BP oil spill trial delayed for settlement talks

By Tom Bergin and Jonathan Stempel

LONDON/NEW ORLEANS | Mon Feb 27, 2012 1:57am EST

A BP petrol station sign pictured in west London, April 25 2010-Reuters/Toby Melville

(Reuters) - The trial to decide who should pay for the 2010 Gulf of Mexico oil spill has been delayed by a week, to allow BP Plc to try to cut a deal with tens of thousands of businesses and individuals affected by the disaster.

Less than 24 hours before the case was set to start in a New Orleans federal court, U.S. District Judge Carl Barbier pushed back the date to March 5 from February 27.

The delay allows further talks between BP and the Plaintiffs' Steering Committee (PSC), which represents condominium owners, fishermen, hoteliers, restaurateurs and others who say their livelihoods were damaged by the April 20, 2010, explosion of the Deepwater Horizon drilling rig and subsequent oil spill.

Eleven people were killed, and 4.9 million barrels of oil spewed from the mile-deep Macondo oil well, in by far the worst offshore U.S. oil spill.

"BP and the PSC are working to reach agreement to fairly compensate people and businesses affected by the Deepwater Horizon accident and oil spill," BP said in a statement.

The London-based oil company said there was no assurance that the talks would lead to a settlement.

Bloomberg news agency reported on Monday that BP and the plaintiffs were discussing a $14 billion settlement that was nearing completion. It cited three people familiar with the talks.

A settlement between BP and the businesses would remove a significant portion of the complex litigation, the trial of which was expected to take nearly a year. It could also be a key step toward reaching a global settlement with its drilling partners, and with federal and state governments.

Much work would remain. The U.S. government has sued BP and others for violating the Clean Water Act and other laws, which could result in fines totaling tens of billions of dollars. Gulf states are also seeking compensation for their losses. BP is also suing and being sued by its drilling partners.

"Before today, I had almost given up on the possibility of a global settlement before a trial began," said Edward Sherman, a professor at Tulane University Law School and specialist in complex litigation. "Now, with an extra week, it seems to improve the chances."

Barbier, meanwhile, has kept the highly complex case moving forward, and had not changed the trial date since it was first set more than a year ago.

"Judge Barbier would not have delayed (the) trial unless (a) settlement was within reach," said David Uhlmann, a University of Michigan law professor and former chief of the Justice Department's environmental crimes section, in an email.

In an order dated Sunday, Barbier said the delay made sense "for reasons of judicial efficiency and to allow the parties to make further progress in their settlement discussions." He did not specify which parties he was referring to.

REASONABLE SETTLEMENTS SOUGHT

Apart from BP, which owned 65 percent of the Macondo well, the main corporate defendants are Vernier, Switzerland-based Transocean Ltd, which owned the Deepwater Horizon rig, and Houston-based Halliburton Co, which provided cementing services for the well. They are also suing each other. Several other companies are also involved in the trial.

A BP spokeswoman declined to comment further on the talks.

Transocean spokesman Lou Colasuonno said BP's talks with the PSC "doesn't change the facts of the case," and that Transocean remains prepared for trial.

A spokeswoman for the U.S. Department of Justice declined to comment. The offices of Alabama Attorney General Luther Strange and Louisiana Attorney General James "Buddy" Caldwell, which are coordinating the states' case, did not immediately respond to requests for comment. Halliburton also did not immediately respond to a request for comment.

BP has accepted responsibility for the disaster, and estimated its legal and cleanup costs for the spill will total $43 billion. Some analysts have said that figure could top $60 billion, especially if there were a finding that its activities at the project were "grossly negligent."

Earlier this month, BP said it had set aside $6.1 billion to cover claims by businesses. Lawyers for those plaintiffs said the amount was too low, and that BP should also award punitive damages, which the oil company says are not warranted.

Many industry analysts and experts say a quick settlement is in BP's best interest.

Chief Executive Robert Dudley has said BP is willing to settle for reasonable terms, and on Sunday told The Sunday Telegraph in an interview that he hoped to reach "some agreements" and perhaps avoid litigation.

