URL: http://zdnet.com.com/2100-1106-848203.html

A huge exodus from San Francisco may be under way as high-tech companies pack their bags for cheaper North American cities and regions, according to a study.

San Francisco is the most expensive North American city for a high-tech company do to business, with an estimated average cost of $43 million a year, according to The Boyd Company, a consulting firm that advises major companies on location planning. For example, a company relocating to Baltimore from San Francisco would see a savings of about 21 percent, according to the study’s figures.

And as if that’s not incentive enough for companies to relocate, an increase in government spending on defense, centered in the metro Washington, D.C., area, and the lure of cheaper operating costs north of the U.S. border, are about to siphon more business out of Northern California.

“I have never seen a decline so rapid,” said John H. Boyd, talking about the conditions that precipitated the study.

The numbers for the study were based on the average cost of operating a 500-employee facility.

Boyd, who has done location planning for 27 years as president of The Boyd Company, said he has watched with amazement as the unemployment rate in San Francisco has risen from 1.7 percent in January 2001 to 7.5 percent in January 2002. That figure doesn’t compare favorably with the national average of 5.6 percent in January, Boyd said.

Things may get worse, he said, as companies head east and north, following the two biggest money trails of the post-Sept. 11 economy.

Venture capitalists “are saying, ‘Show me the money,’ and companies are concluding they have to be competitive on a global scale,” Boyd said. In an economy where it is close to impossible to cut costs, cost reductions have a new importance, and site selection has become more critical.

“Canada is emerging as an alternative location for U.S. high-tech investments in the recessionary economy,” Boyd said, citing a lower exchange rate, the elimination of tariffs under NAFTA (North American Free Trade Agreement) and the absence of corporate health care costs in a country with a national health care system. Several companies have already caught on to the trend: Mountain View, Calif.-based Intuit and Houston-based Compaq have both listed their Calgary, Alberta, facilities as among their most profitable, Boyd said.

“Many companies in the (San Francisco) Bay Area are also looking to Washington because of the vast government spending for the war on terrorism,” Boyd said. John Hopkins University, which has locations throughout the Baltimore-Washington area, “is the center for bio-terrorism research, and the NSA (National Security Agency) is becoming the catalyst for billions and billions of dollars in electronic surveillance and Internet security spending by the federal government,” he added.

“It’s like Silicon Valley is returning to its roots; it was founded in the defense industry in the 60s,” Boyd said.

Of the individual cities being considered, Baltimore; Vancouver, British Columbia; and Calgary are considered some of the most attractive. Baltimore was the cheapest U.S. location included in the study, at $34.4 million a year. Vancouver was the highest-priced Canadian city, at $35 million, and Calgary was the lowest, at $27.7 million.

Santa Clara County, Calif., which includes San Jose, Calif., and most of Silicon Valley, came in second to San Francisco with costs of $41.7 million. New York was next, at $40.9 million and then Boston, at $39 million.

Of course, not every city in North America was considered. The study takes factors such as pre-existing technology centers, ease of travel, and other nuances into consideration. The Boyd Company has spent the last nine months doing everything from number crunching to interviewing mayors to come up with the survey cities, which are likely to become targets for expansion or relocation by the consulting firm’s clients.

Though Boyd would not disclose which companies are considering relocation, he listed Compaq Computer, Chase Manhattan Bank, Pitney Bowes and Time Inc. as clients.

“These cities included in the study were not chosen at random; you will see them on the short lists of corporate-site seekers over the next 12 months,” he said.

-Ian.

