Financial thoughts

The Dow and S&P 500 ended at fresh 18-month highs Thursday, but tech concerns limited the Nasdaq composite’s gains ahead of a long weekend.

The Dow Jones industrial average (INDU) added 70 points, or 0.7%, ending at 10,927.07, its highest close since Sept. 26, 2008, when it ended the session at 11,143.13. The blue-chip indicator rose to within 43 points of 11,000, a key psychological indicator, before pulling back.

The S&P 500 index (SPX) gained 9 points, or 0.7%. The Nasdaq composite (COMP) added 5 points, or 0.2%.

Stocks rose through the early afternoon as investors welcomed reports showing the pace of job losses is slowing and manufacturing is picking up both in the U.S. and abroad. The advance briefly lost steam in mid-afternoon, before picking up again near the close. Stock markets will be closed for Good Friday, although Treasury markets will have a shortened session.

Weaker-than-forecast readings on private-sector employment and manufacturing dragged on stocks Wednesday at the end of an up quarter, in which the Dow gained 4.1%, the S&P 500 gained 4.9% and the Nasdaq gained 5.7%.

Stocks have been on the rise since mid- February, as worries about a global debt crisis have given way to renewed optimism about the economic recovery. All three major stock indexes have risen in six of the last seven weeks.

On Thursday, reports showed that weekly jobless claims continued to slip, U.S. manufacturing continued grew at the fastest pace since 2004 and construction spending retreated. Reports coming out of China and the United Kingdom showed manufacturing activity picked up the pace in March.

"The initial claims number shows we are seeing shows slow and steady improvement in the jobs market and the manufacturing numbers are providing reassurance about the global economy," said Jim Baird, chief investment strategist at Plante Moran Financial Advisors.

However, he said Wednesday’s weak report on private-sector employment and the still relatively high weekly jobless claims numbers over the last few months show the jobs market is not recovering enough to spark economic growth.

"To get a good number tomorrow would be a strong indicator that we are moving toward a period of job creation," Baird said.

Jobs market: The number of Americans filing new claims for unemployment fell last week to 439,000 from 445,000 in the previous week, matching the lowest level since August 2008. Forecasts were for 440,000 claims, according to a consensus of economists surveyed by Briefing.com.

The Labor Department report also showed that continuing claims, a measure of Americans who have been receiving benefits for a year or more, fell to 4,662,000 from 4,668,000 the previous week. Economists thought continuing claims would fall to 4,618,000.

A separate report from outplacement firm Challenger, Gray & Christmas showed that planned job cuts rose in March. Employers said they were planing to cut 67,611 jobs in March, a rise of 61% from February’s 42,090 cuts.

The biggest employment report of the week is Friday’s March jobs report from the government. Employers are expected to have added 190,000 jobs to their payrolls in March after cutting 36,000 in February. The unemployment rate, generated by a separate survey, is expected to hold steady at 9.7%.

Manufacturing: The Institute for Supply Management’s manufacturing indexrose to 59.6 in March from 56.5 in the previous month. Economists surveyed by Briefing.com expected a reading of 57.

February construction spending fell 1.3% after falling 1.4% in January, according to a Census Bureau report released in the morning. Economists thought it would fall 1%.

Company news: BlackBerry maker Research in Motion (RIMM) slipped after it posted fiscal fourth-quarter earnings and revenue that rose from a year earlier, but missed forecasts due to weaker-than-expected phone shipments.

The company also issued a fiscal first-quarter earnings and revenue forecast that was better than expected. But shares fell Thursday as analysts and investors expressed worries that the company is not keeping up with Apple (AAPL, Fortune 500) and Google (GOOG, Fortune 500).

Primerica, Citigroup’s soon-to-be spun-off life insurance division rallied more than 20% in its first day of trading as a public company.

Autos: General Motors (GM, Fortune 500) and Ford Motor (F, Fortune 500) were among the automakers reporting improved sales in March, although forecasts were short of more bullish analyst estimates released earlier in the month.

