Reprographics 101

Morningstar Research (“MSR”) just moved Staples (SPLS) to a 5 star (MS’ highest) rating.

I’m a Morningstar subscriber, and I just finished reading the “updated” report that MSR’s analyst just put up on MSR about Staples.

Yesterday, after Staples released its Q1 earnings results and forward outlook the day before, Staples’ stock dropped like rock. And, articles I read on-line “said that” Staples stock dropped because of its lowered forward outlook.

Well, this morning, after Staples’ stock dropped like a rock yesterday, MSR issued an updated report on Staples, as I already mentioned.

In the updated report on Staples, MSR’s analyst said this:

“We expect Staples to add 30-40 new stores per year, but most of these will be smaller stores solely dedicated to copy and print services. These stores currently represent just 20 of the company’s nearly 1,900 North American Retail stores, and we believe Staples has an opportunity to take share from local copy and print stores and large chains alike.”

Staples is my favorite company in the “office supplies” market space, and based on Staples business model, I think Staples will continue to grow and be profitable well into the future. Staples execution of the “office supplies” business has been amazing.

But, I don’t agree with MSR’s analyst’s opinion that Staples will be very successful at taking “market share” away from local copy/print store and large chains, at least not in sufficient quantities/amounts to make Staples’ copy/print business highly successful. I don’t think that MSR’s analysts have a deep understanding of the copy/print business, nor do they have great insight into the severe “digitalization” headwind that all copy/print businesses (and reprographics businesses) are dealing with and will continue to have to deal with. Demand for “copies and prints” is on the decline. Talk to just about any copy/print center franchisee or independent copy/print center owner; it is highly likely that you will hear the same (sad) story from all. “Customers are finding ways to print less and less.” “Copy/print equipment manufacturers continue to release copy/print equipment at less expensive prices.” “More and more customers are copying and printing less and less.”

While Staples may, because of visibility and the number of its locations, be able to take “some” market share away from franchise copy/print centers, from independent copy/print centers, from Fedex Office (Kinko’s) and from reprographers, “overall demand” for copy/print services from copy/print centers has been declining, not growing, and this trend is expected to get worse, not better. The only saving grace, if there has been one, for copy/print centers and reprographers, has been growth in “color” copying/printing demand, but this growth has mostly been the result of, and at the expense of, copy/print centers seriously lowering, over the past year or so, prices for “color” copy/print services. (At my local UPS Store, 8 ½ x 11 color copies/prints are now priced at $.25 each.) It won’t be long before “color” copy print prices get down to around the $.12-$.15 range. (Some copy/print centers are already there for larger volume copy/print jobs.) As I pointed out in a recent previous post, the first Memjet-enabled very-fast (60 cpm/ppm) small-format, color-capable printer was just released, albeit in China. Hold your breath, but not too long, for an inexpensive Memjet-enbled color printer will likely show up in the U.S. in the not too distant future, and, when it does, it will have an impact – and adverse impact – on the prices copy/print centers charge for color copies/prints. It will also reduce demand for short-run color printing services offered by copy/print centers and reprographers, as consumers and businesses increasingly “insource” what they’ve been outsourcing.

By the way, Morningstar Research provided coverage on ARC from February 2006 up until September 2009. In September 2009, MSR stopped following and reporting on (“dropped coverage” of) ARC. At that time, MSR said this, “We are no longer providing equity research on American Reprographics Company ARP. We provide broad coverage of more than 1,800 companies across 91 industry groups and adjust our coverage as necessary based on client demand and investor interest.” Perhaps MSR decided to stop coverage of ARC because MSR did not feel it knew enough about ARC’s business to provide meaningful insights about ARC’s opportunities? That would be my guess.

In a report on ARC on May 14, 2008, titled “Despite a slowdown in construction, we think American Reprographics is going to ride out this economic downturn,” MSR said this, “Given its clout, we think ARC can set a standard for charging for digital services. Its industry expertise and long-standing customer relationships should also provide a potent deterrent to new entrants. We would gladly buy ARC shares at an appropriate discount to our fair value estimate.”

And, in that same report, MSR said this, “We are maintaining our fair value estimate at $30 per share. We think internal sales growth will be in high single digits during the next five years as ARC continues to grow slightly ahead of the construction sector. We expect operating margins to reach the high teens as a result of positive leverage in general and administrative operations. However, some margin pressure could occur as the industry migrates to the digital medium, and printing volume declines. Despite this negative trend, returns on invested capital are projected to average 21%, exceeding ARC’s 10.8% average cost of capital.”

