Sunday, December 31, 2000
The year in business,
From A (as in A.G. Lafley) to Z (as in zero Nordstrom stores)
2000 wasn't so bad - really!
By Lisa Biank Fasig
The Cincinnati Enquirer
Cincinnatian Norm Miller likes to describe business in 2000 in two words: Reality check.
“Portfolio woes, the entire nation went through portfolio woes,” said Mr. Miller, the director of University of Cincinnati's real estate program. “The lessons learned in venture capital.”
True, 2000 was, to many industries and to Wall Street, a meat grinder. The Dow Jones Industrial Average ended the year down 10 percent, heat and fuel prices soared, and Procter & Gamble bounced its new CEO after its earnings plunged. To salt the local wound, Nordstrom reneged on agreements to open stores in downtown and Deerfield Township.
Yet at the same time, 2000 managed to be a good year. For banking, it continued to be a period of major buyouts. Technology firms thrived in Over-the-Rhine and Covington (even if they were watching their cash carefully), and downtown housing numbers climbed. General Electric picked a hometown native to succeed chairman Jack Welch, and 100 CEOs from across the globe gathered here for the TransAtlantic Business Dialogue.
And, historically speaking, the economy was not that bad.
“The economy is very strong and would be regarded as strong in about any time, until you compare it to the last three or four years,” said George Vredeveld, director of the University
of Cincinnati's Center for Economic Education.
Want to relive it? The good times and bad are captured below month-by-month, in 48 headlines.
January
Dow down; Bowl wrong
The Dow Jones Industrial Average hits its year's high at 11,722.98, only nine months after first topping 10,000. But it retreats to end the month down 4.8 percent, a bad omen for the rest of the year. The “January Indicator” predicts that when the market is down for that month, it typically is down for the year. This, however, conflicted with the “Super Bowl Indicator,” which predicts if an old National Football League team wins, the market advances. Despite the St. Louis Rams' victory, the Dow doesn't regain its January levels.
Roberds' final chapter
Roberds Inc. files for Chapter 11 bankruptcy after sustaining years of declining sales and profits. A heady expansion combined with growing competition contributed to the 29-year-old retailer's demise. The Dayton-based chain cannot reorganize, and it closes its Roberds Grand store in February and all remaining operations in May.
Bell bears plums
As one of the first fruits from Cincinnati Bell's acquisition of fiber-optic network provider IXC Communications, creating Broadwing Inc., the company unveils its novel “Any Distance” long-distance program. The program offers Cincinnati residential customers their first 30 minutes free each month. The program is the first in rapid series of initiatives, including creation of 11 Web-hosting centers nationally by Broadwing to utilize the 18,000-mile fiber optic network it acquired in the IXC deal. At year end, Broadwing is preparing to launch the nation's first all-optical fiber-optic network over the system to deliver voice and data much more quickly and cheaply.
Procter ends drug merger
Overwhelmed by investor backlash, Procter & Gamble breaks off merger talks with drugmakers Warner-Lambert and American Home Products after three weeks of discussions. The company had been close to a deal to acquire both drug companies through a stock transaction that analysts valued at more than $140 billion. But news of the merger talks results in a mass sell-off of P&G shares, forcing the company to back away from the bargaining table.
February
Hackers hit home
E-mail viruses send technology companies scrambling across the continent and in Cincinnati when hackers disrupt Yahoo!, eBay and E-Trade. Broadwing Inc. weathers three incidents, according to Robert Pickering, director/engineering for ZoomTown.com, the Internet access arm of the firm.
March
Our home, the city
When it comes to downtown housing, Cincinnati is a rising star in the constellation of midsize and major American cities, according to a University of Pennsylvania report. Young people, upscale middle-age renters and couples who have already raised families in the suburbs want city living.
Eugenie Birch, professor and chairman of the department of city and regional planning at the University of Pennsylvania, compared housing trends in 40 cities from 1990-1999 and found Cincinnati's downtown is one of four with as many people living downtown as in 1970.
P&G falls like rock
Procter & Gamble surprises Wall Street when it warns that third-quarter profits will fall 10 percent to 11 percent compared with the same quarter of 1999. P&G also cuts growth projections for the year nearly in half.
Investors bail out of the stock in droves, knocking off more than $35 billion in market value — a more than 30 percent drop.
Clear clears stations
Clear Channel Communications Inc., to comply with federal ownership rules, sells WUBE-AM to Cincinnati-based Blue Chip Broadcasting, WUBE-FM to Infinity Broadcasting of New York City and WYGY-FM and WBOB-AM to Salem Communications of Camarillo, Calif.