Ford said sales rose 40% versus earlier forecasts for a gain of 55%. GM said sales rose 21% versus forecasts for a gain of 27%.

Overall auto industry sales were expected to rise sharply in March in comparison to a weak period a year earlier.

The dollar and commodities: The dollar gained versus the euro and fell against the yen.

COMEX gold for June delivery rose $11.60 to settle at $1,126.10 per ounce.

U.S. light crude oil for May delivery rose $1.11 to settle at $84.87 a barrel on the New York Mercantile Exchange, the highest close for crude since October 2008.

Bonds: Treasury prices tumbled, raising the yield on the 10-year note to 3.86% from 3.83% late Wednesday. Treasury prices and yields move in opposite directions.

World markets: In overseas trading, European markets rallied. Asian markets ended higher as well.

Market breadth was negative. On the New York Stock Exchange, winners beat losers eleven to four on volume of 930 million shares. On the Nasdaq, advancers beat decliners five to four on volume of 2.28 billion shares.  

Source

Oracle’s Sun integration got off to a fast start, as the company on Thursday reported an 18% sales increase from the year-ago quarter.

"The Sun integration is going even better than we expected," Oracle President Safra Catz said in a prepared statement. "We believe that Sun will make a significant contribution to our fourth quarter earnings per share as well as meet the profitability goals we set for next year."

The Redwood Shores, Calif., company posted income for the three months ended February 28 that rose to $1.9 billion, or 38 cents per share, after adjustments for one-time expenses. That compares with net income of $1.8 billion a year ago.

Analysts surveyed by Thomson Reuters were expecting income of 37 cents per share.

Oracle (ORCL, Fortune 500) sales rose 18% to $6.5 billion, up from $5.5 billion last year, which beat analysts’ forecast of $6.3 billion. Excluding the effects of Oracle’s $7.4 billion Sun Microsystems takeover, sales were up 7%.

A 13% jump in new software licenses and 12% rise in software maintenance sales were the main drivers behind Oracle’s strong performance. Analysts were looking for a boost in new licenses as an indicator of a recovery in business software spending.

Amid a deep recession and credit crunch, businesses sharply cut back their tech spending in 2009, but technology research company Forrester Research (FORR) predicts U.S. tech spending will rebound 6.6% and global IT spending, will rise 8.1% this year.

Analysts consider Oracle a bellwether for the software industry, and while the company’s results showed improvement over last year, they were perhaps not as positive as the Street had hoped. Oracle shares fell in after-hours trading after the announcement.

"The bulls were looking for an absolute blowout quarter, and what they got was a good quarter," said Richard Williams, a senior software analyst with Cross Research pay day loan lenders. "It was an improving quarter, but the enterprise software stocks have been run-up in anticipation of a robust recovery, and what we’re seeing thus far is, at best, a recovery — not a robust recovery."

Oracle leads the market for business database software. Its Sun deal, completed Jan. 26, marks the company’s first push into the IBM-dominated hardware business. Oracle announced in January that the company would hire 2,000 sales and engineering employees to support this new unit.

Oracle vs. SAP

On a call with investors Thursday, Oracle landed jabs against SAP, its arch rival and the world’s largest business software company. Executives said they intended to grab "huge chunks" of market share from SAP because the company "is vulnerable and we can take them on in a variety of industries," they said.

The dig comes about a week after SAP co-CEO Bill McDermott told reporters that Oracle’s model was outdated and that SAP would be launching new on-demand.

"The 20th Century model that Oracle has chosen to replicate is one of the past," McDermott said during that meeting.

In a press release, Oracle’s Ellison also poked fun at SAP’s trouble staffing their chief executive spot. "SAP is well ahead of us in the number of CEOs for this year, announcing their third and fourth, while we only had one."

SAP CEO Léo Apotheker, who had served as chief executive for only seven months, resigned last month, and co-CEOs McDermott and Jim Hagemann Snabe now lead SAP’s C-suite. 