To its credit, MSR also said this (under “Risk”), “Technological changes leading to a decline in print volume and an increase in free downloads are a major risk factor. Intense local competition, the cyclical nature of the construction industry, and the possibility of new entrants from the copy and printing industry are also areas of concern.”

In a previous report, dated January 29, 2008, titled “We think American Reprographics can weather an economic downturn,” MSR said this, “Internal growth will generally follow the construction industry, which is expected to expand at 8%-9% annually.”

Later on, in a report dated May 2009, titled “American Reprographics is not immune to a slowdown in the construction industry”, MSR said this, “We are lowering our fair value estimate to $13 per share from $30 and raising our uncertainty rating to high after revisiting our growth and profitability assumptions in light of the current economic slowdown. In our model, we project revenue will decrease 4% annually over the next four years, mainly driven by a 20% revenue decline in 2009 as a result of the difficult conditions in the construction industry.”

Again, to MSR’s credit, MSR did mention these (which are basically risk factors) in its very first report on ARC in February 2006:

Bears Say
•	A trend toward free document downloading could undermine ARC’s operating model unless the firm manages to monetize its digital services.
•	A slowdown in the nonresidential construction sector would negatively impact ARC’s earnings.
•	Competition is likely to intensify, as more companies enter the market and existing players consolidate.
•	ARC heavily relies on California’s economy, where it derives 40% of its revenues.

I enjoyed reading MSR’s coverage (reports) on ARC, and I was sad that MSR stopped its coverage of ARC. I think that MSR’s analysts (the ones who researched and wrote reports on ARC) had excellent “finance” knowledge, but, just to the opposite, were slow to catch on to the headwinds ARC (and all reprographers) were facing. This is one of the reasons – and the main reason – why I don’t think any financial analysts (at MSR or elsewhere) really, truly understand the headwinds that copy/print center businesses (and reprographers) are facing, going forward.

Callprint, based in the UK, is one of the partners in “LINK DSG”; LINK was mentioned previously on this blog.

CallPrint Dubai

Callprint is pleased to announce the recent opening of their office in Dubai, UAE. Based in Concord Tower, Dubai Media City (DMC), the office is strategically located at the crossroads of the Middle East, Africa and South Asia.

DMC is a successful reflection of the vision of His Highness Sheikh Mohammed Bin Rashid Al Maktoum, UAE Vice President, Prime Minister and Ruler of Dubai to transform Dubai into a knowledge-based society and economy.

This hub has been created to support the expanding client demand in the Middle East region, offering a bespoke service to meet our clients requirements in line with the UK’s high level of service.

For more information and a list of services please contact:

Rebecca Wigley
+971 (0)50 458 9272
rwigley@callprint.ae

or

Paul D’Rozario
+44 (0)7590 351 184
pdrozario@callprint.co.uk

6th Floor, Concord Tower, Media City, Dubai, UAE, PO Box 126732

Oh, a new term, “ePrinter”. What the heck is an ePrinter?

From a Press Release issued by HP:

HP has expanded its portfolio of web-connected HP Designjet ePrinters that make large-format printing easy and offer instant file access to professionals in the architecture, engineering and construction industries.

The new HP Designjet T1300 ePrinter primarily serves large work groups, while the HP Designjet T790 ePrinter is tailored for small, mobile technical design teams. Both devices simplify the large format printing and content-sharing process so design professionals can focus on building and executing their ideas. With HP’s web-connected ePrinters, users can:

• plug in a USB flash drive or connect a laptop direct to the device to print with driverless printing

• print from and scan direct to the web without a computer and preview projects through a color touchscreen interface, now with direct access to HP ePrint & Share, a free cloud-based solution

• print remotely from a computer or smartphone to any web-connected HP Designjet with HP ePrint & Share

• design without interruption and protect their investment with automatic software updates through the web-connected server

“Last year, HP announced the first web-enabled, integrated multifunction printer priced below $9,000, which introduced an improved way to collaborate and share large-format content,” said Santiago Morera, vice president and general manager, Designjet Large Format Solutions, HP. “Today, HP is dramatically simplifying the large format printing experience by enabling our customers to print and upload their personal content to and from the web in an instant and access their files wherever the job takes them.”