Other companies in the case are Anadarko Petroleum Corp, which owned 25 percent of the well; Mitsui & Co's MOEX USA unit, which owned 10 percent of the well; Cameron International Corp, which made a blowout preventer, and Schlumberger NV's M-I Swaco venture, which provided mud services. All have settled with BP. MOEX has settled with the government.

The case is In re: Oil Spill by the Oil Rig "Deepwater Horizon" in the Gulf of Mexico, on April 20, 2010, U.S. District Court, Eastern District of Louisiana, No. 10-md-02179.

(Reporting by Tom Bergin in London and Jonathan Stempel in New Orleans; Additional reporting by Chris Baltimore in Houston, Ransdell Pierson in New York and Jeremy Pelofsky in Washington, D.C.; Editing by Marguerita Choy and Elizabeth Piper)

Advent and Goldman to Buy TransUnion in $3 Billion Deal

February 17, 2012, 9:36 am

TransUnion, one of the nation's three largest consumer credit reporting companies, produce on-demand reports with a person's borrowing history

By BEN PROTESS, NY TIMES

TransUnion, one of the nation’s three largest consumer credit reporting companies, agreed on Friday to sell itself to a pair of private equity funds, including an arm of Goldman Sachs

Advent International and GS Capital Partners, the Goldman Sachs unit, will buy the company from Madison Dearborn Partners and the Pritzker family, the prominent Chicago billionaires. The deal, which values TransUnion at more than $3 billion, is one of the largest private equity transactions of the year.

The sale is the latest shakeup for TransUnion, which was controlled by the Pritzkers until 2010. When the Pritzkers sold their controlling interest to Madison Dearborn Partners, one of Chicago’s largest private equity shops, the company was worth $2 billion.

The deal announced on Friday will not prompt changes to the company’s management team, TransUnion said in a statement. The companies did not announce the full terms of the takeover on Friday.

“I wish the TransUnion management team and all the associates the very best in this next, and very exciting, stage in the evolution of the company,” Penny Pritzker, one of more than 10 heirs to the Prizker family fortune and the chairwoman of TransUnion’s board of directors, said in a statement.

The deal comes as the credit reporting industry faces broad federal oversight for the first time. The Consumer Financial Protection Bureau, the nation’s federal consumer watchdog, unveiled a plan on Thursday to keep a closer eye on credit reporting companies and debt collectors, two industries that have largely flown under the government’s radar. The proposal would ensnare the industry’s 30 largest companies, including TransUnion and its two biggest competitors, Experian and Equifax.

Credit agencies, which produce on-demand reports featuring a consumer’s credit score and a detailed snapshot of a person’s borrowing history, are essential for obtaining a car, a home mortgage or even a cellphone. But the companies have also drawn criticism for producing the occasional error-riddled report and for deferring to creditors at the expense of consumers.

The TransUnion deal is expected to close by early in the second quarter.

“TransUnion has demonstrated strong growth under the support and guidance that Penny Pritzker has provided as our chairman, and we have benefited greatly from the resources, network and expertise of Madison Dearborn Partners,” Bobby Mehta, TransUnion’s president and chief executive, said in a statement. “We look forward to working closely with the Advent and Goldman Sachs teams to continue executing against our strategic blueprint by remaining focused on providing our clients with highly attentive service and the very best information and risk management products.”

TransUnion was advised by Bank of America and Deutsche Bank and the law firm Latham & Watkins. Evercore advised Advent and Goldman Sachs.

Obama’s budget shows he’s no Keynesian

Commentary: He links fast growth with fiscal contraction in Washington

By MarketWatch

WASHINGTON (MarketWatch) — In his 2013 budget proposal released on Monday, President Barack Obama has now fully embraced austerity as the recipe for economic success.

Obama is no longer a Keynesian.

Although the economy remains weak and unemployment is still elevated, Obama proposes the sharpest contraction in fiscal policy in more than 40 years. And, in the midst of those tax increases and spending reductions, he’s predicting a booming economy growing well above the economy’s long-run potential for the next six years — averaging an incredible 3.6%. Read our news coverage of the White House budget plan.

In short, Obama is agreeing with his Republican critics who say that what the economy really needs right now is a rapid move toward balanced budgets. By contrast, Keynesian economists would say that reducing budget deficits now, when we still have so much slack in the economy, would slow growth. They recommend running high deficits until the economy is stronger, and then moving to balance.