Source

Five Guys Burgers and Fries, which has four Raleigh-Durham locations, ranked as the fastest-growing restaurant chain in the nation in 2009, according to data compiled by restaurant consulting firm Technomic.

Five Guys had $453 million in 2009 sales, a 50 percent increase over 2008 revenue, led by rapid expansion of its franchise locations. That ranks it No. 1 for sales growth among chains with sales over $200 million.

Tim Hortons ranked No. 2, with $446 million in 2009 revenue, a 23 percent increase. Buffalo Wild Wings Grill & Bar ranked No. 3, with $1.5 billion in sales, up 22 percent from 2008.

The revenue gain among the top 10 chains was 19 percent, an impressive showing when cast against Technomic’s overall report on the restaurant industry in 2009. The 500 largest chains saw annual sales decline an average of 0.8 percent last year after growing by 3.4 percent in 2008.

Five Guys, which opened its first restaurant in Arlington in 1986, grew slowly in its first few years, with just a half dozen Washington, D no fax cash loans.C., locations by 2001. It began franchising regionally in 2002 and then nationally in 2003.

The chain now has 550 locations in 35 states, and opened 300 of those locations in less than five years.

Five Guys Burgers and Fries has two stores in Raleigh and two in Cary.

The rest of the 10 fastest growing restaurant chains in 2009 were Jimmy John’s Gourmet Sandwich Shop, Wingstop, Noodles & Company, BJ’s Restaurant and Brewhouse, Chipotle Mexican Grill, Firehouse Subs and Potbelly Sandwich Works.

In total, the 10 fastest-growing chains had $5.9 billion in 2009 sales. The 500 largest restaurant chains had total 2009 revenue of $230 billion, down almost $2 billion from 2008.

Source

BankUnited wants to seize two stalled residential projects in southern Miami-Dade County.

The Miami-based bank filed a foreclosure action March 9 against Lucky Start at Lake Frances, NewSouth LLC and managing members Antonio Balestena and Jorge Fernandez, according to Miami-Dade County Circuit Court records. It concerns a mortgage last modified at $19.2 million in October 2008.

The failed BankUnited FSB issued the loan, so most of the losses would be shouldered by the Federal Deposit Insurance Corp. under its loss-sharing agreement with the new BankUnited.

Lucky Start was building the Lake Frances single-family home project near Homestead Air Force Base. It owns 135 lakefront home sites at the southeast corner of Southwest 280th Street and Southwest 132nd Avenue. Only eight homes have been sold.

NewSouth owns 20.3 acres of industrial and agricultural property at 13700 S.W. 248th St., in the Princeton area. The developer received approval to build 126 townhouse units, 268 apartment units and 8,523 square feet of retail space, but construction never began.

Miami attorney Andrew C. Hall, who represents BankUnited in the lawsuit, did not immediately return a call seeking comment.

Source

The Philippine central bank cut the amount of money available for loans to lenders through its so- called rediscounting facility to reduce cash in the economy, even as it kept interest rates at a record low.

Bangko Sentral ng Pilipinas reduced the budget for the facility to 40 billion pesos ($875 million) from 60 billion pesos, effective March 15, it said in a statement in Manila today. Policy makers kept the benchmark interest rate at 4 percent for a sixth straight meeting, as expected by all 15 economists surveyed by Bloomberg News.

Asian nations from China to Malaysia have started withdrawing monetary stimulus as growth accelerates and inflation returns amid the global economic recovery. Philippine exports, which account for about a third of the nation’s $167 billion economy, rose at the fastest pace in more than 14 years in January, a report showed yesterday.

“Upbeat export readings would nudge policy makers’ priority away from downside risks to growth, and more into emerging inflation risks,” Jun Trinidad, an economist at Citigroup Inc. in Manila, said in a report yesterday. It “would support the phase out of accommodative liquidity measures.”