HP also announced a free firmware upgrade for all existing HP Designjet T2300 eMFP customers, expected to be available May 20. The update provides immediate access to HP ePrint & Share from the printer’s touchscreen, making the HP Designjet T2300 eMFP the industry’s first web-connected large-format printer with print, scan and copy functionality.

“Whenever you have a new machine, it gives you a new way of creating,” said Benedetta Tagliabue, an HP Designjet T2300 customer and co-founder of architectural firm, EMBT, based in Barcelona, Spain. “I’m thrilled about the possibility of having an immediate transfer from this office to another office and being able to really have direct communication. Distances are not distances anymore.

“It would be impossible to work the way we do without the HP ePrint & Share system we now have in the office,” added Benedetta. “It would be especially impossible to communicate so well with all the many places where we are now producing projects.”

The Next Generation of HP Designjet Printing Solutions

The first large-format ePrinter designed for work groups, the HP Designjet T1300 ePrinter helps teams to meet tight deadlines and printing peaks by offering two media rolls and smart switching as well as the ability to print up to two A1-sized prints per minute. Features such as an Embedded Web Server, which offers user access control, and Secure Disk Erase meet advanced security needs.

Offering the simplicity of a plug-and-play device with the collaboration features of HP ePrinters, the HP Designjet T790 ePrinter series enables small teams to produce high-quality computer-aided design drawings while collaborating with colleagues in a connected work environment. Available in 61 and 111.8cm models (24- or 44-inch, respectively), the device features an easily accessible top-loading roll and eight gigabytes of memory, allowing users to print complex files with ease.

Simplifying the Printing and Sharing of Large-Format Files

HP ePrint & Share is a printing and sharing tool that allows designers to easily locate and access their large-format plans on the cloud, and to adjust page layouts, preview print pages and create print-ready files from a single screen. Users also can upload files with a single click while printing is in process to quickly and easily share designs with remote project teams.

HP ePrint & Share is available as a download at no additional cost for HP Designjet customers. It is also accessible from the colour touchscreen of the web-connected HP Designjet T2300 eMFP and HP Designjet T1300 and T790 ePrinters.

With the HP ePrint & Share plug-in for AutoCAD, users can access HP ePrint & Share direct from Autodesk’s industry-leading AutoCAD design and documentation application and create print-ready files with just one click. Additionally, a license of AutoCAD Raster Design software, included with the purchase of the HP Designjet T2300 eMFP, enables the full scanning of sketches, printed plans or blueprints, which can then be digitised and vectorised for further design work.

“Both Autodesk and HP are dedicated to providing our customers with solutions that enable them to do what they do best – design and create amazing things,” said Amy Bunszel, vice president, AutoCAD products, Autodesk. “The HP ePrint & Share plug-in makes printing from AutoCAD easier than ever, saving customers valuable time and enhancing productivity.”

Pricing and availability

HP Designjet T1300 ePrinter, €6,300, available June 1


HP Designjet T1300 PostScript ePrinter, €8,060, available June 1


HP Designjet T790 24-inch ePrinter, €2,350, available June 1


HP Designjet T790 24-inch PostScript ePrinter, €3,000, available June 1


HP Designjet T790 44-inch ePrinter, €3,650, available June 1


HP Designjet T790 44-inch PostScript ePrinter €4,650 June 1


HP Designjet T2300 eMFP, €9,200, available Now


HP Designjet T2300 PostScript eMFP, €11,000, available Now


HP Designjet T2300 eMFP web-connectivity firmware upgrade, No additional cost, available May 20


HP ePrint & Share, No additional cost, available Now

A portion of a Press Release ….(sounds like an advertisement)

WEST CALDWELL, N.J., May 18, 2011 /PRNewswire/ — Ricoh Americas Corporation, a leading provider of digital office equipment and advanced document management solutions and services, today announced its recognition by The Managed Print Services Association (MPSA) as the winner of the 2011 MPSA Leadership Awards for excellence in Managed Print Services as a Direct/Manufacturer. MPSA announced Ricoh as the winner of the award on Wednesday, May 4th at the 2011 Global MPS Conference in Orlando, FL, followed by a Leadership Awards Reception at the Peabody Hotel.

