Business Beat http://www.journalnow.net/index.php/businessbeat/ Richard Craver's business blog en rcraver@wsjournal.com Copyright 2011 2011-03-14T13:37:01+00:00 Exec comp scrutiny part of territory for health care systems http://www.journalnow.net/index.php/businessbeat/entry/exec-comp-scrutiny-part-of-territory-for-health-care-systems/ Executive compensation for not-for-profits has struck what appears to be a pretty raw nerve among many rank-and-file employees at Forsyth Medical Center. The scrutiny of Novant Health Inc. and likely to face Wake Forest University Baptist Medical Center when it releases its exec-comp numbers, represents just more of the territory that comes with being among the largest employers in Forsyth County and surrounding areas. On March 1, the Journal ran its first story on executive compensation at Novant, which listed the top-five officials as receiving a combined $3.3 million in salaries and $2.63 million in bonuses for 2010. Novant owns and operates Forsyth, Medical Park Hospital and Kernersville Medical Center, which is set to open this month. At about 9,000 workers, Novant is the second-largest employer in Forsyth County and one of the largest in the Triad. A follow-up story on March 9 reported that Novant paid two separate bonuses, including a one-time “thank you” offering, to employees at Forsyth and systemwide. The amounts ranged from $120 to $300 for the discretionary bonus and from $60 to $120 for the thank-you bonus. Not all employees received a bonus, and taxes were taken out of the amounts. Since the first story ran, I have received 17 phone calls, 10 e-mails, four letters, and there have been 67 postings on JournalNow.com as I posted this blog. The vast majority have been critical of the bonuses. In contrast, there have been one e-mail, and no phone calls or letters combined in reaction to the recent executive-compensation articles for Reynolds American Inc., BB&T Corp., VF Corp., Media General Inc. - the owner of the Winston-Salem Journal - and Hanesbrands Inc. There have been five postings - two each criticizing Hanesbrands and Reynolds and one criticizing BB&T —at JournalNow. Perhaps that’s just a sign that the community and employees have become accustomed, perhaps resigned, to the high-dollar salaries for high-level corporate executives. A few postings have defended Novant’s executive salaries and bonuses based on: the system’s size; pay of executives in peer health-care systems; the sacrifices made by the executives in hours worked and stress absorbed; and the system’s charitable contributions to the community. The responses to those postings say that the sacrifices and stress of the rank-and-file workers are being taken for granted, if not ignored. Every direct contact to me about Novant has been anonymous because employees or their family members say they fear for their jobs. The root of the discontent is what employees say is just the latest - and perhaps most painful — example of a disconnect between upper management and the rank and file. Employees tell me they have no real voice and little confidence that anonymous comments critical of operations rise to the top executives, yet alone are addressed. They feel Novant has lost its way by being so cost-cutting and do-more-with-less driven, which they say affects employee morale. Of course, most companies have adopted a similar strategy out of economic necessity, some being pleased with the savings it is yielding. That satisfaction likely is contributing to the slow pace of job growth. Jim Tobalski, a Novant spokesman, has said that Novant has an anonymous feedback program for employees to express opinions or ask questions, “but it is not a public program.” Novant has reacted to the criticism by saying that every organization gets complaints about executive compensation, and that certainly is true of many companies. Yet some employees feel stuck in their frustration and are struggling to get past it. For example, they said they don’t believe they can answer internal employee-satisfaction/commitment surveys honestly because they know part of their bonus, as well as executive bonuses, is dependent on giving an excellent rating. Others are frustrated with the lack of raises, yet top executives got raises and bonuses even as Novant officials cited financial challenges due to the economy and lower demand for their inpatient services for cutting at least 48 jobs last year. David Meyer, a health-care analyst with Keystone Planning LLC, said that increasing executive compensation at not-for-profit health-care systems just makes the sector “consistent with other industries that have high executive compensation that generally seems immune to company performance or economic conditions.” “I would say most people in the U.S. have some level of concern about the growing imbalance (in all industries) between executive compensation and the low-end staff wages.” Given that Novant remains committed to building community hospitals—opening Wednesday in Kernersville, just starting in Mint Hill and still on the drawing boards in Clemmons—employees say they will continue to question how the system can afford $100 million hospitals and increased executive compensation, and yet be content with offering bonus that might buy two tankfuls of gas these days. Executive compensation for not-for-profits has struck what appears to be a pretty raw nerve among many rank-and-file employees at Forsyth Medical Center.
The scrutiny of Novant Health Inc. and likely to face Wake Forest University Baptist Medical Center when it releases its exec-comp numbers, represents just more of the territory that comes with being among the largest employers in Forsyth County and surrounding areas.
On March 1, the Journal ran its first story on executive compensation at Novant, which listed the top-five officials as receiving a combined $3.3 million in salaries and $2.63 million in bonuses for 2010.
Novant owns and operates Forsyth, Medical Park Hospital and Kernersville Medical Center, which is set to open this month. At about 9,000 workers, Novant is the second-largest employer in Forsyth County and one of the largest in the Triad.
A follow-up story on March 9 reported that Novant paid two separate bonuses, including a one-time “thank you” offering, to employees at Forsyth and systemwide. The amounts ranged from $120 to $300 for the discretionary bonus and from $60 to $120 for the thank-you bonus. Not all employees received a bonus, and taxes were taken out of the amounts.
Since the first story ran, I have received 17 phone calls, 10 e-mails, four letters, and there have been 67 postings on JournalNow.com as I posted this blog. The vast majority have been critical of the bonuses.
In contrast, there have been one e-mail, and no phone calls or letters combined in reaction to the recent executive-compensation articles for Reynolds American Inc., BB&T Corp., VF Corp., Media General Inc. - the owner of the Winston-Salem Journal - and Hanesbrands Inc.
There have been five postings - two each criticizing Hanesbrands and Reynolds and one criticizing BB&T —at JournalNow.
Perhaps that’s just a sign that the community and employees have become accustomed, perhaps resigned, to the high-dollar salaries for high-level corporate executives.
A few postings have defended Novant’s executive salaries and bonuses based on: the system’s size; pay of executives in peer health-care systems; the sacrifices made by the executives in hours worked and stress absorbed; and the system’s charitable contributions to the community.
The responses to those postings say that the sacrifices and stress of the rank-and-file workers are being taken for granted, if not ignored.
Every direct contact to me about Novant has been anonymous because employees or their family members say they fear for their jobs.
The root of the discontent is what employees say is just the latest - and perhaps most painful — example of a disconnect between upper management and the rank and file.
Employees tell me they have no real voice and little confidence that anonymous comments critical of operations rise to the top executives, yet alone are addressed. They feel Novant has lost its way by being so cost-cutting and do-more-with-less driven, which they say affects employee morale.
Of course, most companies have adopted a similar strategy out of economic necessity, some being pleased with the savings it is yielding. That satisfaction likely is contributing to the slow pace of job growth.
Jim Tobalski, a Novant spokesman, has said that Novant has an anonymous feedback program for employees to express opinions or ask questions, “but it is not a public program.” Novant has reacted to the criticism by saying that every organization gets complaints about executive compensation, and that certainly is true of many companies.
Yet some employees feel stuck in their frustration and are struggling to get past it.
For example, they said they don’t believe they can answer internal employee-satisfaction/commitment surveys honestly because they know part of their bonus, as well as executive bonuses, is dependent on giving an excellent rating.
Others are frustrated with the lack of raises, yet top executives got raises and bonuses even as Novant officials cited financial challenges due to the economy and lower demand for their inpatient services for cutting at least 48 jobs last year.
David Meyer, a health-care analyst with Keystone Planning LLC, said that increasing executive compensation at not-for-profit health-care systems just makes the sector “consistent with other industries that have high executive compensation that generally seems immune to company performance or economic conditions.”
“I would say most people in the U.S. have some level of concern about the growing imbalance (in all industries) between executive compensation and the low-end staff wages.”
Given that Novant remains committed to building community hospitals—opening Wednesday in Kernersville, just starting in Mint Hill and still on the drawing boards in Clemmons—employees say they will continue to question how the system can afford $100 million hospitals and increased executive compensation, and yet be content with offering bonus that might buy two tankfuls of gas these days.

