Outlook isn’t looking up for CEG stock

Constellation Energy Group’s shareholders may have thought they were getting a raw deal with the offer of $26.50 a share from MidAmerican Energy Holdings, but things haven’t been looking up since that deal went south about two weeks ago.

Shareholders seemed hell bent on getting more out of their stock — several filed lawsuits against Constellation, and there were rumblings that they might not approve the merger deal at a planned Dec. 23 shareholder vote — but it doesn’t seem like they’ll be getting much more in the near term.

One day after Constellation announced it was rejecting the MidAmerican takeover bid in favor of a nuclear partnership with Electricite de France, the Baltimore-based firm’s share price fell to $23.97, and has since lingered in the $24 to $25 range.

In the days leading up to Constellation’s split with MidAmerican, the stock climbed above $28 in anticipation of the break up, and hit $30.15 on the day of the announcement.

Paul Justice, an analyst with Morningstar Inc. in Chicago, told me it’s hard to compare the share price between then and now.

“You’ve extended the time horizon and basically made this a stock that’s going to sit on the market; before you had a time frame for an end date,” he said. “To reflect back on the trials and tribulations of 2008, you’re probably looking two or three years out to determine how well this worked out for Constellation,” he added.

If it takes that long to see this deal bear fruit, imagine how long it could take for investors to make their money back. I wonder if they’ll wait around long enough to find out.

DANIELLE ULMAN, Business Writer

The year of Pat Turner

turner-patmf19.jpgPatrick Turner, the Baltimore developer who, it has been noted, resembles Virgin CEO Richard Branson both physically and for the audacity of his business ideas, has a little saying he likes to repeat:

“You make money when you buy, not when you sell.”

He’s told us that at least the last three times we’ve spoken with him, including on Monday, when we got him on the phone to reflect on 2008 and the economic climate for commercial real estate development, and predict the future of 2009 in real estate. But mostly, we ended up chatting about Silo Point, the century-old grain elevator in Locust Point that Turner converted into luxury condos, at a cost of $170 million. The condos went on sale this fall.

The condo tower is one of two marquee Turner Development projects backed by Washington-based private equity firm The Carlyle Group. The other is a proposed, multi-billion-dollar revamping of a 50-acre site known as Westport, on the Middle Branch of the Patapsco, where demolition of a former BG&E power station is almost done, someday to make way for homes, shops and what the developer envisions as “a second downtown” for Baltimore.

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Fraser Smith brings his column to The Daily Record

12_29_smith.jpgA familiar name for many of our readers and one of the most respected commentators on Maryland government and politics for many years is bringing his insight and commentary to The Daily Record.

Fraser Smith, who covered Maryland for more than 30 years for The Baltimore Sun and is now senior news analyst at WYPR-FM, joins the ranks of our columnists on Jan. 9. His commentary will appear Fridays on our editorial page.

I’ve known Fraser since 1977 when he joined The Sun, where we worked together for almost 25 years.  Since then he has written about Maryland issues from Baltimore, Annapolis and Washington as a reporter, editorial writer and columnist. No other journalist in Maryland can match Fraser’s expertise and perspective on state affairs, and I’m delighted he’s joining our team of journalists.

Fraser also will join a panel of our reporters to discuss the issues facing the 2009 General Assembly at a Center Club breakfast event from 7:45 a.m. to 9:30 a.m. on Friday, Jan. 9. Call 443-524-8100 to reserve a ticket ($23 per person plus tax).

I hope to see you there, and I know you’ll enjoy reading Fraser’s column in The Daily Record.

TOM LINTHICUM, Executive Editor

Whose best practices would you subscribe to?

I’ve never purchased anything from Zappos.com, but I know plenty about the company – mostly because of its highly regarded customer service record and stellar management team.

Among other achievements, the online shoe retailer was an early adopter of Twitter, offers free shipping (and return shipping) to customers, and publicly shares its core values.

Now, Zappos.com execs are looking to reap financial benefit from their hard-earned reputation, through the launch of “Zappos Insights” – a glimpse into the company’s methods for creating a positive corporate culture and excelling at customer service.

Subscribers can pay to access Zappos’ articles, training videos, and video responses to user-submitted questions. Some of the material comes directly from CEO Tony Hsieh, a sought-after conference speaker.

