This past week’s news from www.ocbj.com and other sources
Orange County’s August median home price, which slipped 2.8% from July to $499,580, and was flat from a year earlier, according to the California Association of Realtors. Sales were off 7% from July and 11% from a year earlier after the July expiration of housing tax credits.
TOP STORY
Embattled vocational school operator Corinthian Colleges Inc. of Santa Ana launched a marketing campaign that takes aim at proposed federal rules that could cut funding for students at some of the company’s schools. The campaign is the first public response by Corinthian after months of regulator and investor scrutiny. The ads target the Education Department’s proposed “gainful employment” rule, which could cut off federally backed student loans to campuses where graduates take on too much debt. The regulations are set to take effect in 2011 and 2012. Ads by Corinthian in major newspapers contend the rules would have unintended consequences and could lead to financial aid being cut for nearly a million students (see front page story).
TECHNOLOGY
Military business could help double sales and increase profitability for Irvine-based chipmaker Microsemi Corp. in the next few years, according to a Wall Street analyst. Microsemi, the third biggest chipmaker here by local workers, now sees roughly $500 million in yearly sales from products that go into computers, TVs, satellites and other products. A series of recent acquisitions could boost yearly revenue to $1 billion in a few years and produce a 60% gross operating margin, a FBR Capital Markets & Co. analyst said (see story, page 3).
Irvine-based Broadcom Corp. could see roughly $70 million in added revenue during the second half of the year from sales of Apple Inc.’s gadgets. FBR Capital Markets analyst Craig Berger said in a note to clients he sees Apple generating $30 million in revenue in the third quarter and another $40 million during the fourth quarter for Broadcom, which makes communications, radio and touch-screen chips that go into the iPod, iPhone and iPad. Broadcom, which has projected 2010 sales of $6.6 billion, should benefit as Apple builds up its product stockpiles ahead of the holiday season, the analyst said.
HEALTHCARE
Shares of Irvine-based Edwards Lifesci-ences Corp. surged on positive trial results for a new type of heart valve and regulatory approval for further study of the device. The new product, Sapien, is inserted via a catheter instead of during open heart surgery. Sapien and competing devices are seen as the biggest advances in heart valves in years and could open up the market to millions of patients who aren’t candidates for major surgery. The New England Journal of Medicine published test results from an initial Sapien study that showed the valve significantly reduced the rates of death from any cause in patients. The Food and Drug Administration has conditionally approved a second randomized, controlled study for Sapien. That trial’s expected to take place sometime next year. Shares in the company shot up more than 10% on the news. Edwards had a recent market value of about $7.7 billion.
REAL ESTATE
Irvine-based SunCal Cos. lost its ownership stake in a New Mexico project that was set to be the master developer’s largest. A 55,000-acre housing project near Albuquerque was sold for $148 million at a foreclosure auction to three of the property’s largest creditors led by Barclays PLC’s Barclays Capital Real Estate Inc. SunCal and New York-based financier D.E. Shaw & Co. paid about $250 million for the land in late 2006. Development of the massive project was stalled due to the down economy as well as local political issues. In April, SunCal filed for Chapter 11 bankruptcy for the project. The case was dismissed with the land going into receivership at the urging of Barclays, which said it was owed more than $180 million in loans. SunCal officials said the company still is interested in remaining involved in the property, despite the foreclosure and loss of its assets.
Newport Beach is the nation’s most expensive housing market, according to a report by Coldwell Banker Real Estate LLC. A four- bedroom, two-bathroom home in Newport Beach averages $1.8 million, according to the Parsippany, N.J.-based real estate agen- cy. Newport Beach edged out several other pricey California cities on the list, including No. 2 Palo Alto at $1.5 million, No. 4 San Francisco at $1.3 million and No. 5 La Jolla at $1.2 million.
APPAREL
Costa Mesa-based clothing maker Volcom Inc. is looking to double yearly sales to $550 million by 2014, the company told analysts. The revenue goal is part of a five-year plan to boost sales and profits at the maker of clothes inspired by surfing, skateboarding, music and art. Volcom had $280 million in 2009 sales and is projected to see revenue of $317 million this year. Analysts said the plan is aggressive but doable. Volcom could see growth from areas including the company’s dominant men’s clothing segment, a rebound in female clothing sales and niches such as shoes and clothes for kids and snow sports, a Robert W. Baird & Co. analyst said.
OTHER NEWS
Irvine-based In-N-Out Burgers Inc. announced plans for a second Texas restaurant in the company’s first major expansion beyond its core market in the west. The burger chain plans to open a restaurant in Fort Worth, Texas, its second for the Lone Star state after one planned north of Dallas. Both are part of a larger expansion that calls for building a processing and distribution facility near Dallas. Up to now, In-N-Out hasn’t expanded beyond 500 miles of its food processing and distribution facility in Baldwin Park.