Philippine economic growth accelerated to a one-year high of 1.8 percent last quarter from a decade-low 0.4 percent in the previous three months, lifting prospects for the country’s property and food companies. Jollibee Foods Corp., the fast-food chain that outsells McDonald’s Corp. in the Philippines, is looking forward “to a more robust growth in 2010,” the company said last month.

Capital Flows

The government forecasts the economy will expand 2.6 percent to 3.6 percent in 2010, as President Gloria Arroyo, whose term ends this June, increases outlays on airports, bridges and state programs to a record 1.54 trillion pesos ($34 billion) this year to bolster growth.

Low interest rates in the U.S. and Europe and faster growth in Asia are spurring capital flows into the region, prompting China to start draining excess cash from the economy to prevent asset bubbles free online credit report. Australia and Vietnam have raised borrowing costs as inflation accelerates, and Malaysia last week increased its overnight policy rate, saying it wants to avoid “financial imbalances”.

Bangko Sentral in January announced the year’s first increase in the interest rate that it charges lenders for borrowing money from the central bank through the rediscounting facility. The rediscounting window allows lenders to borrow using loans as collateral.

Inflation Forecast

Deputy Governor Diwa Guinigundo said yesterday the unwinding of liquidity measures is “always on the table” and will happen in “a matter of time.” Still, “the policy rates can be maintained at this point as our inflation outlook remains positive and benign,” he said March 8.

Benchmark four-year bond yields dropped to a three-month low yesterday on optimism borrowing costs will remain low. The Philippine peso traded near an eight-week high today as Asia’s rebound attracts funds to the region’s assets.

Bangko Sentral forecasts inflation may slow to a range of 3.4 percent to 3.5 percent in 2011 from an estimated 4 percent this year, Guinigundo said this week. Consumer-price gains in the Philippines eased for a second month in February to 4.2 percent.

The Philippines’ benchmark interest rate is at the lowest level since central bank data started in 1990. Easing inflation last year allowed Bangko Sentral to slash the overnight borrowing rate by 2 percentage points from December 2008 to July 2009 to support economic growth as exports collapsed.

Policy makers also reduced the proportion of cash banks need to set aside as reserves and raised the amount of money available for the rediscounting facility in late 2008.

Source

The Federal Reserve, which is urging Congress to let it keep its bank supervising role, may lose oversight of smaller state banks to the Federal Deposit Insurance Corp., Democratic Senator Jack Reed said.

“What seems to be emerging is the consolidation” of two Treasury bank agencies “with FDIC having some responsibility for state banks as regulator in lieu of the Fed,” Reed, a Rhode Island Democrat and a member of the Senate Banking Committee, said yesterday in a Washington interview.

Senate negotiators are working through proposals to put in place the financial rules proposed by President Barack Obama more than eight months ago, a process stalled by disagreements over the Fed’s role and consumer protection.

Lawmakers are negotiating language that may give the Fed oversight of the largest U.S. financial companies along with a new consumer unit, two Democratic congressional aides with knowledge of the talks said yesterday. The consumer proposal from Banking Committee Chairman Christopher Dodd, a Connecticut Democrat, and Republican Bob Corker of Tennessee has so far failed to win lawmaker support.

Republicans and the financial-services industry oppose Obama’s Consumer Financial Protection Agency, and Dodd and Corker have scrapped the plan. Banks lobbied against the proposal, with JPMorgan Chase & Co. Chief Executive Officer Jamie Dimon calling the agency “just a whole new bureaucracy” on a December conference call with analysts.

The Senate plan under consideration would put the Fed in charge of about 20 or 30 bank holding companies, said one Democratic congressional aide who declined to be identified because the talks are private. The Treasury’s Office of the Comptroller of the Currency, which oversees national banks, and Office of Thrift Supervision would merge, Reed said.

Bernanke Setback

A loss of oversight would be a setback for Fed Chairman Ben S. Bernanke, who told the Banking Committee on Feb. 26 it would be a “grave mistake” to remove authority to regulate banks. Giving another agency the power would make it tougher for the Fed to act as the lender of last resort, he said free credit report online.