Next year, the Obama budget proposal sees federal tax receipts increasing by 2 percentage points of gross domestic product, and federal outlays falling by 1.1 percentage points of GDP. The total drag from fiscal policy would total 3.1% of GDP.

The last time the government tightened fiscal policy that much was in 1969, when a 10% income tax surcharge was implemented to pay for the Vietnam War. The immediate results were terrific in one sense: the federal budget was balanced in 1969, the only time it was balanced between 1960 and 1998.

Unfortunately, the balanced budget was a major cause of the recession that began in December 1969. All too often over the past 90 years, attempts to reduce deficits or increases surplus have contributed to ensuing recessions.

A recession is what the Congressional Budget Office thinks might happen next year if the government goes ahead with deficit-reduction measures already baked into federal law, including the sunsetting of the Bush-era tax cuts and the automatic budget cuts agreed to last year when Obama and Congress settled the debt-ceiling standoff.

For 2013, the CBO projects growth of just 1% (as opposed to 3% in the White House budget), largely because of austerity measures. According to the CBO, growth could be as high as 4.1% next year if the government delayed its plans to reduce the deficits.

It’s hard to fathom how the economy will be able to grow at such a rapid pace over the next three years if fiscal policy is exerting such a powerful drag.

—Rex Nutting

Shilling Strengthens against other currencies

The Kenyan currency continues to hold its own against major currencies after rebounding from its lowest point ever in October 2011. It hit its nadir on October 22nd when it exchanged at Kshs 107 to the greenback.
It then recovered to hit 100 to the US dollar and measured 91.45 against a basket case of 4 major currencies. This basket case is a measure of the units of Kenya's major partners and contains the US dollar, the Sterling pound, the euro and the yen weighting according to trading importance.
The shilling measured 86.53 against the same currencies in September.
On October 26th, a basket case of regional currencies read 8.68 as compared to 8.36 hit on September 22nd. This case holds the South African Rand, the United Arab Emirates' dirham and the 2 East African currencies, the Ugandan and Tanzanian shillings.
The Kenya shilling read 76.27 against the regional currencies on 25th January 2011. These represent a gain of 16.6% and 14.5% respectively on the 2 basket cases.
This has in turn been a result of the treasury's intervention in the markets raising interest rates and also hounding out key players in the banking sector accused of hoarding foreign currencies. These include Equity Bank,Kenya Commercial Bank, Barclays Bank of Kenya, Standard Chartered Bank and Family Bank.


Forex: EUR/USD steadies above 1.3100

Fri, Feb 03 2012, 16:16 GMT
FXstreet.com (Córdoba) - As the dust settles after the surprisingly positive US payrolls report, EUR/USD consolidates above the 1.3100 mark. The pair bottomed at 1.3065 following the data and managed to bounce up although the 1.3130 area capped the recovery confining EUR/USD to sideways consolidation within the last hours.

At time of writing, EUR/USD is quoting around 1.3110, still down 0.3% on the day. The Euro is on track to close the week with modest losses, as despite several attempts to break and hold above 1.3200 within the last days, it has been constantly rejected from those levels.

In terms of technical levels, immediate supports are seen at 1.3070, 1.3020 and 1.2980, while next resistances could be found at 1.3140, 1.3185 and the 1.3200/10 area.

I turned down Facebook: Mark Zuckerbeg's college room-mate admits expensive mistake

Mark Zuckerberg's college room-mate, Joe Green, has revealed how he turned down an invitation to help start Facebook, perhaps costing himself hundreds of millions of dollars.

By Nick Allen, Los Angeles

9:42PM GMT 30 Jan 2012

Mr Green, who remains friends with the Facebook founder, shared a dorm with him at Harvard in 2004. He was asked by Mr Zuckerberg to abandon university to start the social networking website.

But Mr Green listened to his father and stayed at Harvard while his friend moved to Silicon Valley and begin his rise to becoming a billionaire.

With Facebook expected to file for an initial public offering soon Mr Zuckerberg, 27, is now worth an estimated $17.5 billion (£11 billion).

Mr Green said he had decided not to join Mr Zuckerberg in the Facebook venture after their previous project, Facemash, got them into trouble at Harvard. The rudimentary site was used to rate female students "hot or not."

