Posted by madcityradio.com on December 31, 2008 at 22:41:38:
In Reply to: Madison Tech Company gets local Media Partner posted by madcityradio.com on December 31, 2008 at 22:39:35:
Mike Ivey's Business Beat: More bad news than good in 2008
Mike Ivey — 12/31/2008 6:17 am
Given everything that's gone down in 2008 -- from 401(k) balances to consumer confidence -- it almost seems like piling on to come up with the annual list of Business Black Eyes.
So let's start with a few positive business stories from the past year.
One of the most significant was Cellular Dynamics International, the Madison firm started by UW stem cell whiz James Thomson, which managed to raise $18 million in funding from mainly Wisconsin sources. This came at a time when most startups were finding seed money hard to come by.
The firm is looking at selling living tissue cells to drug companies and other researchers in the ongoing search for miracle cures.
In Verona, medical records company Epic Systems continued its amazing growth. With over 3,000 employees at Epic and layoffs at American Family Insurance, Epic is poised to become the largest private-sector employer in the region. President-elect Obama's pledge to make medical records one of the five pillars of his economic recovery plan can only help.
A handful of smaller IT companies also made a splash in 2008. Broadcast Interactive Media, which designs Web sites for TV stations in the nation's largest markets, and Networked Insights, which mines social networking interactions for marketing information, continued to grow.
And Virent Energy Systems, which turns biomass like prairie grass or corn stalks into liquid fuel, earned raves in Time magazine as an emerging technology company.
But the good news was hard to find as Madison discovered it was not immune from the biggest economic downturn since the 1973-75 recession. Here are some developments worthy of a Business Black Eye:
The first real local shocker came in February, when developers of the second phase of the Metropolitan Place condos on West Washington Avenue were forced into foreclosure when sales came to a standstill. Seeing one of the biggest development projects in city history go bust sent shock waves through the local real estate community.
The Williamson Street Grocery Cooperative took a hit on Metropolitan Place as well. The co-op had invested nearly $500,000 in the project for architect fees, legal expenses and other costs, hoping to add a second location there. So far, no word from the co-op on its next step.
Citywide, home sales and construction slowed to a crawl, foreclosures soared to record levels and thousands struggled just to make their payments. While actual sales prices were down only about 5 percent here, some online real estate tracking firms like Zillmer.com said home values in Dane County were likely off 20 percent or more.
The redevelopment of the Hilldale shopping center also hit the skids in 2008. A large hole in the ground now exists at the corner of Segoe Road and University Avenue where a new 65,000-square-foot Whole Foods Market was to open.
Madison's reputation took a body blow in 2008 when the parent company of Famous Footwear consolidated its headquarters in suburban St. Louis, a move that cost Madison some 270 jobs. Brown Shoe closed its Famous Footwear offices at 7010 Mineral Point Road in October and moved those positions to Clayton, Mo., with most local employees choosing not to relocate.
A big ugly Business Black Eye certainly belongs to Spectrum Brands, the former Rayovac.
The battery maker was once a proud anchor of the local manufacturing scene but is just a shell of its former self after being sold by the Pyle family to outside investors in 1996.
Since then, Spectrum has taken on a mountain of debt, moved its headquarters to Atlanta and struggled amid the economic downturn. The New York Stock Exchange halted trading in the company's stock last month as the share price dropped as low as 8 cents -- down from a high of $45 in 2005. While employees and stockholders worry about a bankruptcy, CEO Kent Hussey will pocket an extra $2 million if he stays with the company through 2009.
Scientific Protein Labs found itself at the center of an investigation of a contaminated blood-thinning drug from China linked to allergic reactions, some fatal, in hundreds of patients.
SPL, which has 130 employees at its headquarters in Waunakee and co-owns a drug-manufacturing facility in China, is a major supplier of heparin to Chicago-based Baxter International Inc.
An FDA investigation showed the contaminant was deliberately altered in a way that mimicked the real drug, a finding that adds to pressure on regulators and pharmaceutical companies to step up oversight of the growing Chinese drug-making industry.
While most banks endured a tough year, with many looking for a federal bailout, Madison-based AnchorBank was particularly hard hit.
The city's largest homegrown financial institution announced a net loss of $23.3 million for the quarter ending Sept. 30, with its share price for the year off nearly 90 percent.
Analysts warn the bank is still facing about $169 million in bad loans, up from $144 million in June. The bank has already written off $22.6 million in problem loans.
Once the darling of the local high-tech scene, Madison-based TomoTherapy cut 12 percent of its workforce, eliminating about 60 jobs.
The company, which makes a cancer-fighting radiation machine, has seen sales slow amid stiff global competition, a slowing economy and worries it overstated its market reach.
A shareholder group in California put pressure on the board after the stock price fell from $20 to $3, leading to the resignation of co-founder and President Paul Reckwerdt, effective Dec. 31. Chief Financial Officer Stephen C. Hathaway also has announced plans to retire when his contract expires on March 31.
Finally, the entity that invested money for the Overture Center could still have some financial exposure from the Bernard L. Madoff investment scheme when the case ends up in bankruptcy court.
The Madison Cultural Arts District trust fund at one point had $27 million invested in Fairfield Sentry Ltd., a $7.3 billion hedge fund that is being called the biggest loser in the unfolding Madoff case.
Overture was forced by lenders to liquidate its trust fund in September when the balance fell below established limits. At that point it cashed out the remaining $87 million in the portfolio, including its Fairfield holdings.
But depending on how the case plays out, the arts district still might be forced to return some or all of the money it had invested with Madoff via the Fairfield fund.
City officials, who claim they are not on the hook for the privately owned but publicly operated facility, are hoping for the best.
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