]]> 2011-03-14T13:37:01+00:00 Sellers to Primo Water counting big on company’s share price taking off http://www.journalnow.net/index.php/businessbeat/entry/sellers-to-primo-water-counting-big-on-companys-share-price-taking-off/ Two sellers of technology and distribution channels are betting bid that Primo Water Corp.’s bold growth strategy – and the entrepreneurial touch of Billy Prim – will pay off in the short and long term with its stock. Primo announced Wednesday that it was paying a combined $8.6 million in cash and offering $9.9 million worth of stock to Omnifrio Beverage Co. LLC., which makes dispensing machines for cold carbonated beverages, and Culligan of Canada Ltd. for entrance into the Canadian 18-liter purified bottled- water exchange market. Prim is the founder, chief executive and president of Primo. He also was the founder and top executive of Blue Rhino Corp., a propane-exchange company that he sold in April 2004. Omnifrio received 501,080 shares of Primo, worth $6.1 million, while Culligan of Canada received 307,217, worth $3.8 million. In November, Primo completed its largest purchase to date—a $74 million cash and $31 million stock deal for Culligan Stores Solutions, another unit of Culligan International. Culligan got 2.58 million shares of Primo. So altogether, Primo has issued nearly 3.4 million of its shares in its three deals since going public in November. Not a bad vote of confidence for a company that hasn’t had a profitable year since being established in 2004. Primo’s share price has had its fair share of up and downs since being launched at $12 on Nov. 5. It surged the first day to $15 before settling to $12.95. It has ebbed more than flowed since. Following the after-market announcement of the deals Wednesday, the share price dropped to a low of $10.17 in midday trading Thursday. However, the share price surged again Friday, reaching a mid-day high of $14.20 before closing at $14.04, up 19.2 percent or $2.26. Trading volume was up fivefold from its daily average of 74,350. The increase likely was spurred by investors having time to digest Primo’s sales and revenue projections for 2011. It expects sales to range between $116 million and $123 million, which include revenue from the Culligan Canada and Omnifrio deals. It expects to add 5,700 to 6,700 retail sites during 2011. It projects diluted earnings of between 6 cents and 15 cents a share for the full year, including charges, and 15 cents to 24 cents, excluding charges. “We’re only beginning to reach our potential,” Prim said. “We feel we will achieve strong, profitable growth for many years to come.” Given that Prim sold Blue Rhino – also an unprofitable company when it went public—to Ferrellgas Partners LP for $343 million in April 2004, the short-term boost to Primo’s share price may be just the first fruits that Omnifrio and Culligan Canada gain from selling out. Two sellers of technology and distribution channels are betting bid that Primo Water Corp.’s bold growth strategy – and the entrepreneurial touch of Billy Prim – will pay off in the short and long term with its stock.
Primo announced Wednesday that it was paying a combined $8.6 million in cash and offering $9.9 million worth of stock to Omnifrio Beverage Co. LLC., which makes dispensing machines for cold carbonated beverages, and Culligan of Canada Ltd. for entrance into the Canadian 18-liter purified bottled- water exchange market.
Prim is the founder, chief executive and president of Primo. He also was the founder and top executive of Blue Rhino Corp., a propane-exchange company that he sold in April 2004.
Omnifrio received 501,080 shares of Primo, worth $6.1 million, while Culligan of Canada received 307,217, worth $3.8 million.
In November, Primo completed its largest purchase to date—a $74 million cash and $31 million stock deal for Culligan Stores Solutions, another unit of Culligan International. Culligan got 2.58 million shares of Primo.
So altogether, Primo has issued nearly 3.4 million of its shares in its three deals since going public in November. Not a bad vote of confidence for a company that hasn’t had a profitable year since being established in 2004.
Primo’s share price has had its fair share of up and downs since being launched at $12 on Nov. 5.
It surged the first day to $15 before settling to $12.95. It has ebbed more than flowed since.
Following the after-market announcement of the deals Wednesday, the share price dropped to a low of $10.17 in midday trading Thursday.
However, the share price surged again Friday, reaching a mid-day high of $14.20 before closing at $14.04, up 19.2 percent or $2.26. Trading volume was up fivefold from its daily average of 74,350.
The increase likely was spurred by investors having time to digest Primo’s sales and revenue projections for 2011.
It expects sales to range between $116 million and $123 million, which include revenue from the Culligan Canada and Omnifrio deals. It expects to add 5,700 to 6,700 retail sites during 2011.
It projects diluted earnings of between 6 cents and 15 cents a share for the full year, including charges, and 15 cents to 24 cents, excluding charges.
“We’re only beginning to reach our potential,” Prim said. “We feel we will achieve strong, profitable growth for many years to come.”
Given that Prim sold Blue Rhino – also an unprofitable company when it went public—to Ferrellgas Partners LP for $343 million in April 2004, the short-term boost to Primo’s share price may be just the first fruits that Omnifrio and Culligan Canada gain from selling out.