Mr Green told ABC News: "We'd got into a little bit of trouble with the previous project and my father, who's a professor, was not too happy with the prospect of me getting kicked out of school. Zuckerberg likes to make fun of my dad for this, but we're still very close."

Mr Green went on to work for John Kerry's failed presidential bid but is himself highly successful.

He now runs a multi-million dollar business called Causes, which aims to get people "civically engaged" by using Facebook to allow them to suggest charities and good causes to each other. Its aim is to "empower anyone with a good idea or passion for change to impact the world."

Bernanke has "finger on trigger" for new bond buys

Bernanke at FED summit in Washington on Nov 9, 2011

By Ann Saphir and Jonathan Spicer

CHICAGO/NEW YORK | Thu Jan 26, 2012 9:03am EST

(Reuters) - The Federal Reserve has moved closer to embarking on a new round of its controversial money-pumping after the central bank and its chairman Ben Bernanke highlighted a grim outlook for the U.S. economy.

Bernanke on Wednesday opened the door a bit wider for the Fed to return to buying securities in the months ahead to buttress a weak recovery and keep inflation from slipping too far below its newly adopted 2-percent target.

"It sounds like the finger is on the trigger," said Thomas Simons, a money market economist at Jefferies & Co.

The Fed's announcement that it was unlikely to raise interest rates until at least late 2014, more than a year beyond its previous guidance, immediately pushed down Treasury bond yields and Bernanke's comments to the media raised expectations of a further round of so-called quantitative easing, or QE3.

It remains to be seen if the potential political backlash proves too daunting.

The prospect of the Fed pumping yet more money into the U.S. economy was seized upon by Republican hopeful Newt Gingrich to slam President Barack Obama's record. That highlighted the political pitfalls for the Fed in an election year.

Barring an unexpected pick-up in inflation or the U.S. economy suddenly kicking into a higher gear, Bernanke said it was logical that the Fed should look at ways to do more to help.

"The framework makes very clear that we need to be thinking about ways to provide further stimulus if we don't get improvement in the pace of recovery and a normalization of inflation," he told a quarterly news conference.

"Probably the main take-away from the press conference is the sense conveyed by Bernanke that it would not take much of a disappointment in growth or inflation to get the Fed to start another round of QE," said Michael Feroli, chief U.S. economist at J.P. Morgan.

"In fact, from his answers it's not even clear any disappointment would be necessary to see more QE," Feroli wrote in a note, adding he was not forecasting another round of asset purchases even if the bar for action was low.

The Fed in late 2008 slashed interest rates to near zero and has since bought $2.3 trillion in long-term securities in an unprecedented drive to spur growth and revive the economy after the worst recession in decades.

Yet the recovery has been slow and the outlook issued by the Fed on Wednesday was bleak.

With core inflation now at 1.7 percent and Fed officials forecasting unemployment to stay above 8 percent this year, many analysts took Bernanke's comments to mean QE3 is all but inevitable.

MORTGAGES

The Fed has trained its sights on the stalled housing market in recent months, so any move to QE3 is most widely expected to involve buying mortgage securities to help bring down further already record-low mortgage interest rates.

Some economists said Bernanke may wait until the end in June of the Fed's "Operation Twist", which involves selling short-term bonds and buying longer-term ones in its $2.9 trillion portfolio to push down long-term interest rates further.

Bernanke may also want to wait until the market has absorbed his sweeping changes in communications policy which included the Fed adopting an explicit inflation target and releasing the interest rate projections of its policymakers for the first time on Wednesday.

Buying more mortgage-backed securities would drive down longer-term rates on mortgages with a view to countering what remains a drag on a U.S. economy still struggling to emerge from the worst recession in generations.

"I think it could happen any time now, based on the language that we saw today," said Eric Stein, a portfolio manager at Eaton Vance in Boston.

"I would think the first thing would be squarely focused on purchasing mortgage-backed securities, partially because Treasury yields are already so low, and housing is one of the major issues."

POLITICAL PITFALLS

The blowback from a heavy round of MBS purchases could be just as fierce as that provoked by the Fed's second round of quantitative easing which was announced in November 2010.