Ian Andrew Bell wrote:>
> Hey, guess what? Ed’s on holiday!
>
> I suspended him from posting. Someone remind me to turn it back on on Aug
> 23rd.
>
> -Ian.
>
> Ed Hargrave wrote:
> >
> > I will be out of the office until August 23, 1999.
> > If this matter is urgent. please contact Mike Antoniak
> > at 604.473.9883 or mikea [at] microserve [dot] ca.
> >
> > Best Regards,
> > Ed Hargrave
> >
> > >>> “foib [at] egroups [dot] com” 08/13/99 14:27 >>>
> >
> > I will be out of the office until August 23, 1999.
> > If this matter is urgent. please contact Mike Antoniak
> > at 604.473.9883 or mikea [at] microserve [dot] ca.
> >
> > Best Regards,
> > Ed Hargrave
> >
> > >>> “foib [at] egroups [dot] com” 08/13/99 14:25 >>>
> >
> > I will be out of the office until August 23, 1999.
> > If this matter is urgent. please contact Mike Antoniak
> > at 604.473.9883 or mikea [at] microserve [dot] ca.
> >
> > Best Regards,
> > Ed Hargrave
> >
> > >>> “foib [at] egroups [dot] com” 08/13/99 14:24 >>>
> >
> > I will be out of the office until August 23, 1999.
> > If this matter is urgent. please contact Mike Antoniak
> > at 604.473.9883 or mikea [at] microserve [dot] ca.
> >
> > Best Regards,
> > Ed Hargrave
> >
> > >>> “foib [at] egroups [dot] com” 08/13/99 14:22 >>>
> >
> > I will be out of the office until August 23, 1999.
> > If this matter is urgent. please contact Mike Antoniak
> > at 604.473.9883 or mikea [at] microserve [dot] ca.
> >
> > Best Regards,
> > Ed Hargrave
> >
> > >>> “foib [at] egroups [dot] com” 08/13/99 14:18 >>>
> >
> > http://cbs.marketwatch.com/archive/19990813/news/current/irid.htx
> > http://www.news.com/News/Item/0,4,40492,00.html?st.ne.fd.mdh.ni
> > http://www.news.com/News/Item/0,4,40407,00.html?st.ne.ni.rel
> >
> > -Ian.
> >
> > –=–
> >
> > Chapter 11 filed against Iridium
> > Interest payment of $90 million due Sunday
> >
> > By Debra McGarry, CBS MarketWatch
> > Last Update: 4:42 PM ET Aug 13, 1999
> > Movers & Shakers
> >
> > WASHINGTON, D.C. (CBS.MW) — A group of investors filed an involuntary
> > Chapter 11 bankruptcy
> > petition against financially troubled Iridium World Communications on
> > Friday, two days after the
> > company defaulted on over $1.5 billion in loans.
> >
> > “It became clear to the various parties at interest that a Chapter 11 filing
> > was inevitable and, unless
> > drastic action was taken, the company’s assets could be at serious risk,”
> > said Talton Embry of
> > Magten Asset Management Corporation, a member of the beleaguered company’s
> > steering
> > committee, in a statement.
> >
> > Iridium (IRID: news, msgs) has 20 days to respond to the involuntary
> > petition and can continue to
> > operate its business in the ordinary course.
> >
> > On Wednesday, Iridium said it defaulted on more than $1.5 billion in loans
> > after failing to meet
> > customer and revenue growth targets required on an $800 million loan, the
> > third extension of which
> > expired Wednesday.
> >
> > The expiration triggered the default on that loan and another for $750
> > million. Iridium did not seek
> > another extension, spokeswoman Michelle Lyle told Reuters.
> >
> > The default also delivered a blow to Motorola (MOT: news, msgs), Iridium’s
> > 18 percent owner, and its
> > loan guarantor. Motorola shares gained 5 1/4 to close at 93 amid an overall
> > market rally.
> >
> > Motorola issued a statement on Thursday in which it reiterated its support
> > for Iridium, its operations
> > and gateways and all current and future subscribers. However, Iridium’s
> > largest shareholder said its
> > “willingness to participate in providing additional financial support
> > depended on a substantial degree
> > of participation in a financial restructuring by all other relevant parties
> > with a significant financial
> > interest.”
> >
> > Motorola is the guarantor of the $750 million loan in default. The other
> > $800 million loan is secured by
> > Chase Manhattan Bank. According to Motorola, creditors have been working on
> > plans to restructure
> > Iridium’s debt.
> >
> > The default has hit additional investors, namely Japan’s Nippon Iridium, the
> > second largest
> > shareholder after Motorola. Japan’s Kyocera (KYO: news, msgs) and
> > long-distance phone service
> > provider DDI Corp. are the major shareholders of Nippon Iridium. See full
> > story.
> >
> > “It’s in every investor’s interest to keep them (Iridium) out of bankruptcy,
> > because bankruptcy shrinks
> > the size of the pie available to Motorola, banks, and bondholders,” analyst
> > Armand Mussey of Bank
> > of America Securities told CBS.Marketwatch.com on Wednesday.
> >
> > Once Iridium missed its first customer subscription projections, it had less
> > revenue available for
> > advertising, which resulted in the company missing its revenue and
> > subscription projections even
> > further. “Then they have so little money left over that the banks start
> > coming after them and
> > meanwhile all the interest on their loans keeps accumulating,” Mussey said.
> >
> > On Aug. 15, Iridium must meet a $90 million interest payment on its $1.45
> > billion in bonds. The
> > payment was originally due July 15, but Iridium exercised a 30-day grace
> > period.
> >
> > Trading in shares of the struggling satellite communications company were
> > halted amid a 1 3/16 slide
> > to 3 1/16 on volume of of almost 5 million shares.
> >
> >
> >

I suspended him from posting. Someone remind me to turn it back on on Aug 23rd.