In May, local radio executive Randy Michaels becomes chairman and chief executive of the Clear Channel radio division.
A farewell to greetings
American Greetings completes its acquisition of Gibson Greetings, a move that will result in the closing of Gibson's local headquarters in Amberley Village and a distribution operation in Covington. In total, about 500 workers are expected to be displaced.
Tech stocks shorten peak
The Nasdaq Composite Index peaks for the year at 5048.62, having added about 1000 points in just the first few months of the year. But the decline was long and slippery after that, with the tech-heavy index falling to half that value by the end of 2000.
Tech firms get grants
Ohio gives $2.1 million in Technology Action Grants to such groups as the Greater Cincinnati Software Association, Bio/Start and the Main Street Ventures incubator. The grants help kick-start a movement to grow high-technology companies here.
April
Techs collide with reality
It is the start of the “tech-wreck,” with profit-taking and a return to reasonable valuations creating a 23 percent loss in the Nasdaq from mid-March to the end of April.
May
Lawyer behind tech
The Greater Cincinnati Chamber of Commerce hires attorney Johnathan Holifield as vice president of New Economy enterprise, to help coordinate a half-dozen local efforts at building high-tech industry.
Nordstrom twice as nice
Sought-after retailer Nordstrom Inc. agrees to open two Cincinnati stores — one downtown and one in a proposed mall in Deerfield Township. The party lasts six months before Nordstrom pulls first out of downtown and then Deerfield, blaming weak financial conditions. The city is left with a hole in the ground and no Plan B.
Scripps moves Rocky Mountain
E.W. Scripps Co. admits to federal regulators that its Denver Rocky Mountain News is a failing newspaper and asks to merge some operations with the Denver Post. Scripps must pay MediaNews, owner of the Post, $60 million so the companies can create a new firm, the Denver Newspaper Agency, to operate both daily papers. The move ends a decades-old newspaper war in Colorado.
June
Durk dumped, A.G. rises
Former Procter & Gamble CEO Durk I. Jager's resignation following a series of missed earnings forecasts and a failed attempt to expand its drug business thrusts veteran P&Ger Alan G. Lafley into the spotlight.
Mr. Lafley, the former head of P&G's global beauty care business who prefers “A.G.” to his given name, is named to replace Mr. Jager as president and CEO immediately. John E. Pepper, former CEO and chairman of the company's executive committee, is pulled out of retirement to become chairman of the board.
Delta, Continental, back off
Delta Air Lines, the nation's third-largest carrier with its second-largest hub at Cincinnati/Northern Kentucky International Airport, discusses a merger with Continental Airlines but backs off.
$1.91 a gallon
Greater Cincinnati gasoline prices hit a high of $1.91 for regular unleaded. With the Midwest as the epicenter, fuel prices climb above $2 for a gallon of regular unleaded in Chicago, Milwaukee and Cleveland. Cincinnati prices hovered around $1.50 from August until recently, when they dropped to one-year lows.
July
All-American name
Great American Insurance Co. announces that it would pay $75 million over 30 years for naming rights to the new Cincinnati Reds ballpark. Reds principal owner Carl Lindner also is chairman of Great American's parent company, American Financial Group.
Paper deal dies
Cox Newspapers Inc. kills a proposed deal by Thomson Corp. to sell the Middletown Journal,the Journal News in Hamilton and 10 non-daily Southwest Ohio newspapers to Gannett Co. Inc, parent of the Cincinnati Enquirer. Atlanta-based Cox exercised a right of first refusal for Thomson's Southwest Ohio properties, which cover most of Butler and Warren counties.
Federated Fingers problem
Federated Department Stores warns that credit delinquencies at its Fingerhut business will cut total direct-to-consumer earnings before taxes and interest by $150 million in the second quarter. In October, Federated announces 550 job cuts from Fingerhut. Federated acquired Fingerhut in 1999.
August
A mall grows in Norwood
Shoppers rush Rookwood Commons, the Cincinnati market's first open-air mall. The high-end Norwood center introduces about 12 new merchants to the market, including Wild Oats grocery, Sur la Table and Anthropologie. Crowds are so large that sheriff's deputies are brought in to handle traffic on a regular basis.
P&G postpones profits
Procter & Gamble's A.G. Lafley tells Wall Street analysts that they'll have to wait until the second half of the fiscal year to see a turnaround in the company's disappointing performance.