QE2, which targeted Treasuries, attracted sharp criticism from Republicans who warned it could fuel inflation and crimp the Fed's ability to tighten policy eventually, and who accused Bernanke of going beyond the central bank's mandate.

"People are now expecting more QE, and that would be in mortgages," said John Canally, investment strategist and economist at LPL Financial in Boston. "I think economically they (the Fed) would want to do that, but I don't know if politically they can withstand the forces against it."

Republican presidential candidates have repeatedly criticized the Fed and Bernanke on the campaign trail. Asked about the Fed's latest statement, Gingrich said it was "a sign of the failure of the entire Obama program" that Bernanke is bracing for such weak economic growth that he will have to keep rates low for so much longer.

At the same time the Fed is "putting in future inflation expectations," Gingrich told reporters in Florida on Wednesday. "It's more of Bernanke laying down a very bad future."

Foreign countries slammed the Fed's previous bond-buying programs, saying they artificially weakened the U.S. dollar and hurt their exporters. Brazil's finance minister talked of a "currency war."

Some economists say the political pressure on the Fed may prove too heavy.

"A third round of QE is still beyond them - or maybe the chairman simply doesn't have the stomach for the congressional mauling that further asset purchases would have precipitated....," said Ian Shepherdson, chief U.S. economist at High Frequency Economics.

Nonetheless, many others expect that the Fed will act again.

Economists at 12 of 18 primary dealers, the large financial institutions that do business directly with the Fed, believe the central bank will undertake further quantitative easing, according to a Reuters poll after Bernanke's news conference.

Some top investors have placed their bets, too.

Bill Gross, who runs the world's largest bond fund, has ramped up purchases of mortgage-backed securities which at the end of November accounted for 43 percent of his holdings. The self-styled "bond king" said last month that any QE3 would likely be focused on the housing sector.

Keith Wirtz, chief investment officer at Fifth Third Asset Management, with $18 billion in assets, said the Fed had gone "all in" with its promise to keep rates low through late 2014, and predicted that any rise in long-term borrowing costs would push the Fed to buy more bonds.

"Brace for QE3 if rates start to move higher on the long end," he said.

(Reporting by Ann Saphir and Jonathan Spicer; Additional reporting by Jennifer Ablan, Sam Youngman, Rodrigo Campos and Karen Brettell; Editing by Kim Coghill)

America's Most Promising Companies: The Top 20

Digital Broadcasting Group's front page

What if someone told you the most promising company in America aimed to compete with multiple multibillion-dollar giants in a traditional industry with un-software-like profit margins? Then what if they told you that the same company had clocked explosive growth through the deepest recession in recent memory—and it was just getting started?

Meet Smashburger, tops on our new list of America’s 100 Most Promising Companies–privately held up-and-comers with compelling business models, strong management teams, notable customers, strategic partners and precious investment capital. Since 2007, the Denver-headquartered patty chain will have grown to 143 locations (half company-owned, half franchised) and $54 million in annual revenue by the end of 2011. Another 450 franchise agreements are already on the books.

The companies on our AMPC list hail from 22 industries, with software-and-services taking the biggest slice (35%). Some fast facts: 90 have raised outside capital; 70 have a CEO who is also one of the founders; 12 have one younger than 35 years old; 7 have yet to generate revenue; and one sells a burger topped with pastrami. None of these outfits may blossom into the next Google or Apple, but all, it appears, have bright futures.

Take BOKU, at No. 2. Founded in 2008, the company (fiscal 2010 sales: $55 million) creates software that helps online merchants process payments using a customer’s cell phone number in place of a credit card; it then takes a small cut of each transaction. Big customers include Facebook and Electronic Arts. BOKU has raised $42 million in venture capital from stalwarts Andreesen Horowitz, Khosla Ventures, and others. Founders Mark Britto, Ron Hirson, and Erich Ringewald have each sold companies they founded or lead.

Digital Broadcasting Group, at No. 3, launched in 2006. It produces online videos–marketing disguised as entertainment–for corporations and places them (as well as traditional video ads) among a network of 2,600 websites. Customers include Wal-Mart Stores, American Express, Coca-Cola and Ford. CEO Chris Young sold KlipMart, an online video ad company, to Doubleclick in 2006.

Those are the kind of ingredients promising companies are made of—which leads us to the point of this whole exercise.

