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SW Fla. companies don't share in stock markets' 2007 serendipity

By Tim Engstrom
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Originally posted on January 06, 2008

Gains in major stock indexes in 2007 offered no lift to Southwest Florida's publicly traded companies, which either drifted lower or sank like a rock to close the year.

The Dow Industrials gained more than 6 percent and the Nasdaq exchange finished more than 9 percent higher. The Standard and Poor's 500 index gained 3.5 percent.

Yet, an unlikely investor who purchased a single share in 16 local public companies at closing prices on Jan. 3, 2007, likely would be searching for a new financial adviser.

That investor would have paid $254.95, after adjusting for dividends, for the portfolio. After the close on Dec. 31, it was worth just $141.05, a decline of nearly 45 percent.

Combined, the locally based public companies have a market capitalization of $4.9 billion and employ more than 45,000 people nationally.

Bonita Springs-based homebuilder WCI Communities Inc. was down 80 percent on the year, but even that high-profile company doesn't take the honors for biggest decline. Tiny Innova Robotics, whose founder and chairman stepped down in December, ended the year down 93 percent. It makes the 56 percent decline for Chico's FAS stock almost seem mild.

Reasons for the decline extend beyond Southwest Florida, said David Kamm, investment adviser with Raymond James. "We have a fractured market right now because some sectors are struggling and others are doing pretty well," said Kamm, who also writes a column for The News-Press.

Many of the sectors struggling — home building, financial services, health care, retail — are represented locally. Those thriving, such as oil or gold mining operations, are not.

To make matters worse, Southwest Florida's companies are all mid-size and smaller and that is generally reflected in the price of the stocks.

"When the general market gets salty, it's more difficult for lower-priced stocks than for higher-priced stocks," Kamm said. "Generally, the institutional investors don't take large positions in smaller stocks and that can make them vulnerable."

For some of the companies, the reasons for the declines are obvious, even locally.

WCI, for example, builds luxury homes and high-rise condominiums in a real estate market where contract defaults and cancellations outpace new orders.

In fact, the company's growing debt has forced it to renegotiate its credit agreements with its lenders and it has until Monday to come to new terms.

WCI investor Arletta Banas said she is hopeful better days are ahead for the company, and others. "To me, the market is like life: It goes up and down," said Banas, who lives in the company's Pelican Preserve community off Colonial Boulevard. "If you endure, you will be satisfied with your decisions."


WCI Communities Inc.

The year began with an unsolicited bid of more than $950 million — $22 a share — for luxury homebuilder WCI Communities Inc. from billionaire investor Carl Icahn.

The bid was rejected but Icahn leveraged his stake in the company into taking the seat of chairman of the board.

But contract cancellations and defaults outpaced new orders and the company's losses mounted. The company reported losses of $18.8 million in the first nine months of the year.

In November, the company cut its work force to about 2,100 jobs — down about 46 percent from its 2006 peak of 3,889 — to generate annual savings of about $46 million in salaries and benefits. One-time costs of the restructuring, including severance, were about $5.4 million.

The stock rose to about $24 per share after Icahn's offer, but fell as low as $3.

Chico's FAS Inc.

Fort Myers-based Chico's FAS Inc. ended a decade-long run of sales growth in late 2007 when sales dropped in an increasingly tight-fisted retail market.

In December, the company reported net income of $23.6 million, or 13 cents per share, in the three months ended Nov. 3, down about 44 percent from the $42.2 million, or 24 cents a share, in the comparable period a year ago.

The stock peaked around $27 earlier in the year before sales waned and the stock ended the year in the $9 range.

Executives also warned that the company's fourth-quarter earnings — to be announced in March — may only break even.

"Retail has definitely been under pressure, there is no question. It's just very tough out there," Chico's Chairman and Chief Executive Officer Scott Edmonds said in late November.

However, Edmonds said he remains confident the company has brighter days ahead and, in December, bought $1 million worth of company stock.

Health Management Associates Inc.

Naples-based Health Management Associates Inc. — a hospital operator — started the year by passing out a $10-a-share dividend to shareholders, but it borrowed billions to do it and the company's financial picture clouded as the year progressed.

Unpaid patient bills increased and profits fell by about 85 percent late in the year.

The company appointed Burke W. Whitman as CEO and his predecessor, Joseph Vumbacco, stepped down from his board position in December.

HMA operates 59 hospitals in 15 states, including Lehigh Regional Medical Center in Lehigh Acres and the Physicians Regional Health System with two campuses in Collier County.


Radiation Therapy Services Inc.

The Fort Myers-based Radiation Therapy Services expects to end its nearly four-year run as a public company early this year.

The company, which operates radiation treatment centers primarily under the name 20th Century Oncology, announced in October that it would be acquired by Vestar Capital Partners for $764 million, or about $32.50 a share. The companies valued the acquisition at $1.1 billion including debt.