]]> 2011-03-11T21:53:41+00:00 RF Micro turns 20, a survivor and an innovator http://www.journalnow.net/index.php/businessbeat/entry/rf-micro-turns-20-a-survivor-and-an-innovator/ RF Micro Devices turned 20 years old Sunday, as much a survivor of the accelerating pace of technological changes as an innovator of radio and cellular-phone components. It went public in June 1997. The Greensboro company, with about 1,460 Triad employees, is planning commemorative events at company sites throughout the year. RF Micro made its mark initially as a pioneer in the commercialization of RF components using gallium-arsenide compound semiconductor technology. Within three years of going public, RF Micro became a Wall Street darling, riding along the cellphone wave with its chief customer, Nokia. Its share price reached a high of $184.50 a share in March 2000. The stock was split that year. But as RF Micro’s technological advantage was erased by its rivals, its share price plummeted sharply. hitting a low of 70 cents in December 2009. RF Micro had three significant job cuts since May 2008 totaling about 475 local positions. Recently, RF Micro is reaping the benefits of its commitment to product diversification, particularly with 3G and 4G smartphones, but also including CATV infrastructure, smart energy, WiFi, and aerospace and defense. It is pursuing projects in concentrated photovoltaics and RF components for automotive and point-to-point radio applications, and power and switching components for defense and power electronics markets. Recently, Investors have warmed to RF Micro’s potential, establishing a 52-week share price high of $8.48.on Feb. 15. RF Micro also has been a Triad headliner in terms of economic-incentives, It is eligible for about a combined $22.7 million from six state and city incentive packages and five county packages. It already has been paid about $5.6 million in local incentives. In return, the company has spent more than $500 million on local capital investments, including two fabrication plants. Bob Bruggeworth, the president and chief executive of RF Micro, said that the company is “just beginning to see the many ways in which our products and technologies can positively impact the experience of individuals, companies and markets. “We are very optimistic about our opportunities for revenue growth and strong operating results.” The Triad should be optimistic as well about RF Micro’s ability to continue to evolve with technology in future years. RF Micro Devices turned 20 years old Sunday, as much a survivor of the accelerating pace of technological changes as an innovator of radio and cellular-phone components. It went public in June 1997.
The Greensboro company, with about 1,460 Triad employees, is planning commemorative events at company sites throughout the year.
RF Micro made its mark initially as a pioneer in the commercialization of RF components using gallium-arsenide compound semiconductor technology.
Within three years of going public, RF Micro became a Wall Street darling, riding along the cellphone wave with its chief customer, Nokia. Its share price reached a high of $184.50 a share in March 2000. The stock was split that year.
But as RF Micro’s technological advantage was erased by its rivals, its share price plummeted sharply. hitting a low of 70 cents in December 2009.
RF Micro had three significant job cuts since May 2008 totaling about 475 local positions.
Recently, RF Micro is reaping the benefits of its commitment to product diversification, particularly with 3G and 4G smartphones, but also including CATV infrastructure, smart energy, WiFi, and aerospace and defense. It is pursuing projects in concentrated photovoltaics and RF components for automotive and point-to-point radio applications, and power and switching components for defense and power electronics markets.
Recently, Investors have warmed to RF Micro’s potential, establishing a 52-week share price high of $8.48.on Feb. 15.
RF Micro also has been a Triad headliner in terms of economic-incentives, It is eligible for about a combined $22.7 million from six state and city incentive packages and five county packages. It already has been paid about $5.6 million in local incentives.
In return, the company has spent more than $500 million on local capital investments, including two fabrication plants.
Bob Bruggeworth, the president and chief executive of RF Micro, said that the company is “just beginning to see the many ways in which our products and technologies can positively impact the experience of individuals, companies and markets.
“We are very optimistic about our opportunities for revenue growth and strong operating results.”
The Triad should be optimistic as well about RF Micro’s ability to continue to evolve with technology in future years.