You’d have to be living under the dirt that’s under the rock not to have noticed that the business press loves rankings. Readers devour, dissect and debate them. More to the point, rankings sell advertising—and that leads to more rankings.

Company rankings are a popular confection, if often an ultimately unsatisfying one. That’s because most are based on a single metric (such as revenue, assets or market capitalization) and don’t take a comprehensive approach to evaluating a business’ health—or more importantly, its potential.

Sizing up younger, privately held firms is even harder. Their fortunes can change very quickly, and they aren’t obliged to share their plans and finances with the public. The default: Cajole as many companies as possible into revealing their annual sales figures and stack them accordingly.

These short cuts are understandable given the effort, resources and skill deeper due diligence requires—not to mention the abiding fascination with rankings, however unenlightening they might be.

How, then, to find hidden gems with scintillating prospects?

To sharpen our search, FORBES teamed up with CB Insights, a New York City-based data firm that tracks investment in high-growth private companies. With $650,000 in grants from the National Science Foundation, CB Insights has developed complex software called Mosaic to help lenders and investors dole out capital more efficiently. We married Mosaic’s data-crunching with old-fashioned reporting to assemble a list of up-and-comers with big growth potential.

Mosaic mines data from 30,000 sources (from press releases and social networks to job boards and court filings) to come up with one score that measures a company’s potential. Think of it as the SAT score for private companies—something that lenders, investors and vendors can use to quickly gauge whom they want to do business with. “Five years from now we expect Mosaic will help the best private companies access capital at more favorable terms and win more customers,” says CB Insights cofounder Anand Sanwal, 38.

Mosaic’s algorithms look at a host of signals that collectively paint a picture of a company’s health. Example: If turnover in the management ranks is ticking up, that’s a negative signal. A new distribution deal with a large strategic partner is a favorable signal. The hard part: extracting all those “digital footprints” (job postings, product reviews, press reports, debt filings—all in different digital formats) and assembling them in a meaningful way.

There are two powerful advantages to this approach. First, aggregating data from thousands of sources would take far too long to do by hand. Second: “Mosaic assesses these dimensions not just on an absolute basis but relative to competitors,” adds Sanwal. “It implicitly considers relative performance.”

Our hunt began with a free online survey. Entrepreneurs could nominate their own companies or be nominated by those familiar with their businesses (lawyers, accountants, p.r. types). Contenders had to be privately held, for-profit, stand-alone businesses (as opposed to divisions of bigger firms). Companies that hadn’t yet generated revenue but had compelling business models were given a look, too.

(To encourage participation, we offered contenders the chance to be selected to attend a two-and-a-half day small business bootcamp at Aileron, in Dayton, Ohio, established by billionaire pet food titan Clay Mathile.

Using the Mosaic score as a preliminary ranking, we honed the list by gathering additional data via a second, more detailed survey (also free) to get a better sense of each company’s growth potential. We asked for annual revenue and the number of employees for 2008 and 2010, and estimates for 2011. (Companies had to verify existing revenue via a corporate tax return or an accounting opinion letter from an independent accounting firm.) We also took into account the size of the addressable market, the strength of major competitors, the experience of the management team, any significant customers and strategic partnerships, the amount of outside capital raised and how much of the founders’ own stash was on the line (the more the better). Then we spoke with representatives of each company to confirm the information and get additional color on their operations.

Our ranking of 100 promising companies is chocked with interesting outfits poised to take off. For the full list, click here. Here are a few more names and nuggets from the Top 20:

No. 7 Allonhill

Annual revenue (latest fiscal year): $19.3 million

Founded in 2008, the company audits individual residential mortgage loan files for institutions that buy or sell mortgage-backed securities. Everything from the borrower’s income and property value to the authenticity of signatures gets a look from one of Allonhill’s 530 employees. Founder and CEO Sue Allon funded the company with proceeds from the sale of her last company, Murrayhill, which also managed risk for mortgage securities, in 2004.

No. 11 uSamp

Annual revenue (latest fiscal year): $22.7 million

Founded in 2008, the company makes online-survey software and has a network of 6.5 million respondents globally in its stable. The company charges according to the number and demographics of the respondents. J.D. Power & Associates is a marquee customer. Co-founders Gregg Lavin and Matt Dusig are childhood friends who together launched and sold two previous companies. They raised $10 million in venture capital from Openview Partners in 2010.