The Fed won endorsement yesterday from six Washington-based trade groups, led by the American Bankers Association. A letter to the banking committee said “it would be a mistake to limit the Federal Reserve to supervision of only larger, complex institutions headquartered in major financial centers.”

Treasury Secretary Timothy Geithner had asked the leaders to back the administration’s rules overhaul at a Feb. 25 Washington meeting. Later, groups including the Financial Services Roundtable and Securities Industry and Financial Markets Association agreed to write a letter, according to two people with knowledge of the matter, who declined to be identified because the meeting was private.

Small Bankers

The leaders then recruited the Consumer Bankers Association and Independent Community Bankers of America, which represent small banks, the people said. Both support the Fed as overseer of some state-chartered banks. The Senate legislation may give such power to the FDIC, which regulates some state-chartered banks.

A copy of the letter was sent March 2 to Michelle Smith, the Fed spokeswoman and adviser to Bernanke, the people said.

The Fed’s role emerged yesterday as senators negotiated the powers of a consumer unit at the Fed.

“Each of these pieces affects another piece in the bill,” Corker said in an interview. “Today has been by far the very best day we’ve had in the process.”

The plan for the Fed, still under discussion and may change, would abandon the single bank regulator Dodd proposed in his November draft legislation.

Dodd wanted to eliminate the OCC, which regulates national banks, and the OTS, the regulator of savings and loans, and merge their authority into a new Financial Institutions Regulatory Administration that would gain oversight powers of the FDIC and the Fed. The House passed a bill in December that merged OCC and OTS, leaving the Fed’s bank oversight powers intact.

Source

The nation’s two largest hospital chains signaled today that they are actively seeking acquisitions in the year ahead. Prime targets: Nonprofit hospitals whose investments were hit hard by the sour economy.

In back-to-back earnings calls with analysts, Nashville-based HCA Inc. and Franklin-based Community Health Systems Inc. both said they are well-positioned to take advantage of favorable pricing in the U.S. hospital market.

CHS, which operates 122 hospitals in 29 states, said it plans to make at least two acquisitions in 2010. In December, CHS closed on a deal to purchase Rockwood Clinic, P.S., a multi-speciality clinic with 32 locations in Washington State and Idaho. The buy helped lift CHS’ fourth-quarter profits 8.7 percent to $65.1 million for the fourth quarter that ended Dec. 31.

“There are a number of opportunities out there. We always like to keep our pipeline relatively full,” CHS Chairman Wayne Smith said during the call. “I think two in 2010 is a good number, but as usual it could be more than that.”

Smith said pricing for hospitals has been “very good,” at 50 to 60 cents on the dollar of net revenues compared to 80 cents to 100 cents on the dollar a few years ago.

Such low pricing will likely drive up the competition for hospitals, creating what CHS Chief Financial Officer Larry Cash called a “competitive window over the next 12 to 18 months.”

The window is open. In one of the first deals of 2010, HCA announced on Wednesday an agreement to acquire the Heart Hospital of Austin through its existing joint venture with Texas-based St. David’s HealthCare. According to a filing with the Securities and Exchange Commission, the deal is valued at $83.6 million.

“We needed additional cardiac capacity, and it made more sense than building a heart tower at one of our other facilities,” HCA Chairman and CEO Richard Bracken said when asked by an analyst about the acquisition. “There’s a lot of synergies there, and we’re excited about it.”

HCA’s fourth-quarter earnings results released today confirmed preliminary results announced three weeks ago that showed revenue of $7.61 billion, a 4.7 percent increase over the same period a year earlier.

The privately held operator of 163 hospitals and 105 freestanding surgery centers said today its same-facility admissions increased 2.6 percent on an adjusted basis during the fourth-quarter, boosted by a 9.1 percent increase in emergency-room visits.