MPSA recognized Ricoh for its Managed Document Services (MDS) approach, which is an extension and evolution of MPS. Ricoh’s MDS solutions address the three fundamental functions relating to the entire document management ecosystem of input, throughput, and output. Ricoh’s MDS aims to streamline core business processes by focusing on process, people, and technology and innovation to create a state of continuous improvement. Ricoh helps organizations better manage and leverage information for improved business outcomes through a flexible, proactive approach.

“At Ricoh, we take a unique, customer-centric, step-by-step approach to document management that goes beyond MPS. Our MDS solution provides sustainable, long-term savings that impact our customers’ bottom line,” said Mark Boelhouwer, Vice President, Strategic Marketing, Ricoh, U.S. “We are proud to receive this recognition as a symbol of our innovative approach and the value we bring to our customers.”

“Ricoh has been an outstanding supporter of the Managed Print Services Association and of the MPS industry. Its nomination really stood out against tough competition as an example of leadership, innovation and talent. We are very pleased that Ricoh received this well-deserved recognition,” said MPSA President, Joe Barganier.

Yesterday, I visited the “procurement” web-site of NKU (Northern Kentucky University) to see how that public-sector school is handling “documents” for new construction and renovation projects for its facilities.

I printed the “page(s)” that I eventually wound up on. If you click-on the link I’ve provided below, you will see that NKU has an arrangement with ARC to host its documents for procurements related to NKU projects.

Everything is nicely organized. ARC is managing the documents, and visitors to the page I visited can “link to” ARC PlanWell to access the documents, to view the documents and to order “prints” of the documents.

This is, I think, a perfect way for reprographers to introduce this concept (of a reprographer with a planroom service, offering document management, printing and distribution services) to public-sector educational institutions and to government-sector procurement agencies.

Here’s the link to the document I mentioned above:

https://docs.google.com/viewer?a=v&pid=explorer&chrome=true&srcid=0B81al4kFAU9JNjU1NGY5NmItMjJlMS00NjE5LTk1YzUtNzJjYTg0MjM1OTQ4&hl=en&authkey=COKE4OQH

…..about NKU

Northern Kentucky University (NKU) is a public, co-educational university located in Highland Heights, Kentucky, seven miles (11 km) southeast of Cincinnati. NKU is primarily an undergraduate, liberal arts institution, but it also features graduate programs. Total enrollment at the university currently exceeds 15,000 students, with over 13,000 undergraduate students and over 2,000 graduate students.[4] NKU is the third largest university in Greater Cincinnati and the youngest of Kentucky‘s eight state universities, although it is not the last to join the state system, as the University of Louisville did not become a state university until 1970. NKU is also among the top 600 institutions named to Forbes Magazine‘s 2010 & 2011 “America’s Best Colleges” ranking.

An “opinion article” – about the healthcare insurance industry – authored by Barbara Shelly of the Kansas City Star, appeared yesterday in the St Pete Times newspaper. I’ve posted a copy of that article in my Google Docs document library so that you can read the full article, if you want to. And, I think you should. Here’s a (click-on) link to the article that Ms. Shelly authored:

https://docs.google.com/viewer?a=v&pid=explorer&chrome=true&srcid=0B81al4kFAU9JM2UyMWVhMjYtMzU2MS00M2QzLThkZjctYzYyZTVlMGFhMmRj&hl=en&authkey=CL2G_rkL

She begins her ‘opinion article’ with these three paragraphs:

“Who would you figure to be America’s highest-paid chief executive officer?

Someone from the tech industry, maybe. Or bioscience. Or petroleum. And to be sure, some sweet compensation packages and bonuses are to be had in those fields.

But according to Forbes, America’s highest-paid chief executive officer hails from the industry that President Barack Obama and congressional Democrats are roundly accused of trying to destroy — health insurance.

Meet Stephen J. Hemsley, CEO of UnitedHealth Group. He is 58 years old with a one-year compensation package of almost $102 million, Forbes reports. And he has $111 million in company stock.”