-Ian.

Ed Hargrave wrote:>
> I will be out of the office until August 23, 1999.
> If this matter is urgent. please contact Mike Antoniak
> at 604.473.9883 or mikea [at] microserve [dot] ca.
>
> Best Regards,
> Ed Hargrave
>
> >>> “foib [at] egroups [dot] com” 08/13/99 14:27 >>>
>
> I will be out of the office until August 23, 1999.
> If this matter is urgent. please contact Mike Antoniak
> at 604.473.9883 or mikea [at] microserve [dot] ca.
>
> Best Regards,
> Ed Hargrave
>
> >>> “foib [at] egroups [dot] com” 08/13/99 14:25 >>>
>
> I will be out of the office until August 23, 1999.
> If this matter is urgent. please contact Mike Antoniak
> at 604.473.9883 or mikea [at] microserve [dot] ca.
>
> Best Regards,
> Ed Hargrave
>
> >>> “foib [at] egroups [dot] com” 08/13/99 14:24 >>>
>
> I will be out of the office until August 23, 1999.
> If this matter is urgent. please contact Mike Antoniak
> at 604.473.9883 or mikea [at] microserve [dot] ca.
>
> Best Regards,
> Ed Hargrave
>
> >>> “foib [at] egroups [dot] com” 08/13/99 14:22 >>>
>
> I will be out of the office until August 23, 1999.
> If this matter is urgent. please contact Mike Antoniak
> at 604.473.9883 or mikea [at] microserve [dot] ca.
>
> Best Regards,
> Ed Hargrave
>
> >>> “foib [at] egroups [dot] com” 08/13/99 14:18 >>>
>
> http://cbs.marketwatch.com/archive/19990813/news/current/irid.htx
> http://www.news.com/News/Item/0,4,40492,00.html?st.ne.fd.mdh.ni
> http://www.news.com/News/Item/0,4,40407,00.html?st.ne.ni.rel
>
> -Ian.
>
> –=–
>
> Chapter 11 filed against Iridium
> Interest payment of $90 million due Sunday
>
> By Debra McGarry, CBS MarketWatch
> Last Update: 4:42 PM ET Aug 13, 1999
> Movers & Shakers
>
> WASHINGTON, D.C. (CBS.MW) — A group of investors filed an involuntary
> Chapter 11 bankruptcy
> petition against financially troubled Iridium World Communications on
> Friday, two days after the
> company defaulted on over $1.5 billion in loans.
>
> “It became clear to the various parties at interest that a Chapter 11 filing
> was inevitable and, unless
> drastic action was taken, the company’s assets could be at serious risk,”
> said Talton Embry of
> Magten Asset Management Corporation, a member of the beleaguered company’s
> steering
> committee, in a statement.
>
> Iridium (IRID: news, msgs) has 20 days to respond to the involuntary
> petition and can continue to
> operate its business in the ordinary course.
>
> On Wednesday, Iridium said it defaulted on more than $1.5 billion in loans
> after failing to meet
> customer and revenue growth targets required on an $800 million loan, the
> third extension of which
> expired Wednesday.
>
> The expiration triggered the default on that loan and another for $750
> million. Iridium did not seek
> another extension, spokeswoman Michelle Lyle told Reuters.
>
> The default also delivered a blow to Motorola (MOT: news, msgs), Iridium’s
> 18 percent owner, and its
> loan guarantor. Motorola shares gained 5 1/4 to close at 93 amid an overall
> market rally.
>
> Motorola issued a statement on Thursday in which it reiterated its support
> for Iridium, its operations
> and gateways and all current and future subscribers. However, Iridium’s
> largest shareholder said its
> “willingness to participate in providing additional financial support
> depended on a substantial degree
> of participation in a financial restructuring by all other relevant parties
> with a significant financial
> interest.”
>
> Motorola is the guarantor of the $750 million loan in default. The other
> $800 million loan is secured by
> Chase Manhattan Bank. According to Motorola, creditors have been working on
> plans to restructure
> Iridium’s debt.
>
> The default has hit additional investors, namely Japan’s Nippon Iridium, the
> second largest
> shareholder after Motorola. Japan’s Kyocera (KYO: news, msgs) and
> long-distance phone service
> provider DDI Corp. are the major shareholders of Nippon Iridium. See full
> story.
>
> “It’s in every investor’s interest to keep them (Iridium) out of bankruptcy,
> because bankruptcy shrinks
> the size of the pie available to Motorola, banks, and bondholders,” analyst
> Armand Mussey of Bank
> of America Securities told CBS.Marketwatch.com on Wednesday.
>
> Once Iridium missed its first customer subscription projections, it had less
> revenue available for
> advertising, which resulted in the company missing its revenue and
> subscription projections even
> further. “Then they have so little money left over that the banks start
> coming after them and
> meanwhile all the interest on their loans keeps accumulating,” Mussey said.
>
> On Aug. 15, Iridium must meet a $90 million interest payment on its $1.45
> billion in bonds. The
> payment was originally due July 15, but Iridium exercised a 30-day grace
> period.
>
> Trading in shares of the struggling satellite communications company were
> halted amid a 1 3/16 slide
> to 3 1/16 on volume of of almost 5 million shares.
>
>
>