The deal is expected to close in the first quarter of this year.

The company went public in June 2004, with an opening share of $13.02. Trading has leveled off near the pending purchase price. The company reported net income of about $24 million in the first nine months of the year.


Source Interlink Cos.

In May, Source Interlink made a $1.2 billion cash deal for more than 70 magazine titles, including Motor Trend and Soap Opera Digest, and 90 associated Web sites.

The purchase, completed in August, made the Bonita Springs-based company a magazine publisher for the first time. The company's major focus had been distributing magazines, books, DVDs and CDs published by other companies to 110,000 retail stores nationwide.

The deal has boosted the company's revenues, but non-cash accounting write-offs related to the purchase have pushed the company to a loss in recent quarters. The company reported a net loss of $415,000 in the first nine months of the year. The stock opened the year around $8 per share, but fell below $3 per share as the year ended.


Whitney Information Network

Russ Whitney, founder of the Cape Coral-based Whitney Information Network, announced his resignation as the company's chief executive officer as of Dec. 31.

Whitney, 52, will continue to serve as chairman of the board of directors and will act as an adviser to the company. His resignation was among the recommendations of an internal investigation launched after the company announced a year ago that it was under investigation by the U.S. Attorney for the Eastern District of Virginia and the Securities and Exchange Commission. Federal authorities have refused to comment on those investigations.

The company notified the Securities and Exchange Commission in May that its earnings reports have been delayed by the internal investigation.

MIVA Inc.

Fort Myers-based MIVA Inc. shifted its focus to selling ads on Internet browser toolbars and Web sites it develops in 2006, moving away from selling its advertising network to other site operators.

The company narrowed its losses in the quarter ended Sept. 30, with a net loss of $3.3 million, or 11 cents per share, down from $4.5 million, or 14 cents a share, in the same period a year ago.

Chief Executive Officer Peter Corrao said the performance of the company's pay-per-click advertising network was weaker than expected.

Innova Robotics & Automation Inc.

Walt Weisel, founder of Fort Myers-based Innova Robotics and Automation, stepped down from his role as chairman of the board with the company as the year ended.

He signed on as consultant and vowed to continue working to bring "deals to the table" for the company, which writes software to control industrial robots, such as those in manufacturing.

The company reported a net loss of $5.2 million in the first nine months of 2006.

SMDK Corp.

In July, the Fort Myers-based company formerly known as SmartDisk Corp. sold its assets — except for its patents — to Verbatim Corp. for $9.5 million.

The company still trades lightly over the counter.

Alico Inc.

Profits for LaBelle-based Alico Inc. remained solid in its farming and ranching operations. However, the company's bottom line dipped into the red as it tucked tens of millions of dollars into reserves because of an ongoing IRS audit. The audit centers around the formation of Agri Insurance Co. Ltd. and its tax-exempt status from 2000 to 2004, the company said.

For the fiscal year, Alico posted a net loss of $13.8 million, or $1.88 a share, compared with net earnings of $6.5 million, or 88 cents a share, during fiscal year 2006. For the year, the tax reserves related to the audit were $26.2 million.


Beasley Broadcast Group Inc.

The Naples-based radio station operator watched profits fall as the economy tightened up around the nation.

Beasley Broadcasting owns 44 radio stations in 11 markets in the United States, including five stations in Southwest Florida: WJBX-99.3 FM, WJPT-106.3 FM, WRXK-96.1 FM, WXKB-103.9 FM, and WWCN-770 AM. In November, it reported quarterly net income of $1 million, or 4 cents a share, compared with $2.4 million, or 10 cents a share, in the same period a year ago.

NeoMedia Technologies Inc.

As 2007 drew to a close, NeoMedia appears to be severing its ties to Fort Myers. CEO William "Chip" Hoffman said in September the company was considering a move to major metropolitan areas like Atlanta, Washington, D.C., and Dallas.

In December, company filings with the Securities and Exchange Commission showed a return address in Atlanta. Calls to Fort Myers and Atlanta numbers for the company reached the same automated voicemail that keeps callers on line while attempting to forward the call.

Neomedia develops technology used to market products and services on mobile phones.

The company trades at about 1 cent a share and reported a net loss of $40 million in the first three months of the year.

NeoGenomics Inc.

A cancer genetics testing lab company based in Fort Myers, NeoGenomics was the major success story of 2006 with a stock price gain of about 690 percent, but it fell victim to the same trends as its publicly traded neighbors in 2007. Net profits swung to losses in 2007 as it invested in a new California laboratory and expanded staff.

The company recorded a net loss of $591,263, or 2 cents a share, in the period ended Sept. 30. The loss compares with a net profit of $31,895, or less than a cent per share, a year ago.

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