At $39.95/month, the subscription is affordable to small business owners or other professionals who may not otherwise have an opportunity to meet and mingle with Hsieh and his team (and/or can’t afford to hire a pricey consultant). Sounds like a good deal to me.

This got me thinking: Which Maryland-based company (of those remaining, that is…) has best practices that you would subscribe to? Maybe it’s your role model in customer service, marketing or another area that your business needs to improve.

For me, it would be Dell. The electronics retailer has been enterprising in the social media realm; it’s made $1 million in revenue in the last 18 months from alerting Twitter followers to promotions and sales.

JACKIE SAUTER, Web Editor 

Happy holidays to Amazon.com

While the rest of the retail outlets are suffering losses of 5 to 25 percent this season, Amazon.com declared Friday that it had its best holiday season ever, saying it saw a 17 percent increase in orders on Dec. 15, traditionally the busiest day of the year for online retailers.

Customers ordered more than 6.3 million items that day compared to roughly 5.4 million last season, and Amazon says it shipped more than 5.6 million products on its best day compared to about 3.9 million on its busiest day in 2007.

In reporting on the holiday shopping season this year, I can anecdotally vouch for the increasing desire by many shoppers to veer toward shopping online versus braving the crowds (albeit thinner this year) in stores. Many people I’ve spoken to said they have done between a third and one-half of their shopping online this year, which they said is more than they have done in the past. The increase in free or discounted shipping deals has also encouraged more people to shop online this year.

The poor weather in the North and East this year also contributed to the increase in online shopping, leaving many folks housebound to finish buying their presents off store Web sites.

I wonder how much of Amazon’s success this year was a result of these factors and how much of it is because the Web site really gained that much in popularity this year.

Do you think online shopping (much like the online news business) is becoming more popular than the traditional store?

LIZ FARMER, Business Writer

Hoping for a brighter 2009? Bill Miller sure is.

This has not been a banner year for Bill Miller.

The Legg Mason fund manager famed for beating Standard & Poor’s 500 index for 15 consecutive years (through 2005), has seen serious underperformance in his Legg Mason Value Trust fund.

A fund that once soundly bested the S&P is down 58 percent for the year as of Wednesday, according to Morningstar, compared to a 20.4 percent decline for the S&P.

To make matters worse, media outlets are starting to post their superlative lists of 2008, and Miller has landed with a thud in the “worst” column.

On Tuesday, The Wall Street Journal listed its “Worst Calls of the Year,” noting that in a year when bad calls ran rampant, some had the merit to rise to the top of the list. Bill Miller came in at No. 4 out of 10.

“…the real trouble didn’t begin until this year, when Mr. Miller’s tried-and-true strategy of buying aggressively on the dips backfired. Mr. Miller made big bets on financial shares recovering, and that hasn’t happened — not even close.”

U.S. News & World Report included Miller in an anecdote in its list of “The 10 Worst Assumptions of the Year” under the heading “Things will Bounce Back.” BusinessWeek called Miller one of the “13 Big Losers” of the year.

Miller also received a nod in syndicated columnist Charles Jaffe’s “13th Annual Lump of Coal Awards” for “(Mis)Manager of the Year.”

Things could be looking up for Miller in 2009. Legg Mason announced earlier this month that Miller will manage the Legg Mason Partners All Cap Fund starting in January, but even that good news has come with some heat from the media.

DANIELLE ULMAN, Business Writer

How effective is a 3-second TV ad?

What takes some just 3 seconds to do?

Punch lines aside, for some folks it’s airing a television commercial.

And not just any commercial, we’re talking about the most highly coveted advertising space of each year — a Super Bowl television ad.

This, at least, is the cost-saving scheme of New York-based Weatherproof Garment Co., which is proposing to buy a 30-second ad in this season’s Super Bowl and share the slot with nine other companies.

“Not only is a 30-second ad cost prohibitive, especially in today’s economy, but we feel strongly that we can accomplish our mission of reaching America’s consumers within 3 seconds,” Freddie Stollmack, president of Weatherproof, said in a news release. “We are confident that many other brands will agree.”

Weatherproof has reached out to about 100 companies to gauge their interest, the release said.

