -- the former head of DirecTV -- will assume the post on Monday.

He'll be taking over at a newspaper that has cut hundreds of positions as it struggles with falling circulation and declining ad revenues.

The former publisher, David Hiller, resigned last month on the same day that Chicago-based Tribune Co., which owns the Times, began implementing more staff cutbacks.

Hartenstein, who has no newspaper publishing experience, will be the Times' fourth publisher since Tribune acquired it in 2000.

Hartenstein was chairman and CEO of DirecTV from 2001 to 2004.

Read about the ongoing saga of the Boeing-Northrop competition for a $35 billion aerial refueling tanker.

Here's the full story.

Find out in today's Business Casual column.

The South Bay's newest Fresh & Easy Neighborhood Market opened Wednesday at 26640 Western Ave. in Harbor City.

At Wednesday's grand opening, the store presented a $1,000 check to the Boys & Girls Clubs of the Los Angeles Harbor, a local non-profit organization.

I can't imagine Boeing would give up after helping overturn the Northrop contract win.

From the St. Louis Biz Journal:

The Boeing Co. will reportedly stay in the competition for a hotly contested $35 billion contract from the U.S. Air Force to replace the service branch's refueling tankers, according to media reports.

Boeing has disputed the Air Force's decision to award the KC-X tanker contract to a team composed of Northrop Grumman Corp. and European Aeronautic Defence and Space Co., the French-German parent of Airbus.

Officials from Boeing and Northrop Grumman met Tuesday with government officials at Wright-Patterson Air Force Base in Dayton, Ohio.

Read the full story.

See who makes them in the South Bay.

A tattoo on his right forearm that reads "0331" indicates former Marine Cpl. Jeff Hopson was a machine gunner.

The Hawthorne resident wears four silver rings in his left ear to show the number of years he served in uniform.

"Four years in the Marine Corps as a gunner and I made it, and I'm alive," Hopson said with satisfaction.

Read the full story.

Read about my adventures sparring with "The Janitor" in today's issue of the Business Casual column. Sorry, no photos of us sparring. His training facility is at 321 Richmond St. in El Segundo. (Many thanks to Swedish documentarian Frank Aschberg for the top three photos.)

Watch Matyushenko defend his title in this YouTube video

Here's the light heavyweight champion of the International Fight Leauge (right) with me.

Here's Matyushenko directing two female fighters during training. The woman on top is Shawni Young, who has an upcoming IFL title bout later this month.

Matyushenko overseeing training of a Swedish fighter.

Matyushenko doesn't look that menacing while on his motor scooter. I would have imagined he drives a Harley instead.

One way to train is to use a sledge hammer to pound a giant tire.

Janitors who clean local aerospace companies voted Thursday to allow their union's negotiating committee to authorize a strike if talks over a new contract do not show enough progress.

The vote preceded a noontime rally Thursday in El Segundo by about 100 janitors and their supporters in front of facilities they clean, which are operated by Northrop Grumman Corp., Boeing Co. and Raytheon Co., along Imperial Highway west of Aviation Boulevard.

The janitors, whose previous contract expired July 22, are demanding that their individual health insurance benefits be expanded to include their families. They also want a wage increase beyond the current $8.30 an hour, which union members say is inadequate in the face of rising inflation.

About 500 aerospace janitors working in the South Bay are members of the Service Employees International Union Local 1877, which is negotiating with cleaning contractors that serve the aerospace firms.

"The majority of the janitorial industry in Los Angeles has full family health benefits," said David Huerta, the SEIU local's building services director and a member of the union's negotiating committee. "We're not looking to make up all that difference in one contract. But we want to make inroads toward getting to parity with the industry."

Huerta noted that janitors in Los Angeles' commercial real estate industry earn about $12 an hour.

Huerta did not say when a strike decision may occur, but added, "We do not intend to go beyond next week without a contract."

The negotiations began almost a month ago with no resolution. Janitors at Boeing facilities in Long Beach are included in the talks.

Leading up to the previous contract three years ago, janitors went on strike for three weeks and held much larger rallies sometimes reaching more than 400 demonstrators.

In an email to the Breeze, Northrop Grumman spokesman Jim Hart said: "Janitorial services are provided by an outside contractor, and as a matter of policy we don't get involved in the labor relations of our contractors and suppliers."

The contract talks are making progress, said Michael Mahdesian, chairman of Servicon Systems Inc., a Culver City janitorial service, and one of several contractors involved in the contract negotiations.

"We feel both sides are bargaining in earnest and we're working long hours," Mahdesian said.

Mahdesian said the current negotiations are going much smoother than three years ago.

"Three years ago, there were several sides that were being run by nonunion contractors," Mahdesian said. "And so the union I think had more at stake in trying to organize those sides and bring those companies to the bargaining table. And they did succeed in that."

Thursday's rally was punctuated by chants of "Si se puede," Spanish for "We can do it." One protester jabbed a mop into the air to the rhythm of the chants.

Jose Umana, 60, a janitor who has worked for 11 years at a Boeing facility in El Segundo, was among the protesters.

"We're just asking for the basics that families need," Umana said.

Starting at noon today at the corner of Imperial Highway and Aviation Boulevard, hundreds of janitors working at local aerospace companies will protest the lack of a new contract with the cleaning contractors that employ them.

You may remember that three years ago, the South Bay saw similar protests by aerospace janitors. The rallies are often raucous but peaceful.

Just as a note, the aerospace firms do not employee the janitors directly. They firms hire contractors that employ the janitors. But the janitors' strategy is to publicly embarrass the aerospace companies into forcing their contractors to pay the cleaning staff better wages and benefits.

The Service Employees International Union Local 1877 is organizing todays' protest.