]]> 2011-02-28T15:06:56+00:00 Is North Carolina ready to raise the tax on tobacco products again http://www.journalnow.net/index.php/businessbeat/entry/is-north-carolina-ready-to-raise-the-tax-on-tobacco-products-again/ A poll, conducted by Public Opinion Strategies, states that 62 percent of North Carolinians support increasing the state’s excise tax by $1 to $1.45 on each cigarette pack. A similar increase would go in place for other tobacco products. The cigarette tax in North Carolina has been raised twice since 2005, going from 5 cents to 45 cents, but remains one of the lowest in the country. The poll consisted of 500 likely voters was taken Feb. 8-10 and has a margin of error of 4.4 percent. The support for the tax increase came mostly from a projected $338.4 million in new revenue, as well as having a roll in reduce youth smoking. On Feb. 15, the State Employees Association of North Carolina also voiced its support for raising the tobacco tax, saying it would create $454 million in new revenue. The pollsters said that an increase in the tobacco tax was the only tax supported by the majority of the poll participants. Tax increases rejected by the participants included the sales tax and income tax. Participants - not surprisingly - also turned down reducing funding for state health-care programs, Medicaid, state prisons and education. The pollsters summed up their findings by saying that “North Carolinians are ready and willing to support an increase in the state tobacco tax to fund public health programs and to address the state budget deficit. Support for the tobacco tax increase crosses not just party lines, but also regional, gender and ideological lines. However, a survey of Triad legislators found there is little support for raising the tobacco tax during the current session, and Gov. Bev Perdue did not include a tax increase in her budget. Rep. Larry Brown, R-Forsyth, summed up his feelings about any tobacco-tax increase this way: “I do not believe it will change at all in this session. Taxes are taxes and I cannot support any tax. All we have done is tax and tax for years, and it it time to get our budget in line now.” What do you think? Is another tobacco-tax increase warranted, or is tobacco just the easiest tax target to go after - some say a warranted “sin tax” - since 80 percent of North Carolinians don’t smoke. A poll, conducted by Public Opinion Strategies, states that 62 percent of North Carolinians support increasing the state’s excise tax by $1 to $1.45 on each cigarette pack. A similar increase would go in place for other tobacco products.

The cigarette tax in North Carolina has been raised twice since 2005, going from 5 cents to 45 cents, but remains one of the lowest in the country.

The poll consisted of 500 likely voters was taken Feb. 8-10 and has a margin of error of 4.4 percent.

The support for the tax increase came mostly from a projected $338.4 million in new revenue, as well as having a roll in reduce youth smoking.

On Feb. 15, the State Employees Association of North Carolina also voiced its support for raising the tobacco tax, saying it would create $454 million in new revenue.

The pollsters said that an increase in the tobacco tax was the only tax supported by the majority of the poll participants. Tax increases rejected by the participants included the sales tax and income tax. Participants - not surprisingly - also turned down reducing funding for state health-care programs, Medicaid, state prisons and education.

The pollsters summed up their findings by saying that “North Carolinians are ready and willing to support an increase in the state tobacco tax to fund public health programs and to address the state budget deficit. Support for the tobacco tax increase crosses not just party lines, but also regional, gender and ideological lines.

However, a survey of Triad legislators found there is little support for raising the tobacco tax during the current session, and Gov. Bev Perdue did not include a tax increase in her budget.

Rep. Larry Brown, R-Forsyth, summed up his feelings about any tobacco-tax increase this way: “I do not believe it will change at all in this session. Taxes are taxes and I cannot support any tax. All we have done is tax and tax for years, and it it time to get our budget in line now.”

What do you think? Is another tobacco-tax increase warranted, or is tobacco just the easiest tax target to go after - some say a warranted “sin tax” - since 80 percent of North Carolinians don’t smoke.