Source

Google moved quickly over the weekend to try to contain mounting criticism of Buzz, its social network, apologizing to users for features widely seen as endangering privacy while announcing product changes to address those concerns.

Todd Jackson, product manager for Gmail and Google Buzz, wrote in a blog post on Saturday that Google had decided to alter one of the most-criticized features in Buzz: the ready-made circle of friends the service provided to new users based on their most frequent e-mail and chat contacts in Gmail. Instead of automatically connecting people, Buzz will in the future merely suggest to new users a group of people they may want to follow or be followed by, he said.

Jackson, who said that the auto-follow feature had been designed to make it easy for people to get started on Buzz, acknowledged the criticism that was heaped on Google in the last few days.

“We’re very sorry for the concern we’ve caused and have been working hard ever since to improve things based on your feedback,” Jackson wrote. “We’ll continue to do so.”

The startup for Buzz, which Google introduced Tuesday as its answer to Facebook and Twitter, drew angry responses on technology blogs and beyond, as users feared that the names of their e-mail correspondents would be publicly exposed. A set of changes that Google announced Thursday failed to quell the uproar.

Some critics said the latest modifications to Buzz, which is tightly coupled with Gmail, appeared to have addressed the most serious privacy concern.

“Turning off the auto-follow was a huge improvement,” Danny Sullivan, a longtime Google analyst and the editor of SearchEngineLand, said in an e-mail message.

Marc Rotenberg, executive director of the Electronic Privacy Information Center, said his organization was still intending to file a complaint with the Federal Trade Commission this week pending its review of Google’s changes.

“Even with these changes, there is still the concern that Gmail users are being driven into a social networking service that they didn’t sign up for,” Rotenberg said in an interview on Sunday.

The privacy concerns about Buzz, and Google’s rapid efforts to address its critics, echo incidents that have bedeviled other social networks, most notably Facebook personal business card. None of those incidents have slowed the growth of Facebook, which recently said it had reached more than 400 million users. Gmail has 176 million users, according to the research firm comScore.

“I think the privacy issues earlier this week with Buzz will blow over and not harm the product in the long term,” Sullivan said. But privacy will continue to haunt Google, he said, and many people will point to the release of Buzz as an attempt by Google to overreach and a reason that the company could not be trusted.

The change in the enrollment of new users of Buzz was the most significant of a series of modifications that Jackson announced on Saturday.

Google also said that it would create a new Buzz tab in Gmail’s settings page to allow users to hide Buzz from Gmail completely. The page gives users the option to disable Buzz, deleting their posts and removing their Google profile, which in many cases listed publicly their circle of contacts in Buzz.

The new feature could address concerns that disabling Buzz and removing a public profile was a multistep process that confused many users and that some described as a game of whack-a-mole.

Google also will no longer automatically connect public Picasa albums and items shared on Google Reader, another feature that had been widely criticized by some users and privacy advocates.

In the next two weeks, Buzz users will be directed to the new start-up to give them a “second chance to review and confirm” the people they are following, Jackson said.

The changes Google announced Saturday will be imposed in the next few days. While it is too early to gauge Buzz’s success, Google said tens of millions of people had tried the service in its first 48 hours.

Sullivan of SearchEngineLand said that the level of activity on Buzz appeared to be significant. “I suspect Google might have a minor hit on its hands already,” he said.

Source

Think recessions spur laid-off workers to launch new ventures? Think again.

A study released this week by the Kauffmann Foundation found that the number of new businesses incorporated annually in the U.S. has remained remarkably consistent over the years.

"We have a surprisingly steady supply of new firms, despite frequent and sometimes sharp changes in economic conditions," the study’s authors concluded. "No matter which data set one examines, any given year’s total of new companies is consistent with other years, with annual numbers fluctuating only mildly."