Saturday's launch failure of a SpaceX rocket was caused by a timing disparity during the second-stage separation, the company's founder said Wednesday.

"It is a design, not a production or quality assurance error," company founder Elon Musk said during a media conference call.

Saturday was the third launch failure for the Hawthorne-based developer of low-cost experimental rockets, whose full corporate name is Space Exploration Technologies
According to Musk, the Falcon 1 rocket's first stage separated properly, but maintained its thrust, thereby colliding into the second stage about 1.5 seconds later.

"What it does mean is if we had a rocket on the launch pad tomorrow, we could make that timing change very quickly," Musk said.

Musk said the launch failure will not slow SpaceX's ambitious plans, which involve proving the technology to put rockets into orbit at a fraction of current cost, and creating a long-term business out of that technology.

As early as next month, SpaceX may have its next rocket on the launch pad at Kwajalein Atoll, part of the Marshall Islands in the Pacific.

SpaceX has been profitable and cash-flow positive for the past 18 months.

Northrop Grumman Corp. has leased the former Xerox Centre building in El Segundo, now called 101 Continental Boulevard after the site's address.

About 1,000 Northrop employees, many of them from the El Segundo-based Integrated Systems sector , will work at that new site.

No manufacturing will occur at 101 Continental Boulevard.

Three days after its third launch failure, Space Exploration Technologies, the Hawthorne-based developer of low-cost experimental rockets, announced a $20 million cash infusion.

Founders Fund, a major technology venture capital firm based in San Francisco, invested $20 million in the private rocket firm dubbed SpaceX.

On Saturday, SpaceX suffered its third launch failure after the second stage of the single-engine Falcon 1 did not separate.

SpaceX has hundreds of millions of dollars worth of launch orders from government and commercial customers, even though the company has never completed a successful launch.

On Sunday, in an email to investors, customers, fans and the media, SpaceX founder Elon Musk hinted at the Founders Fund investment.

"As a precautionary measure to guard against the possibility of flight 3 not reaching orbit, SpaceX recently accepted a significant investment," Musk wrote.

Musk also wrote that the launch failure will not affect future launches including the next rocket planned for later this year.

"The most important message I'd like to send right now is that SpaceX will not skip a beat in execution going forward," Musk wrote. "We have flight four of Falcon 1 almost ready for flight and flight five right behind that. I have also given the go ahead to begin fabrication of flight six."

SpaceX also is moving forward with launch preparations next year for its nine-engine Falcon 9 rocket, which recently underwent a successful test firing, Musk wrote.

It seems that failure can't stop SpaceX.

Three days after its third launch failure, SpaceX, the Hawthorne-based developer of low-cost experimental rockets, announced a $20 million cash infusion.

Founders Fund, a large technology venture capital firm based in San Francisco, invested $20 million into SpaceX.

When a satellite is released by a launched rocket, the compact spacecraft unfurls its solar panels and scoots into a geosynchronous orbit above the Earth.

However, the people controlling the satellite may be located in an El Segundo building 22,300 miles below.

On Monday, Boeing Co. opened to the media its new satellite Mission Control Center.
The $10 million, 20,500-square-foot center -- in a former Boeing shipping and receiving facility -- gives the company greater capacity and flexibility in operating and monitoring launched satellites.

The center is critical to Boeing's El Segundo satellite production business by controlling and testing satellites before the eventual handover of operation to the customer several weeks or months after launch.

"We've taken 40 years of Boeing satellite operations experiences and put them into this facility," Chris Cutroneo, Boeing Mission Control Center director, said.

The new facility, at Boeing's El Segundo campus, replaces an older center inside a Raytheon Co. building two miles away. That previous center was opened in 1996 when the Raytheon building was used by Hughes Aircraft Co., which sold off its aerospace operations to Boeing and Raytheon.

The new mission control center benefits from being closer to Boeing's engineers, who can respond to technical issues much quicker, said Craig Cooning, vice president and general manager of Boeing Space and Intelligence Systems, which encompasses the satellite business.

The new center also has the ability to support four U.S. government satellite launches simultaneously. The previous facility could handle only one government satellite deployment at a time.

"It's a recognition of our existing government business and wanting to support our customer as capably as possible," Cooning said.

Today's At Work profile is on Paul Kiramichyan, who examines people with an ultrasound.

Read the full piece.

(AP) SpaceX, the Hawthorne-based developer of low-cost experimental rockets, is investigating the cause of Saturday's failed flight of the Falcon 1.

SpaceX CEO Elon Musk, who co-founded PayPal, said in a news release that a problem occurred causing the rocket's two stages to remain together instead of separating after the launch from a Central Pacific atoll. However, he described the launch, powered by the company's new Merlin engine, as "picture perfect."

SpaceX is developing the single-engine Falcon 1, the nine-engine Falcon 9, the 27-engine Heavy Falcon and the Dragon cargo-crew capsule to fly to the international space station when the current space shuttle fleet retires in 2010.

Douglas Furniture of California, the El Segundo-based maker of sofas, reclining chairs and dining sets, filed for bankruptcy protection after sales plunged amid the teetering national economy and real estate bust.

The privately-help company filed for Chapter 11 bankruptcy protection Monday in the U.S. Bankruptcy Court in Los Angeles.

The company may disappear altogether if it can not find a buyer that will continue the business, according to the court filing.

The firm's bankruptcy legal counsel, Levene, Neale, Bender, Rankin & Brill in Los Angeles, did not return a call seeking comment.

The furniture market has suffered from a severe drop in home sales. That has led to closure of some major furniture stores such as Levitz, which sold Douglas Furniture products.

It dawned on me recently that the worldwide ranks of Avon Ladies and Tupperware party hostesses likely represent a menagerie of zany people.

Read the full Business Casual column.