The company's guidance for the current fiscal year, which began July 1, calls for first-quarter earnings growth to be flat, accelerating to the mid-single digits in the second quarter. The company promises to be back on track by the third and fourth quarters of the fiscal year.
Techs get big bucks
Cincinnati software company Synchrony Communications receives $27 million in venture financing — a high point in a year when other local companies reined in more than $120 million. Others: PlanetFeedback, $25 million; Digineer $20 million; and Cadence Network, $15 million.
Will pay for work
As the nation celebrates Labor Day 2000, companies scramble to find workers because of the lowest unemployment rate in 30 years and a white-hot economy. But the Employment Policy Foundation warns that a severe labor shortage clouds the economic horizon. That shortage could deepen to an estimated 4.6 million people by 2008, the Washington, D.C., think tank predicts.
Hate the D word
It is the worst summer on record when it comes to airport delays, with labor trouble, a lack of runway space and weather all taking a toll. Cincinnati/Northern Kentucky International is one of the best performers nationally; but even here, the air delay numbers have worsened.
September
Utilities pass on choice
State regulators approve Cincinnati Gas & Electric's plan to open its Southwest Ohio service area to competition, implementing the Ohio General Assembly's plan to deregulate the state's $11 billion electric industry. The legislation gives residential and commercial customers the ability to pick from competing electric suppliers starting Jan. 1. But as the effective date for the initiative approaches, none of the state-certified suppliers is offering choice to residential customers in much of the state.
Minister collared
A Clermont County grand jury indicts former minister Gerald Lach on charges of selling more than $2.3 million in unregistered stock to investors for projects that never happened. Even after the 55-count indictment, investigators continue to search for hundreds of thousands of dollars collected by Mr. Lach during the past four years but unaccounted for in his financial statements.
Offices go unfilled
The third quarter ends, and the scorecard for downtown Cincinnati's office market isn't good. More office space is vacated than leased, largely because two larger tenants left 50,000 square feet at the downtown Scripps Center.
Brokers throughout Greater Cincinnati — downtown, the suburbs and Northern Kentucky — become concerned that demand for new space is waning. Vacancies for downtown space remain low at 3 percent, but suburban vacancies bump up to 10 percent because of new office buildings.
October
Newsman takes a bow
William R. Burleigh ends a 54-year career in journalism by retiring as chairman and chief executive of the E.W. Scripps Co., a diversified media company headquartered in Cincinnati. He remains chairman of the board.
Kenneth W. Lowe, founder of the company's surging HGTV network, is named chief executive.
Brothers make the bank
Two of banking's best-known brothers — Jerry and John Grundhofer — pair to merge banks and form a financial-services giant with branches spanning 24 states, including Ohio, Kentucky and Indiana.
The deal calls for Jerry's Firstar Corp. to buy his brother's bank, U.S. Bancorp, for about $19 billion in stock. The megamerger is the second time that Firstar, successor to Cincinnati's Star Banc Corp., launched such a deal and moved its corporate headquarters. The merger forms a company with $160 billion in assets and 2,200 branches nationally. The new company's key retail banking business will remain in Greater Cincinnati, where Firstar has about 3,000 employees and 120 branches.
Gambling draws 1,000s
The Belterra Casino & Resort opens along the Ohio River in Florence, Ind., the third riverboat casino in Greater Cincinnati. The opening has been delayed two months by a collision with a Mississippi River barge, but the casino attracts nearly 50,000 visits in its first five days in operation.
Toys walk, say "bye-bye'
Hasbro Inc. says it will relocate its boys' toys operations from Cincinnati to Pawtucket, R.I., eliminating up to 325 jobs as of Jan 1. The move, ending 53 years of toy-making tradition in the Queen City, is part of a strategy by Hasbro, maker of G.I. Joe, Tonka Trucks and Star Wars toys, to improve earnings in a take-no-prisoners industry.
High-tech bug spreads
A group of business people in Covington forms the Madison Avenue Launch Team, to help develop technology companies in Northern Kentucky.
Amtrak: Hit the highway!
Amtrak made its first offer to redeem more than 5 million shares of common stock held by Carl Lindner's American Financial Group Inc. The company curtly rejected the 3-cents-per-share offer in November.
November
Forest Fair reinvented
Bass Pro Shops Outdoor World, Burlington Coat Factory, Stein Mart Outlet store and Media Play open at Forest Fair Mall, culminating years of lease work by the mall's third owner. The effort is part of a plan to breathe life into a center that hasn't taken an unlabored breath since it opened in 1989.