-Ian.

–=–

Chapter 11 filed against Iridium Interest payment of $90 million due Sunday

By Debra McGarry, CBS MarketWatch Last Update: 4:42 PM ET Aug 13, 1999 Movers & Shakers

WASHINGTON, D.C. (CBS.MW) — A group of investors filed an involuntary Chapter 11 bankruptcy petition against financially troubled Iridium World Communications on Friday, two days after the company defaulted on over $1.5 billion in loans.

“It became clear to the various parties at interest that a Chapter 11 filing was inevitable and, unless drastic action was taken, the company’s assets could be at serious risk,” said Talton Embry of Magten Asset Management Corporation, a member of the beleaguered company’s steering committee, in a statement.

Iridium (IRID: news, msgs) has 20 days to respond to the involuntary petition and can continue to operate its business in the ordinary course.

On Wednesday, Iridium said it defaulted on more than $1.5 billion in loans after failing to meet customer and revenue growth targets required on an $800 million loan, the third extension of which expired Wednesday.

The expiration triggered the default on that loan and another for $750 million. Iridium did not seek another extension, spokeswoman Michelle Lyle told Reuters.

The default also delivered a blow to Motorola (MOT: news, msgs), Iridium’s 18 percent owner, and its loan guarantor. Motorola shares gained 5 1/4 to close at 93 amid an overall market rally.

Motorola issued a statement on Thursday in which it reiterated its support for Iridium, its operations and gateways and all current and future subscribers. However, Iridium’s largest shareholder said its “willingness to participate in providing additional financial support depended on a substantial degree of participation in a financial restructuring by all other relevant parties with a significant financial interest.”

Motorola is the guarantor of the $750 million loan in default. The other $800 million loan is secured by Chase Manhattan Bank. According to Motorola, creditors have been working on plans to restructure Iridium’s debt.

The default has hit additional investors, namely Japan’s Nippon Iridium, the second largest shareholder after Motorola. Japan’s Kyocera (KYO: news, msgs) and long-distance phone service provider DDI Corp. are the major shareholders of Nippon Iridium. See full story.

“It’s in every investor’s interest to keep them (Iridium) out of bankruptcy, because bankruptcy shrinks the size of the pie available to Motorola, banks, and bondholders,” analyst Armand Mussey of Bank of America Securities told CBS.Marketwatch.com on Wednesday.

Once Iridium missed its first customer subscription projections, it had less revenue available for advertising, which resulted in the company missing its revenue and subscription projections even further. “Then they have so little money left over that the banks start coming after them and meanwhile all the interest on their loans keeps accumulating,” Mussey said.

On Aug. 15, Iridium must meet a $90 million interest payment on its $1.45 billion in bonds. The payment was originally due July 15, but Iridium exercised a 30-day grace period.

Trading in shares of the struggling satellite communications company were halted amid a 1 3/16 slide to 3 1/16 on volume of of almost 5 million shares.