If you’ve spent any time, the past couple of years, following the financial results of healthcare insurance companies, you’d know that all have been growing and prospering “right through” the recession, and in spite of the recession. Why is that? Well, it’s “kinda” simple, and I “kinda” explained this in a “rant”-post I did, not too long ago, on my blog. The main reason is the healthcare insurance industry operates in an ‘oligopoly’ environment. There really isn’t any competition to speak of. There aren’t that many healthcare insurance companies. They all raise their premium rates each year, pretty much inline with one another, and there really isn’t any way to stop them from doing that. Our present system of healthcare insurance in the U.S. is, to put in very bluntly, a “license to rape.” In addition to this “license to rape”, healthcare insurance companies have benefitted, during the recession, from being able to charge higher insurance premiums to people who were terminated from companies. (And, we all know that job losses have created what’s still a very high unemployment level.) If a person has insurance coverage in a company “group” and if that “group” is of fair size and, later on, that person (for whatever reason) leaves the company and is no longer included in any “group”, then that person’s healthcare insurance premium is going to rise, and rise by a significant amount. And, the higher insurance premium that person pays will be for coverage that has worse benefits than the “group” coverage-plan had. So, he/she will pay a lot more, for a lot less. And, keep in mind we are talking about the “same person.” The only difference is that … that “same” person is no longer covered in a ‘group’ plan, but, rather, covered by an ‘individual’ plan. It’s not going to cost the healthcare insurance company any more for claims) for that person than it cost the healthcare insurance company before (for claims) for that person. The healthcare insurance company benefits, substantially, because it is able to move that person’s premiums from “column one” pricing (group coverage) to “column two” pricing (individual coverage.) And, “column two” pricing is extraordinarily high. As I said, the system is a license to rape (and pillage.)

One doesn’t have to be a rocket scientist to figure this out. Anyone who currently had coverage under a “group” plan, but is now covered by an “individual” plan, knows exactly what I’m talking about. I’m certainly aware of what’s going on. My monthly premium for healthcare insurance (individual coverage, not through any group) is now about 3x more than what it was when I was covered by a “group” plan. If I joined a group plan next month, my monthly premium would drop substantially. And, I’d still be the same person!

For these reasons, and for other reasons I’m not going to bother going into more detail about in this post, I find it very difficult, if not completely impossible, to figure out why any congressman or senator would be stupid enough to think that “privatizing” healthcare insurance completely would be a good idea for the citizenry of the U.S. In my opinion, any (and I mean ANY) congressman or senator who thinks that completely privatizing healthcare insurance is a good idea is not just stupid, but a complete idiot. Which means that we have a lot of stupid people – idiots – in the U.S. House of Representatives and the U.S. Senate. That’s disconcerting, to say the very least.

So, anyway, now that I’ve “ranted-on” about that, I’d like to make a suggestion to reprographers who are looking for ways to reduce the “net cost” of their healthcare insurance expense, which was the ‘title’ of this post. Find healthy people who are currently covered by “individual” healthcare insurance coverage and add them to your “group” coverage plan, and charge them an “administrative” fee for allowing them to “ride” your group coverage plan. If under your “group” plan the person’s monthly premium is going to be $1,000 and if that person is now paying $2,000 per month for coverage under an “individual” plan, charge them an administrative fee of $500 per month. The “person” would save $500 each month, and you, the reprographer, would profit by $500 each month. That profit would reduce your company’s “net expense” for healthcare insurance premiums. I don’t think that healthcare insurance companies would like this, but I say, “F— ‘em”. What goes around, comes around.

If you don’t take advantage of this business opportunity, someone will. Perhaps someone who’s very entrepreneurial will found a company that’s nothing more than a healthcare “group.” And, I’ve got a suggestion for the name of that “company” – “PFCBIHcIWGTOGFBHcIC, LLC”

A $100 cash prize will be paid to the first person who correctly guesses what those letters stand for. (Don’t’ waste your time, you will never figure out the correct answer.)

I’ve previously posted a couple of articles to share information contained in the Fed’s “Beige Book” reports. These reports are not issued every month. I think the next report will be published the second week of June.

Below, I’ve copied into this posted the “overall nationwide summary” and just four of the individual “district” reports. If you want to see what the Beige Book reports say about your district, then go to the Fed Reserve Board’s web-site and scroll through the complete report.

