Housing Slump Causes Gilbert-Based RE Broker to Shut Doors

The owners of one of the Valley’s largest real estate brokers, Gilbert-based Re/Max 2000 decided over the Christmas weekend 2007 to close its 13 offices, lay off 20 salaried employees and jettison 350 real estate agents. Unfortunately, some of the bills that weren’t paid were the agents’ commission. At a meeting on the Wednesday after the closing is was disclosed that over $110,000 was owed to the agents.

The owners, Robert and Mary Kline wouldn’t respond to questions about the commissions. Earlier in the week they did tell the Arizona Republic that December 2007 was particularly rough. The company’s cash flow was not covering the rent and overhead. They felt it was time to stop the bleeding and close the company. Arizona State University Realty Studies said that the third quarter was down nearly 30% from the previous year and that was also a down year. The owners haven’t filed for bankruptcy but their creditors could force into an involuntary bankruptcy. In September 2007, Phoenix-based real estate broker, Century 21 Metro Alliance, filed for bankruptcy. It’s another indicator that the real estate market continues to be in the dumps.

Re/Max 2000’s most likely problem was that it over expanded during the real estate boom. The broker had acquired a number of offices which was probably financed. Once the market slumped, Re/Max 2000 probably was upside down on its payments. Compounding the problem is a tight mortgage market which has further delayed a turnaround in the housing market.

On Friday the Arizona State Department of Real Estate has began an audit of the records of Re/Max 2000. The Auditors want to ensure that the company was not using the money in the property-management escrow trust accounts to pay for things not allowed under state law.

John Laub is the Founder of the CEO-CFO Group.

1. “Shuttered Re/Max May Have Future.” Andrew Johnson. The Arizona Republic. December 25, 2007.

2. “Agents: Closed Re/Max Owes Them $111,000.” Luci Scott. The Arizona Republic.December 27, 2007.

3. “State to Audit Re/Max Records.” Luci Scott. The Arizona Republic. December. 28, 2007.

4. Real Estate News Access. Lillian Wong. http://blog.lillianwong.com/

Phoenix-Based FreshBrew Named Top Company at Capital Conference

The annual Invest Southwest Capital Conference formerly known as the Arizona Venture Capital Conference and the Arizona Angel Investment Conference announced the top company of conference and winner of the $200,000 prize. The conference’s goal is to link startup companies with investors. This year’s winner was FreshBrew Inc., a Phoenix-based company. The company is developing software that makes it easier to make web-based digital media presentations without coding.

FreshBrew was one of 14 firms that was selected to present at the conference. Other companies included Scottsdale-based Career Tours, Tuscon-based LiPoint which develops nasally delivered drug products and Novo Technologies, a Tempe-based firm that allows bars to digitally monitor their liquor use.

FreshBrew was started in 2003 by Don Pierson who is best known as one of the founders of the e-learning company, Learning-Edge. The company also received a boost when Pat Sulivan, founder of Sales Logix and ACT!, agreed to be the CEO.

FreshBrew reported that it had recently signed a term sheet for equity financing with the Menlo Park based venture capital firm, Sierra Ventures. The amount was not disclosed. The conference did help connect venture capital to new companies.

John Laub is the Founder of the CEO-CFP Group.

1. “Tech Startup Gets Lift at Conference: Software Maker Receives a $200,000 Investment.” Andrew Johnson. The Arizona Republic. December 15, 2007.

2. www.freshbrew.com

3. www.investsouthwest.org

Owners of the Cardinals Football Team to Build $1.2 Billion Office Park

The Bidwill family which also owns the Arizona Cardinals Football team has announced that it is developing a $1.2 billion office, retail and residential district, north of the University of Phoenix Cardinal Stadium on Bethany Home Road and the 101 Loop. The project is called cdb101 which stands for "central business district" will take 10 years to build out. The project will have 2.6 million square feet in the 77-acre project which will include a 36-story tower, retail shops, restaurants, 900 residential units and 3 stand-alone hotels. Tim Bidwill, 35, will be running the project. The Bidwills had commissioned Elliot Pollack to estimate the economic impact of the project. Pollack forecasted that the development could mean 11,600 jobs and ultimately $2.1 billion in sales for the valley. The project will be reviewed by the Glendale Planning Commission and the Glendale City Commission in January 2008.