No. 14 Contour

Annual revenue (latest fiscal year): $15.1 million

Makes small, rugged cameras that athletes attach to their helmets or bodies for hands-free recording. Each camera comes with free video editing software; other features include a Bluetooth connection that turns a user’s mobile phone into a viewfinder. Sells through Best Buy and Dick’s Sporting Goods. Marc Barros and Jason Green started the company in 2003 after winning $20,000 at an undergraduate business plan competition. They raised $5 million from Montlake Capital and Black Oak Capital in November 2010.

No. 19 IntegriChain

Annual revenue (latest fiscal year): $5.7 million

Founded in 2007, the company makes software for pharmaceutical companies looking for a better window into their “forward supply chains”—that is, sales and inventory data from distributors and local pharmacies. (Say you wanted to tally the inventory at a single pharmacy, or even see the number of units that pharmacy sold on any given day.) Clients—including Novartis, Johnson & Johnson, and GlaxoSmithKline—sign three- to five-year contracts for access to IntegriChain’s dashboard which can display data myriad ways to make sales teams more efficient. The company raised $3.25 million in venture capital in early 2011.

CEO of the Year: Cloud, Fire lifted Amazon’s Bezos

In 2011 he cemented role atop new economy in most uncertain of times

By Shawn Langlois, MarketWatch

SAN FRANCISCO (MarketWatch) — A lot of people made money on Amazon.com Inc. in 2011, but Jeff Bezos wasn’t one of them.

The founder and chief executive, who takes home a nominal salary of $81,840, holds more than 88 million shares. And while Amazon’s stock leapt nearly 40% from the beginning of the year to its 2011 high in October, it’s since come back to Earth, ending the year off about 4%.

Not that Bezos is worried.

True to form, Bezos, who turned 48 last week, whipped through the year on a series of bold initiatives and innovations that cemented Amazon’s superpower status at the pinnacle of the digital economy, alongside the likes of Apple, Google and Facebook, all of which are now major competitors for Bezos in one way or another.

And so, for his imagination, his long-term focus and his sheer optimism in the face of the most uncertain of economic times, Bezos has been named MarketWatch CEO of the Year.

His moves in 2011 gave millions of customers new and faster ways to consume books, music and more from Bezos and from all manner of other vendors in his galaxy. They gave thousands of workers new jobs. And they significantly added value to long-term investors, even as they gave nearsighted investors plenty of new jitters.

From his cloud drives to massive expansion of online-order-fulfillment centers to the wildly successful launch of the Kindle Fire tablet, Bezos spent 2011 rethinking and re-engineering Amazon’s relationship with customers. Time and again along the way, the company took on industry heavyweights, often beating them to the punch.

Bezos and Amazon “come up with better ideas [and have] executed them well, and now they’ve built a significant moat around what they’ve created,” says Jay Freedman, fund manager at Crystal Rock Capital Management, which counts Seattle-based Amazon among its top holdings. “Frankly, Amazon just keeps putting people out of business”
Short term sacrifices

To be sure, Amazon’s trials and tribulations aren’t for the fainthearted investor. The stock opened 2011 at $180 and built its way up to $246.71 in mid-October, before entering a prolonged slide to end the year lower, at $173.10.

Bonds with the investment community were frayed in the fall, when Amazon’s 44% jump in sales to $10.88 billion was overshadowed by its net income’s plunge to $63 million from $231 million in the comparable quarter of 2010. Making matters worse in the eyes of the bean counters, Amazon warned it might lose money in the fourth quarter while ratcheting up spending on the Fire and other projects.

Over the longer term, however, the stock has outperformed, and, even with the late-2011 pullback, Amazon has equaled Apple’s gains over the past five years. Indeed, for all the questions raised about making money in the here and now, the stock today commands an overweight rating, the highest possible, based on a FactSet Research survey of analysts who cover the $80 billion company.

“Bezos has demonstrated that he has incredible vision, and that he will invest huge dollars and huge resources if he believes in something,” says Eric Best, who worked under Bezos in the company’s early days. “I wouldn’t rule out anything from Amazon at this point.”