]]> 2011-02-21T22:41:04+00:00 Tengion gains another voice of support in fight for survival http://www.journalnow.net/index.php/businessbeat/entry/tengion-gains-another-voice-of-support-in-fight-for-survival/ The roller coaster ride of Tengion Inc. took a public day off Monday with the Presidents Day holiday. But it didn’t keep new voices, in the form of the online analytical group Seeking Alpha, from expressing their projections for the promising and beleaguered biotech company, which has its largest operations and 45 employees in Winston-Salem. Seeking Alpha is trying to make a reputation for providing stock market opinion and analysis through contributors - a la The Motley Fool - for more than 1,500 public companies. Ian Bezek recapped the turbulent last two weeks for Tengion in solid detail - share price soared from below $3 to $6.25 on Feb. 15 because of rumors that Tengion had found a buyer, then a public disclosure that such a deal collapsed because of the share price surge led to the share-price gain being wiped out. He then chimed in on Tengion’s future, landing on the side of it surviving a pending funding crisis in April. “With the share price again well below the IPO price, it is hard to imagine the company successfully pulling off a financing in such a limited time,” Bezek said. “However, not all hope is lost. Three of Tengion’s largest institutional investors have purchased more shares recently, and Johnson & Johnson maintains its sizable holding of Tengion shares. “It’s unlikely with the amount of backing Tengion has, and the amount of scientific research that has gone into the company’s pipeline, that Tengion’s financiers will let the company go quietly into bankruptcy.” He said that it is likely that the buyer will return now that the share price is below $3 again. “With institutional backing and the fairly reputable (for example, note this recent CNN article) Dr. Anthony Atala leading the company’s research, it seems likely that some bargain shopper will pick the company up on the cheap rather than letting Tengion go into bankruptcy,” he said. The roller coaster ride of Tengion Inc. took a public day off Monday with the Presidents Day holiday.

But it didn’t keep new voices, in the form of the online analytical group Seeking Alpha, from expressing their projections for the promising and beleaguered biotech company, which has its largest operations and 45 employees in Winston-Salem.

Seeking Alpha is trying to make a reputation for providing stock market opinion and analysis through contributors - a la The Motley Fool - for more than 1,500 public companies.

Ian Bezek recapped the turbulent last two weeks for Tengion in solid detail - share price soared from below $3 to $6.25 on Feb. 15 because of rumors that Tengion had found a buyer, then a public disclosure that such a deal collapsed because of the share price surge led to the share-price gain being wiped out.

He then chimed in on Tengion’s future, landing on the side of it surviving a pending funding crisis in April.

“With the share price again well below the IPO price, it is hard to imagine the company successfully pulling off a financing in such a limited time,” Bezek said.

“However, not all hope is lost. Three of Tengion’s largest institutional investors have purchased more shares recently, and Johnson & Johnson maintains its sizable holding of Tengion shares.
“It’s unlikely with the amount of backing Tengion has, and the amount of scientific research that has gone into the company’s pipeline, that Tengion’s financiers will let the company go quietly into bankruptcy.”

He said that it is likely that the buyer will return now that the share price is below $3 again.

“With institutional backing and the fairly reputable (for example, note this recent CNN article) Dr. Anthony Atala leading the company’s research, it seems likely that some bargain shopper will pick the company up on the cheap rather than letting Tengion go into bankruptcy,” he said.

]]> 2011-02-21T21:56:35+00:00 Hatteras Financial draws “Foolish” attention http://www.journalnow.net/index.php/businessbeat/entry/hatteras-financial-draws-foolish-attention/ Hatteras Financial Corp.‘s dividend policy has gained the Winston-Salem mortgage real-estate investment trust some national exposure. On Friday, The Motley Fool ranked Hatteras No. 7 among the 25 highest-yielding stocks for its dividend payout. Hatteras was listed with a 13.8 percent dividend yield. No. 1 on the list - PDL BioPharma at 19.9 percent. By paying out 90 percent of its taxable income, among other requirements, a REIT avoids paying corporate income tax, allowing it to pay a high quarterly dividend. Hatteras has paid a dividend ranging from $1 to $1.20 a share since going public at a time when most banks have cut their dividend significantly to preserve capital. Dan Dzombak, an analyst with The Motley Fool, said that “investors have taken to heart Jeremy Siegel’s studies, which show that higher-yielding stocks tend to offer greater returns over time than low- or no-yield stocks.” He did, however, offer a caveat. “In more cases than not, however, an astronomical yield is a bad sign for a stock,” Dzombak said. “Since dividend yields and stock prices move in opposite directions, a high yield usually means that investors have begun to worry about the business and driven down its stock price. “Dividends are not guaranteed; you need to make sure that a business is generating enough cash to pay its dividend, or your investment could be disastrous.” On Feb. !5, Hatteras reported it had net income of $45.6 million in the fourth quarter, up $2.4 million from a year ago.  For the full year, the company had net income of $169.5 million, down from $174.4 million in fiscal 2009. Hatteras Financial Corp.‘s dividend policy has gained the Winston-Salem mortgage real-estate investment trust some national exposure.

On Friday, The Motley Fool ranked Hatteras No. 7 among the 25 highest-yielding stocks for its dividend payout.

Hatteras was listed with a 13.8 percent dividend yield.

No. 1 on the list - PDL BioPharma at 19.9 percent.

By paying out 90 percent of its taxable income, among other requirements, a REIT avoids paying corporate income tax, allowing it to pay a high quarterly dividend. Hatteras has paid a dividend ranging from $1 to $1.20 a share since going public at a time when most banks have cut their dividend significantly to preserve capital.

Dan Dzombak, an analyst with The Motley Fool, said that “investors have taken to heart Jeremy Siegel’s studies, which show that higher-yielding stocks tend to offer greater returns over time than low- or no-yield stocks.”

He did, however, offer a caveat.

“In more cases than not, however, an astronomical yield is a bad sign for a stock,” Dzombak said. “Since dividend yields and stock prices move in opposite directions, a high yield usually means that investors have begun to worry about the business and driven down its stock price.

“Dividends are not guaranteed; you need to make sure that a business is generating enough cash to pay its dividend, or your investment could be disastrous.”