P&G trumpets tech firms
Procter & Gamble Co. CEO A.G. Lafley announces the launch of the Regional Technology Initiative, formed to boost high-tech industry locally. He urges the region's big companies to help support the movement.
CEOs attract protests
More than 100 of the world's most influential chief executives gather at the Omni Netherland Plaza for the TransAtlantic Business Dialogue conference. The eventdraws hundreds of protesters on downtown streets and worldwide media attention.
Bank buys big
Continuing an acquisition binge to fuel growth, Fifth Third Bancorp completes its biggest deal ever after paying about $4.75 billion in stock to buy Old Kent Financial Corp. of Grand Rapids, Mich.
The Cincinnati-based banking company said the combined entity will have assets of about $70 billion, making Fifth Third the nation's 15th-largest bank. The deal gives Fifth Third growth opportunities in such markets as Chicago and Detroit and expands its branch network to more than 980 in Ohio, Kentucky, Indiana, Michigan and Illinois.
Home buyers hibernate
Rising mortgage rates continue to crimp Tristate home sales most of year, causing them to drop 4.6 percent in November.
In Southwest Ohio, which accounts for about 80 percent of the Tristate's sales, year-to-date volume was 17,311, versus 17,963 the first 10 months of last year. Competing against record-setting years of home sales in 1999 and 1998 also fueled the decline.
Heir sends aftershocks
Ending months of speculation, GE chairman Jack Welch taps Finneytown native Jeffrey Immelt, son of a retired GE Aircraft Engines engineer and president of GE's fast-growing medical imaging business, as his successor when he retires at the end of 2001.
A ripple effect of the decision leads W. James McNerney, GEAE president since 1997 and one of three finalists to succeed Mr. Welch, to accept a job as Minnesota Minning & Manufacturing's chairman and CEO. David L. Calhoun, Mr. McNerney's designated successor, is named to replace him as head of Evendale-based GEAE, which stands to double in size if GE's planned $45 billion acquisition of Honeywell Inc. is approved.
Nordstrom pulls the plug
Nordstrom bails out of its proposal to build a store in downtown Cincinnati, saying it “didn't make sense.”
December
Nordstrom pulls again
Financial problems force Nordstrom to pull out of a proposed mall deal in Deerfield Township. The decision is expected to kill plans for the mall, known as Cincinnati Center, on 80 acres off Montgomery-Mason Road.
Rates drop, buyers cheer
After a near-year of volatility, mortgage rates in Greater Cincinnati hit their lowest level in about 18 months, good news for potential home buyers or those considering refinancing.
The average, 30-year fixed-rate rate declines to 7.59 percent Dec. 18, from 8 percent the same time a year ago. The last time the rate was that low was June 6, 1999, when it hit 7.57 percent, according to the Cincinnati Area Board of Realtors.
Delta, pilots feud
Delta Air Lines sues its pilots in Atlanta federal court, asking for a return to normal levels of voluntary overtime requests, which account for about 5 percent of the schedule. Delta also cuts 100-125 flights a day out of its schedule to minimize the impact.
Gas is gold
Cincinnati Gas & Electric cautions that typical residential natural gas customers will see an increase of more than $90 in their bills starting next month because colder-than-normal temperatures are igniting wholesale gas prices.
The new rates are about 60 percent higher than a year ago and 20 percent higher than winter rates that went into effect a month earlier.
The ceiling cracks
Patricia Mann Smitson is named to managing partner of the Cincinnati office of the law firm Thompson Hine & Flory, a position she assumes in January. She is the first woman to lead a major law firm in Ohio.
It's no 1999
After several months of suffering, all major indexes are ending 2000 deep in negative territory. The Dow Jones ended the year down 6.2 percent, its first annual decline since 1990 and its largest annual decline since 1981. The Standard & Poor's 500 Index fell 10.1, its worst year since 1977. And the Nasdaq Composite Index closed the year down 39.3t — its worst performance ever since its inception in 1971.
Staff writers Amy Higgins, Mike Boyer, Randy Tucker, John Eckberg, James Pilcher, Jeff McKinney, John Byczkowski and Ken Alltucker contributed to this report.
• Tallying the numbers
Investors, others tally the plusses and minuses
The year in business,
BYCZKOWSKI: New Economy
Commercial landlord stretches out
Buying a PC
Nesting on the Net
Small-business diary
What's the Buzz?