Clearly, Wall Street’s fascination with the short term hasn’t stopped Bezos from pushing boundaries, and that’s just fine with his ever-growing customer base.

“Bezos has earned the right to go wherever he wants to go, and the customers will follow,” Crystal Rock’s Freedman explains. “Amazon has spent massive amounts of money to get people their product quickly and relatively cheaply in order to further engender their loyalty.”

When Bezos was asked at the annual shareholder meeting last summer if Amazon.com should be considered a technology, infrastructure or e-commerce company, he answered simply, “Yes.”

He wasn’t joking, either. No signature guffaw.

Amazon’s steady buildout of diversified new products and ventures in 2011 has taken dead aim at such formidable incumbents as Apple Inc. , Google Inc. and Netflix Inc

To some, Amazon may seem to be at a disadvantage, considering the strengths of the competition. But to Best, who went on to found Mercent Corp., a company that helps merchants sell items via Amazon and eBay, Bezos is at his best when he takes on daunting, and risky, concepts.

“If you want to win market share in hypergrowth spaces like tablets, digital media and cloud computing, you have to be committed and make the right level of investment,” Best says. “Bezos has been consistent in demonstrating his willingness to do just that since the company started.”

Of course, Amazon won’t be putting Apple out of business any time soon. But it does pose the first credible threat to Apple’s dominance of the tablet market, which the iPad effectively created.

The Kindle Fire is a 7-inch tablet that sells for the relative bargain price of $199. The iPad starts at $499. The new Amazon device was launched in mid-November.

Amazon hasn’t released specific sales numbers, beyond a press release in December indicating sales were going well.

But Barclay’s analyst Anthony DiClemente just raised his fourth-quarter sales forecast for the Fire from 4.5 million to 5.5 million units and projected sales in 2012 of more than 18 million. That would be enough to give Amazon a commanding presence in the non-iPad tablet market.

Even at 5 million units, in the fourth quarter, Amazon’s share of the of the tablet market would be 25%, according to J.P. Morgan estimates.

The device, which industry insiders say sells at loss, is a gateway to Amazon’s burgeoning library of movies and television shows. Thousands of those are available, and unlimited, for Amazon Prime members, who get two-day shipping and bundled media content for $79 a year.

That’s the beauty of the Amazon that Bezos created. Using its significant leverage and vast product range, the company is able to absorb short-term losses and turn them into profits, and customer loyalty, over time.

Of course that strategy doesn’t come cheaply.

The number of full- and part-time employees at the company soared from 31,200 at the end of the third quarter in 2010 to 51,300 at the end of the third quarter in 2011. That surge came as the company moved to add 13 distribution centers world-wide to speed delivery of the goods demanded by its customers. Amazon has justified the buildup by noting that it hadn’t added any such facilities since the financial crisis of 2008.

“While investments in infrastructure and new products are heavy in the near term,” J.P. Morgan analyst Doug Anmuth says, “we believe they are appropriate for driving long-term growth and they widen Amazon’s competitive moat. Amazon is the best long-term growth story in the Internet space.”
Space race

Born in Albuquerque, N.M. and raised in Houston and Miami, Bezos graduated from Princeton University in 1986 and found employment on Wall Street, rising to vice president positions at Bankers Trust and D.E. Shaw before hatching the idea for an online bookstore and heading west. His Amazon salary may be a relative pittance, and he takes no stock awards, but the company spends $1.6 million on his personal security.

Not one to rest on his many successes, Bezos has also put himself deep into the space race alongside fellow star-chasing billionaires Richard Branson and Elon Musk. His Blue Origin spaceflight company won a $22 million contract from NASA to build systems capable of sending astronauts to the International Space Station.

Though details and progress reports are closely guarded, Blue Origin aims to give the public a chance to experience spaceflight — and, in fine Amazon fashion, to do so at relatively competitive prices.

After that, who knows? Shuttling common folk into outer space would be a tough act to follow, but, if Bezos’s track record is any indication, it would probably be just another steppingstone en route to his next venture.

“We are willing to invent. We are willing to think long term,” Bezos told shareholders last summer. “We start with the customer and work backward — and, very importantly, we’re willing to be misunderstood for long periods of time.”

Shawn Langlois is a reporter for MarketWatch in San Francisco.