On Feb. !5, Hatteras reported it had net income of $45.6 million in the fourth quarter, up $2.4 million from a year ago.  For the full year, the company had net income of $169.5 million, down from $174.4 million in fiscal 2009.

]]> 2011-02-21T14:27:12+00:00 Snail’s pace of Rodgers case frustrating employees http://www.journalnow.net/index.php/businessbeat/entry/snails-pace-of-rodgers-case-frustrating-employees/ The legal case against William Rodgers Sr., the former top executive of defunct Pace Airlines Inc., continues to move as a snail’s pace, puzzling and frustrating former employees and followers of the debacle that cost 300 local employees their jobs in September 2009. On Tuesday, Noelle Talley, a spokeswoman with the state Attorney General’s Office, said that all she could say is the office is continuing its investigation. The non-news comes 17 months after Rodgers was arrested by the criminal-investigations division of the N.C. Insurance Department on Sept. 22, 2009, and charged with one count of willful failure to pay group health-insurance premiums—a Class H felony. It also comes two months after it appeared the case was moving forward when Rodgers agreed in December to waive his probable-cause hearing, which allowed the case to proceed from Forsyth District Court to Forsyth Superior Court. The case had been handled by the Forsyth DA for about a year until being transferred to the N.C. Attorney General’s office last September. A preliminary hearing in District Court has been continued six times. Rodgers took over Pace on May 29, 2009, based on a promissory note to pay $9 million for stock in Pace Airlines LLC and Pace Airlines II LLC and take over $6 million in liabilities. Less than four months later, Pace was out of business, and 423 employees were out of work. Pace was forced into involuntary Chapter 7 bankruptcy in January. When Rodgers waived his probable-case hearing, a hearing in Superior Court could have been held as early as late January, Walter Holton, an attorney representing Rodgers, said in December. “The AG’s office must feel they are ready to move for them to ask Mr. Rodgers to waive the probable-cause hearing,” Holton said. “This was the first time they had asked him to do that.” But Wednesday, Holton said that he did not know when the next hearing was being planned. “We’re kind of in a holding pattern,” Holton said. “Sometimes cases get in this sort of posture, and this is not their only case.” It’s not that the attorney general’s office lacks an emphasis on white-collar fraud and crime. Pretty much every week I get at least one e-mail from the office about legal actions taken against a company or individuals regarding securities fraud, violating the do-not-call registry, false advertising cases and the like. Yet, not a beep about Rodgers unless I ask. For sure, the case is complicated and the bankruptcy case is proceeding at a similar slow and deliberate pace. Pace also failed to pay employees for up to their last six weeks of work—expecting them not to quit for fear of being ineligible for unemployment benefits. The N.C. Labor Department has filed a claim with the U.S. Bankruptcy Court of more than $1.5 million in back wages for employees. However, there has not been an update for months from either the U.S. and N.C. labor departments about their investigations. Rodgers has said that many of Pace’s woes were caused by prior management while it was owned by the estate of Bob Brooks, the chairman of Hooters Air. Questions remain about whether the estate may be legally liable for the demise of Pace given how Rodgers acquired the company. Holton said it is possible that financial information from the bankruptcy case could be admitted as evidence in the criminal case. Meanwhile, Rodgers has been free on bail, including being allowed to fly to his residence in Liberty, Mo. Every once in a while I get an e-mail from a Liberty resident who has been keeping up with the Pace case. They typically are stunned that Rodgers is able to travel as freely as he does. All of which is discouraging many former Pace employees who are trying to hold onto a sliver of hope they may get some of their missed wages. They are among the top creditors in the bankruptcy case, but it’s not looking promising that there will be enough money raised from what’s left of Pace to give them much compensation, if any. “It all seems to be pushed under the rug and forgotten,’ said Jeff Catlin, a former Pace employee who has been struggling to keep his home out of foreclosure since the collpase of the company. His comments are common among former employees. “It’s just hard to believe this man is still free and walking. Justice seems to be only for the criminal.” The legal case against William Rodgers Sr., the former top executive of defunct Pace Airlines Inc., continues to move as a snail’s pace, puzzling and frustrating former employees and followers of the debacle that cost 300 local employees their jobs in September 2009.

On Tuesday, Noelle Talley, a spokeswoman with the state Attorney General’s Office, said that all she could say is the office is continuing its investigation.

The non-news comes 17 months after Rodgers was arrested by the criminal-investigations division of the N.C. Insurance Department on Sept. 22, 2009, and charged with one count of willful failure to pay group health-insurance premiums—a Class H felony.

It also comes two months after it appeared the case was moving forward when Rodgers agreed in December to waive his probable-cause hearing, which allowed the case to proceed from Forsyth District Court to Forsyth Superior Court. The case had been handled by the Forsyth DA for about a year until being transferred to the N.C. Attorney General’s office last September.

A preliminary hearing in District Court has been continued six times.

Rodgers took over Pace on May 29, 2009, based on a promissory note to pay $9 million for stock in Pace Airlines LLC and Pace Airlines II LLC and take over $6 million in liabilities.

Less than four months later, Pace was out of business, and 423 employees were out of work. Pace was forced into involuntary Chapter 7 bankruptcy in January.

When Rodgers waived his probable-case hearing, a hearing in Superior Court could have been held as early as late January, Walter Holton, an attorney representing Rodgers, said in December.
“The AG’s office must feel they are ready to move for them to ask Mr. Rodgers to waive the probable-cause hearing,” Holton said. “This was the first time they had asked him to do that.”