SUMMARY OF COMMENTARY ON CURRENT ECONOMIC CONDITIONS BY FEDERAL RESERVE DISTRICTS

APRIL 2011

FROM “SUMMARY FOR ALL DISTRICTS (NATIONWIDE):

Real Estate and Construction

Real estate markets for single family homes for the most part either were little changed from low levels or continued to weaken across all Districts. Residential construction was described by Chicago as subdued and the spring building season is likely to be slower than previously anticipated. Market activity was still declining in the St. Louis and Minneapolis Districts, while activity in the New York, Cleveland, Kansas City, Dallas, and San Francisco Districts remained weak. Atlanta characterized the market as mixed, with Florida brokers providing most of the signs of improvement. Both Philadelphia and Atlanta noted that brokers expected the market to improve, and builders in the Cleveland District were more optimistic than in the past several months. A few Districts found pockets of improvement. For example, Philadelphia reported that agents were seeing a pickup in inquiries, showings, and traffic, although there was little increase in sales or construction. Boston noted higher activity in just the last few weeks, due in part to improved weather, and Richmond said that the market for lower- priced homes improved. The multifamily markets strengthened in several Districts, including Chicago, Dallas, Minneapolis, and San Francisco, both in terms of leasing and construction activity.

Commercial real estate activity remained weak across all Districts, although seven reported slight improvements since their last report. Market activity was still slow in the St. Louis and Philadelphia Districts and remained at low levels in the Boston, Atlanta, and San Francisco Districts. Markets in the San Francisco District were characterized as subdued, but leasing activity increased among technology firms. Most other Districts noted improvements, albeit slight, in activity. For example, Chicago and Kansas City cited moderate gains in construction, with Chicago highlighting gains in healthcare and automotive industries. Improvements in the Cleveland District were also driven by healthcare projects and, to a lesser extent, by manufacturing and energy. Office and industrial leasing improved in the Richmond District, although retail was little changed.

FIRST DISTRICT – BOSTON

Commercial Real Estate

New England’s commercial real estate market was roughly flat in recent weeks. In Boston, office leasing activity is stable, but not sufficient to generate significant positive absorption. Asking rents for office space are either flat or up marginally in greater Boston. However, contacts note that some existing tenants are successfully bargaining for rent reductions, bringing their rents down to current market rates from higher levels agreed upon at the market’s peak. In Rhode Island, political uncertainty over budget deficits is said to have stalled business plans, resulting in light leasing activity, but pending deals for downtown Providence continue to engender optimism regarding office absorption in the coming months. In Portland, the commercial market was mostly quiet, with the exception of two significant dealsI for call-center space. A Portland contact perceives continued downward pressure on office rents despite modest positive absorption. Outlooks across the region call for slow but positive office absorption for the remainder of 2011, conditional on ongoing employment growth in line with recent trends. The multifamily sector remains strong in southern New England, with new construction under way in several areas of greater Boston and in the planning stages in two Rhode Island locations. Lenders continue to bid aggressively for apartment projects in greater Boston, as rental rate increases persist. While some Boston contacts worry about potential overbuilding in this sector, at least one is confident that a glut is unlikely in light of permitting hurdles and a scarcity of vacant land in desirable locations. Respondents mention no significant new construction activity aside from the multifamily sector.

Residential Real Estate

States throughout the region experienced year-over-year declines in single-family home sales in February with the exception of New Hampshire where sales increased modestly. The median price of homes also slipped slightly in the region except for Rhode Island where the median price rose. Meanwhile, sales and median prices of condominiums were lower than a year ago except in the Greater Boston area where the median condo price edged up. Contacts cite inclement weather as a factor contributing to February sales declines; sellers as well as buyers were discouraged by the weather, with home listings decreasing as well. Contacts also note that sales in the first half of 2010 were boosted by the homebuyer tax credit, making year-over-year comparisons difficult to interpret. Contacts report a recent increase in activity attributable to more favorable weather as well as the typical seasonal rise at the onset of spring. Some respondents say the distressed share of property sales has declined, but others lacked sufficient figures to assess the distressed property share accurately. Although inventory levels declined in much of the region during February, the number of homes on the market remains relatively high across New England, particularly in New Hampshire. Notwithstanding their reports of recent increases in activity, contacts emphasize that activity levels in the region’s housing markets remain far from what they would characterize as ―normal‖ and they anticipate a lengthy recovery.

SIXTH DISTRICT – ATLANTA

Real Estate and Construction.