If successful, the move would cut the cost of the ad by as much as $2.7 million during a time when many of the game’s traditional ad buyers are forgoing the expense due to the economy.

Super Bowl standards like FedEx, GMC and Garmin are sitting out this year’s game, and NBC still has more spots to sell with just more a month to go before the big game. Should the broadcast company take a cue from Weatherproof Garment and split ad space up to sell at a lower price?

It may be a lousy economy but it’s still the Super Bowl and millions will be watching. Would you fork over a few hundred thousand for a three-second shot during one of the biggest media events of the year?

LIZ FARMER, Business Writer

Let’s keep those holiday lights burning

Keep those bright lights shining

Ah, the lights of the holidays!

Don’t you just love all those cheerful lights inside and outside houses? Don’t they cheer your spirit as you pass by on these dark winter lights?

And don’t you just hate when folks dismantle their lights after the holidays, leaving us depressed in the winter of our discontent?

So I have a suggestion: Why not leave those lights on for the next few months? Not the specifically Christmas-related lights: those that illuminate the Christmas trees, the crèches, the Santas, the reindeer and the candy canes. No, I’m talking about the bright lights that adorn windows and trees — the outdoor lights that guide us on our way and seem to say: “Cheer up. You’re not alone.”

Daylight saving time’s a-comin’. (Actually, DST starts on the first Sunday in March, that is, March 8.) Spring will be here soon. Meanwhile, keep those holiday lights burning. They really do help to lift our spirits and remind us that winter is not such a bad time of year, after all.

PAUL SAMUEL, Associate Editor

What does acquisition of Provident mean for bball tourney?

While M&T Bank’s name is almost synonymous with the Ravens, M&T Bancorp’s new acquisition Provident Bankshares Corp’s name is very much tied in with another sport in the state — Division III college basketball.

For the last four years, Provident Bank has been the title sponsor of the Pride of Maryland Tournament, a three-day championship played in November between Maryland’s nine Division III teams to crown the state’s Division III basketball champ. (The schools are spread across four conferences — four in the Capital Athletic Conference, three in the Centennial Conference, and one apiece in the Landmark Conference and Allegheny Mountain Collegiate Conference.)

The vision for the tournament began with Bill Nelson, men’s basketball coach at Johns Hopkins University, and Brett Adams, athletic director and men’s basketball coach at Stevenson University, 10 years ago but the idea was stalled by conference scheduling concerns. As the story goes, Nelson and Adams decided to forge ahead while flying out together to the NCAA Division I Championships five years later.

The first tournament was played in 2005 with Provident Bank coming on as the title sponsor the following year.

The bank also sponsors a scholarship associated with the tournament and donates $1,000 to the general scholarship fund of each of the nine schools participating in the tournament, also known as the Provident Pride Tournament.

“Provident’s corporate culture perfectly compliments the ideals that represent Division III basketball,” a tournament description says.

Buffalo, N.Y.-based M&T Bank touts its “long history of civic and charitable support” on its Web site and there are many cases where the parent company absorbs the sponsorship duties of its acquisition. And, in the SEC filing accompanying news of the deal M&T said it would continue “Provident’s charitable contributions.”

But in times when charitable donations are dwindling, will the cost of supporting a “Maryland pride” Division III basketball tournament still be in the best interests of an out-of-state bank?

LIZ FARMER, Business Writer

Iraqi journalist causes footwear frenzy

Apparently, the old adage that any publicity, positive or negative, is good for business has been borne out again.

According to a report by Bloomberg News on Friday, the Turkish shoemaking company responsible for the shoe flung at President George W. Bush has seen demand for the specific model skyrocket.

Raman Baydan, owner of Istanbul-based Baydan Ayakkabicilik San. & Tic., said there have already been 300,000 orders for the brown “Model 271” after last weekend’s incident, when an Iraqi journalist threw his shoes at the president during a press conference.

Baydan said he is even considering re-branding the shoes as the “Bye-Bye Bush” or “The Bush Shoe” to further capitalize on the notoriety.

While most of the orders are coming from Iraq, Iran, Syria and Egypt, Baydan told Bloomberg he had interest from an American company looking to import 4,000 pairs as well.

BEN MOOK, Assistant Business Editor

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