But Wednesday, Holton said that he did not know when the next hearing was being planned.

“We’re kind of in a holding pattern,” Holton said. “Sometimes cases get in this sort of posture, and this is not their only case.”

It’s not that the attorney general’s office lacks an emphasis on white-collar fraud and crime.

Pretty much every week I get at least one e-mail from the office about legal actions taken against a company or individuals regarding securities fraud, violating the do-not-call registry, false advertising cases and the like.

Yet, not a beep about Rodgers unless I ask.

For sure, the case is complicated and the bankruptcy case is proceeding at a similar slow and deliberate pace.

Pace also failed to pay employees for up to their last six weeks of work—expecting them not to quit for fear of being ineligible for unemployment benefits. The N.C. Labor Department has filed a claim with the U.S. Bankruptcy Court of more than $1.5 million in back wages for employees.

However, there has not been an update for months from either the U.S. and N.C. labor departments about their investigations.

Rodgers has said that many of Pace’s woes were caused by prior management while it was owned by the estate of Bob Brooks, the chairman of Hooters Air. Questions remain about whether the estate may be legally liable for the demise of Pace given how Rodgers acquired the company.

Holton said it is possible that financial information from the bankruptcy case could be admitted as evidence in the criminal case.

Meanwhile, Rodgers has been free on bail, including being allowed to fly to his residence in Liberty, Mo. Every once in a while I get an e-mail from a Liberty resident who has been keeping up with the Pace case. They typically are stunned that Rodgers is able to travel as freely as he does.

All of which is discouraging many former Pace employees who are trying to hold onto a sliver of hope they may get some of their missed wages.

They are among the top creditors in the bankruptcy case, but it’s not looking promising that there will be enough money raised from what’s left of Pace to give them much compensation, if any.
“It all seems to be pushed under the rug and forgotten,’ said Jeff Catlin, a former Pace employee who has been struggling to keep his home out of foreclosure since the collpase of the company. His comments are common among former employees.

“It’s just hard to believe this man is still free and walking. Justice seems to be only for the criminal.”

]]> 2011-02-16T17:55:59+00:00 Forsyth Medical honors PR manager for 15 years of delivering its message http://www.journalnow.net/index.php/businessbeat/entry/forsyth-medi/ Forsyth Medical Center held a “retirement” party Wednesday for Freda Springs, who had served as its public and media-relations manager for 15 years. She left the hospital after the end of January. Freda is battling several forms of cancer, according to her colleagues. Following her treatments, it wasn’t surprising Freda returned to work, determined not to let the cancer keep her from a job she’s enjoyed despite the often long hours. But her health eventually required her to leave her post. “Colleagues are inspired by Freda’s courage as she tackles the cancer,” said Mike Horn, who provides public relations assistance to Forsyth as a consultant. “Freda’s thoughts regarding her battle are foremost letting people know that how you face it is as important, if not important, that what the cancer has the capacity to do to you.” It has become a hiring pattern of health-care systems to hire journalists, particularly beat reporters, as PR handlers because they know the demands facing reporters on deadline. Who better to anticipate the questions that reporters may ask, as well as suggest potential story ideas that might resonate? The pay’s typically better as well. Freda served as a news intern at the Winston-Salem Journal in the summers of 1985 and 1986, then served as a full-time reporter for nearly three years before making the switch to Forsyth Medical. In all my dealings with Freda, she has been professional, understanding of my requirements, as forthcoming as she could be in answering my questions, and always willing to chase down pertinent information she didn’t know to make my deadlines. She also made the time to share the adventures of our daughters, who are about the same age and each of us learning how to cope with having one in college – how to step in as a parent and when to let them make adult decisions and learn from the consequences. My family’s prayers are with Freda and her family. Forsyth Medical Center held a “retirement” party Wednesday for Freda Springs, who had served as its public and media-relations manager for 15 years. She left the hospital after the end of January.
Freda is battling several forms of cancer, according to her colleagues. Following her treatments, it wasn’t surprising Freda returned to work, determined not to let the cancer keep her from a job she’s enjoyed despite the often long hours.

But her health eventually required her to leave her post.

“Colleagues are inspired by Freda’s courage as she tackles the cancer,” said Mike Horn, who provides public relations assistance to Forsyth as a consultant.

“Freda’s thoughts regarding her battle are foremost letting people know that how you face it is as important, if not important, that what the cancer has the capacity to do to you.”

It has become a hiring pattern of health-care systems to hire journalists, particularly beat reporters, as PR handlers because they know the demands facing reporters on deadline.

Who better to anticipate the questions that reporters may ask, as well as suggest potential story ideas that might resonate? The pay’s typically better as well.

Freda served as a news intern at the Winston-Salem Journal in the summers of 1985 and 1986, then served as a full-time reporter for nearly three years before making the switch to Forsyth Medical.

In all my dealings with Freda, she has been professional, understanding of my requirements, as forthcoming as she could be in answering my questions, and always willing to chase down pertinent information she didn’t know to make my deadlines.

She also made the time to share the adventures of our daughters, who are about the same age and each of us learning how to cope with having one in college – how to step in as a parent and when to let them make adult decisions and learn from the consequences.

My family’s prayers are with Freda and her family.