John Laub is the President of the CEO-CFO Group.

1. “Bidwill Project Could Generate $2.6 Bil a Year Report Says.” Scott Wong. The Arizona Republic. December 15, 2007.

Startup Scottsdale Company Receives High Praises

Scottsdale-based WildCharge Inc. received high praises in November 2007 from Time magazine, Wall Street Journal and the Consumer Electronics Association for its charge pad that allows consumers to charge multiple phones at once on its pad. The product, the WildCharger, took six years to develop. It uses a small adaptor that is connected to the back of the phone. The phone is then laid on the pad for charging. Up to three phones can be charged at one time. Currently, only Motorola’s RAZR line of phones is set up for the charge pad; however, the company is expanding to Apple and Blackberry phones. Izhar Matzkvich PhD, the president of the company, said that they received a patent in February 2007. The company was founded in 2005 and has 10 employees. In 2007 the company had sales of $100,000 and forecasted sales of $4 million in 2008.

John Laub is the Founder of the CEO-CFO Group.

1. “Innovator’s Charge Pad Wins Fans.” Jane Larson. The Arizona Republic. December 14, 2007.

2. www.wildcharge.com

Another Phelps Dodge Official Leaves

Tim Snider was the former President and Chief Operating Officer of Phelps Dodge and Freeport-McMoRan. He had worked at Phelps Dodge for 37 years. The company announced that it was reorganizing its management team and Snider will resign as of April 1, 2008. Phelps Dodge was acquired in March 2007 by Freeport-McMoRan Copper and Gold. It is fairly typical that the executives of the acquired company leave shortly after they have been purchased. Ramiro Peru, the former CFO of Phelps Dodge had left at the time of the merger. He subsequently went to Swift and is now being replaced by another Phelps Dodge Employee, Stan Rideout as Swift’s CFO.

John Laub is the Founder of the CEO-CFO Group.

1. “Former Phelps Dodge Executive to Step Down.” The Arizona Republic. December 14, 2007.

Swift Hires another Phelps Dodge Executive as CFO

Swift Corporation has hired Stan Rideout as its CFO. Rideout had worked for 25 years for Phelps Dodge, most recently serving as its treasurer and director of investor relations. Phelps Dodge was acquired in March 2007 by Freeport-McMoRan Copper and Gold. Rideout will replace Ramiro “Ramey” Peru who was previously the CFO of Phelps Dodge before taking the Swift CFO position in on May 4, 2007. Peru said that he was retiring for personal and family reasons. In other news, Peru was recently appointed as a director of the Tuscon-based UniSource Energy Corporation in December. Swift Transportation is privately owned by Jerry Moyes who took the company private in May 2007.

John Laub is the Founder of the CEO-CFO Group.

1. “Swift Corp. Again Hires a Former Phelps Official.” The Arizona Republic. December 15, 2007.

2. “UniSource Energy Adds 2 to Board of Directors.” The Arizona Republic. December 15, 2007.

Phoenix-Based ON Semiconductor Buys Company for $915 Million

Phoenix-based ON Semiconductor (ON) bought Amis Holdings, Inc. in an all stock deal for $915 million. The deal was announced on December 14, 2007. Amis Holdings is the parent of Ami Semiconductors based in Pocatello, Idaho with 2,500 employees. ON’s stock fell upon the announcement that 104 million shares would be issued to make the purchase. The stockholders apparently believe that the transaction will dilute their interest. Keith Jackson, CEO of ON told the Arizona Republic that it strengthens its position in the automotive industry and adds customers in the medical and aerospace fields.

Analysts seem to think that it’s a good move. Will Straus, principal analyst for Forward Concepts based in Tempe said,“ON has been known as a maker of single transistor chips and this moves them into integrated circuits with multiple transistors.”

ON was a division of Motorola until it was sold it to an investor group in 1999. The company has 11,000 employees with 1,000 in Phoenix and $1.5 billion in sales. This latest purchase will add another $500 million in sales. ON also made another purchase in November 2007. ON bought the voltage regulation and heat monitoring chip business from Analog Devices for $185 million in cash..

John Laub is the Founder of the CEO-CFO Group.

1. “ON Semi Acquires Idaho Competitor.” Max Jarman. The Arizona Republic. December 14, 2007.