Reports from District homebuilders on new home sales in February and March were mixed. Florida and Georgia builders stated that sales were below year-ago levels, while elsewhere in the region sales were similar to year earlier levels. Homebuilders noted that construction activity remained below last year’s level and inventories eased further. Several residential construction contacts remarked that financing remained very difficult to secure. District residential brokers indicated that existing home sales growth softened somewhat in February and March, and were generally similar to year-ago levels. However, Florida brokers were more upbeat with the majority noting sales gains on a year-over-year basis, which were largely driven by sales of distressed homes. Brokers elsewhere in the region remarked that sales remained below year-earlier levels and were slightly weaker than in our last report. District brokers stated that home inventories eased on a year-over-year basis and that the number and speed of foreclosures coming into the market had slowed. Several contacts mentioned greater demand for rental property. The outlook for sales growth continued to improve, largely driven by positive reports from Florida brokers. Nonresidential construction activity remained at low levels during February and March. However, the majority of contractors indicated that the pace of commercial development was flat to slightly up compared with a year earlier, which is an improvement from our previous report. Backlogs declined on a year-over-year basis. Contacts noted that material prices were on the rise while competition for available projects remained aggressive. Most contractors anticipate activity to remain flat to slightly below last year’s level. District commercial brokers reported that markets continued to stabilize. Vacancy rates remained relatively unchanged from the end of last year and declining rents were noticed across much of the District. Commercial brokers anticipate a slow recovery.

ELEVENTH DISTRICT—DALLAS

Construction and Real Estate

Eleventh District housing activity remains weak, and contacts expect more of the same in the coming months. Outlooks for the second half of the year were slightly more upbeat. Respondents said the first-time homebuyer market continues to deteriorate, but some realtors and builders said higher–end homes sales had increased modestly. Apartment demand accelerated since the last survey, and contacts said occupancy rates were improving and rental rates were rising. While construction activity is picking up, demand continues to outpace supply suggesting conditions will continue to improve in the near-term. Office and industrial leasing activity picked up slightly since the last report. With construction of office buildings and warehouses at very low levels, contacts say the modest acceleration in demand for space is likely to have a positive impact on vacancy rates this year. Sales of commercial property remained at low levels, although contacts noted a small uptick in sales of foreclosures and distressed properties.

TWELFTH DISTRICT–SAN FRANCISCO

Real Estate and Construction

Activity in District residential and nonresidential real estate markets remained at very low levels overall, albeit with slight improvement noted in some market segments and areas. The sales pace for new and existing homes was mixed across the District but remained very weak overall, and contacts again noted that the limited availability of nonconforming jumbo‖ loans held back sales of higher-priced homes in some areas. In response to sluggish sales, new home construction stayed quite subdued. However, demand for residential rental space grew further in some areas, and reports noted modest increases in the construction of apartment buildings. Demand remained weak overall in commercial real estate markets, as vacancy rates for office and industrial space remained elevated throughout the District. However, further gains in leasing activity were noted for some major markets in the District, particularly in technology-intensive portions of the San Francisco Bay Area.

An article from Business Wire on 5/17/11, found on thestreet.com, begins by saying this ……

U.S. chief financial officers (CFOs) of middle-market companies are becoming more positive on the state of the industries in which they operate, as well as on the outlook for growth, according to the latest GE Capital survey of middle-market CFOs. In fact, their level of optimism has increased substantially since they were first surveyed in January 2010.

“As we continue to track CFO sentiment, it’s clear that top line growth for middle-market companies is improving. CFOs are more optimistic than they were a year ago, which is evident in their plans to invest in their people and infrastructure,” said Dan Henson, president and CEO of GE Capital, Americas. “This is consistent with the uptick in demand we’re seeing across our lending and equipment leasing businesses. Our first quarter financing volume was up 83 percent versus the same period a year ago, reflecting much improved activity levels.”

The survey, which took place during the first quarter of 2011, included responses from 530 CFOs of companies with revenues ranging from $50 million to $1 billion and operating across seven major industries, including: (1) metals, mining and metals fabrication; (2) food, beverage & agriculture; (3) general manufacturing; (4) healthcare; (5) retail; (6) technology & business services and (7) transportation.

You can access the complete article by clicking on this link ……

http://www.thestreet.com/story/11121288/1/us-cfos-grow-increasingly-optimistic-about-business-environment-economic-growth-ge-capital-survey-reveals.html