]]> 2011-02-11T19:15:24+00:00 Joel Coliseum may learn NCAA options later this year http://www.journalnow.net/index.php/businessbeat/entry/joel-coliseum-may-learn-ncaa-options-later-this-year/ Here’s a follow-up on Thursday’s article that offered a dim outlook for Joel Coliseum getting the opening rounds of the men’s NCAA Tournament anytime soon. The NCAA typically bids out sites in three-year increments, with the coliseum locked out through 2013. The coliseum has had first- and second-round games four times since 1993, most recently in 2007. Wake Forest University is the member organization in charge of placing bids for the coliseum Cameron Schuh, an associate director for public and media relations for the NCAA, said Friday that the organization is planning to begin the bid process later this year for the preliminary rounds of the 2014 and 2015 tournaments. “There are no specific dates for the process as of yet,” Schuh said. The opening rounds of the tournament have become more popular, “which means there are more communities bidding on them,” Richard Geiger, the president of Visit Winston-Salem, said in Thursday’s article. Bucky Dame, the director of public assembly facilities for the city of Winston-Salem, said that the NCAA doesn’t have concerns about the 14,400 seating capacity at the coliseum. “But unless we get more first-class hotel and restaurant properties within a 15- to 25-miles radius, future bids will be problematic for us,” Dame said. Dame said he believes the NCAA will bring the tournament back to Joel Coliseum because of how well it has supported the event. “I’d like to think we could get it once every seven or eight years,” he said. Here’s a follow-up on Thursday’s article that offered a dim outlook for Joel Coliseum getting the opening rounds of the men’s NCAA Tournament anytime soon.

The NCAA typically bids out sites in three-year increments, with the coliseum locked out through 2013.

The coliseum has had first- and second-round games four times since 1993, most recently in 2007. Wake Forest University is the member organization in charge of placing bids for the coliseum
Cameron Schuh, an associate director for public and media relations for the NCAA, said Friday that the organization is planning to begin the bid process later this year for the preliminary rounds of the 2014 and 2015 tournaments.

“There are no specific dates for the process as of yet,” Schuh said.

The opening rounds of the tournament have become more popular, “which means there are more communities bidding on them,” Richard Geiger, the president of Visit Winston-Salem, said in Thursday’s article.

Bucky Dame, the director of public assembly facilities for the city of Winston-Salem, said that the NCAA doesn’t have concerns about the 14,400 seating capacity at the coliseum.

“But unless we get more first-class hotel and restaurant properties within a 15- to 25-miles radius, future bids will be problematic for us,” Dame said.

Dame said he believes the NCAA will bring the tournament back to Joel Coliseum because of how well it has supported the event.

“I’d like to think we could get it once every seven or eight years,” he said.

]]> 2011-02-11T15:49:12+00:00 Krispy Kreme ranked as “powerful” stock buy http://www.journalnow.net/index.php/businessbeat/entry/krispy-kreme-ranked-as-powerful-stock-buy/ What do Caterpillar Inc. — one of the stock market’s top performers — and Krispy Kreme Doughnuts Inc. — a former Wall Street darling that’s trying to escape out of a seven-year malaise — have in common? Besides both will have a major presence in Winston-Salem soon. They are listed as “powerful” stock buys by Zacks.com for “each of the four main styles of investing: aggressive growth, growth and income, momentum and value.” While Caterpillar, hitting a 52-week high of $103.54 Friday, appears about as much an investing no-brainer as there is, getting selected by a respected analytical group is a real shot-in-the-arm for Krispy Kreme. Zacks made its recommendation upon the expectation that Krispy Kreme will more than quadruple its earnings by the end of fiscal 2012. “Fortunately, the growth rates are priced at a discount, and this looks like a great entry point.” Krispy Kreme’s share price closed Friday at $7.23, up 7 cents. Its 52-week high was $8.14 on Dec. 31, while its 52-week low was $2.95 on Feb. 12, 2010. Krispy Kreme appears likely to report in March its first profitable year since 2004. After posting a $2,.4 million profit in the third quarter of its fiscal year 2011, which ended Oct. 31, the talk about the company has turned to how big of a profit will it have. It’s another promising sign that Jim Morgan, the top executive of Krispy Kreme, has righted its ship with international sales providing the wind to its sails and sales. What do Caterpillar Inc. — one of the stock market’s top performers — and Krispy Kreme Doughnuts Inc. — a former Wall Street darling that’s trying to escape out of a seven-year malaise — have in common?

Besides both will have a major presence in Winston-Salem soon.

They are listed as “powerful” stock buys by Zacks.com for “each of the four main styles of investing: aggressive growth, growth and income, momentum and value.”

While Caterpillar, hitting a 52-week high of $103.54 Friday, appears about as much an investing no-brainer as there is, getting selected by a respected analytical group is a real shot-in-the-arm for Krispy Kreme.

Zacks made its recommendation upon the expectation that Krispy Kreme will more than quadruple its earnings by the end of fiscal 2012.

“Fortunately, the growth rates are priced at a discount, and this looks like a great entry point.”

Krispy Kreme’s share price closed Friday at $7.23, up 7 cents.

Its 52-week high was $8.14 on Dec. 31, while its 52-week low was $2.95 on Feb. 12, 2010.

Krispy Kreme appears likely to report in March its first profitable year since 2004. After posting a $2,.4 million profit in the third quarter of its fiscal year 2011, which ended Oct. 31, the talk about the company has turned to how big of a profit will it have.

It’s another promising sign that Jim Morgan, the top executive of Krispy Kreme, has righted its ship with international sales providing the wind to its sails and sales.

]]> 2011-02-11T15:38:54+00:00