Researchers Dane Stangler and Paul Kedrosky crunched data from the U.S. Census Bureau, the Small Business Administration and the Bureau of Labor Statistics, covering 1977 through March 2009. About 600,000 new businesses were formed each year during that 30-year period. The data includes formally established new enterprises as well as new franchise locations and other outposts of existing companies.

For more than a year, the potential for startup growth has been promoted as the silver lining of the recession.

The conventional wisdom goes that as people lose their jobs, they are inspired to launch that innovative little company that’s been percolating in the back of their minds for years.

Recessions also lower the cost of entry for new companies and make customers more willing to explore less-expensive alternatives to current products or services they’re using, said Rhonda Abrams, founder of entrepreneurial consulting firm The Planning Shop.

"I liken a recession to a forest fire — it can be devastating, but can clear out weak and old growth," Abrams said. "Small upstart companies have a chance to get a hold better when their competitors are weakened."

But Kaufmann researcher Stangler said there just isn’t data to back up that kind of ‘hopeful thinking."

"It’s not that the reasons behind that thinking are bad, it’s just that from the evidence, we don’t expect there to be a huge increase in the amount of startups or a decrease during this recession," he said. The Kaufmann Foundation, based in Kansas City, Mo., is a nonprofit organization focused on entrepreneurship research and advancement.

To check their findings from the last three decades, Stangler and Kedrosky went back even further, to census reports from the 1940s and 1950s. There, they found remarkably similar results. Only one year — 1946 — had a noticeable startup spike, a result the researchers attribute to the effects of the end of World War II and a flood of returning war veterans.

What’s behind the consistency in startup launches? Stangler said two findings stood out: Even in down times, the U.S. has a fairly stable and consistent economy. Also, the number of working-age adults in the workforce fluctuates little.

But just because there’s no data to prove that economic turmoil spurs business growth doesn’t mean recession-era entrepreneurs should be disheartened, Abrams said. Citing her own research, she notes that the majority of current Fortune 500 companies were started during tough economic times.

The Kauffman Foundation has similar findings: More than half of 2009’s Fortune 500 companies launched in bear markets, it reported in June.

"Even if the numbers of new companies are consistent, you have a better chance at being a big success if you form during a recession or a depression than in good times," Abrams said.

She also believes that when the dust has cleared, this recession will have spurred more new businesses than past downturns because the percentage of those who are unemployed will remain persistently high.

"More people will turn to consulting and other kinds of low-cost-of-entry businesses to tide them over," Abrams said. 

Source

Information Technology Services Qualifications Center is spinning off from Carnegie Mellon University to become ITSqc LLC in order to extend research started at the university.

ITSqc started in 2000 as a consortium of information technology companies and university researchers to study best-practices within the information technology service provider industry. Since then, the organization has developed models and a certification process that can be used by clients and providers to ensure that the right expertise is brought on board and services meet client needs.

“The research was done and the models were created and focus shifted from creating and gathering, which universities are great at, we produced the models and now it’s a more commercial adoption issue,” said company director Jeff Perdue of the decision to spin-off.

The intellectual property was licensed in October and the new company started Jan. 1, Perdue said. The company has three employees: Perdue, an associate professor in the Institute for Software Research within the CMU School of Computer Science; Jane Siegel, senior systems scientist in the Institute for Software Research and the Human-Computer Interaction Institute at CMU; and Bill Hefley, faculty at the Katz School of Business at the University of Pittsburgh business card design.

Hefley was previously with the Institute for Software Research.

Some of the companies involved in the consortium include IBM and Accenture, Perdue said. ITSqc already has six organizations that have licensed the models and are working with clients, he said.

“The evolution of the Internet and the growth of the world’s telecommunications infrastructure now enables companies to seek out IT expertise from providers anywhere on the globe,” said Raj Reddy, chairman of the ITSqc Advisory Board in a written statement. “But without a set of commonly accepted best practices, many providers will routinely fail to deliver on their promises and potential clients will have no basis for comparing prospective providers. By establishing these best practices, the ITSqc has helped to bring order to the outsourcing marketplace.”

Source