We’re Being Strangled by All the Recent ‘Good News’ From The Newsroom by Michael Hart The VICA boys put in a good day’s work last Tuesday. They spun their hearts out, starting with a lunchtime board meeting, moving onto a press conference in the early afternoon and then, many of them, to a Business Journal reception for Valley CPAs later that evening. Their good news was that get this the Valley business community is in favor of secession! Evidence was what they called the 57 percent of VICA members who responded favorably to the breakup in a mail-in poll. Before I get too cynical here, let me go ahead and get into the record what I do think was remarkable about Tuesday’s events. For the first time in apparently as long as anybody can remember, VICA polled each and every one of its members on an important issue: whether or not to secede. The ballot didn’t just have a yes and no box either. It included a “VICA shall take no position” option, a choice 48 VICA members took. That’s 48 out of the 285 who were eligible to vote and the 174 who did, 17 percent and 28 percent respectively. Add the 23 abstentions that were sent in and that becomes 25 percent and 41 percent. Given this is the first time many VICA members had ever been asked their opinion about anything and the pressure former Mayor Richard Riordan put on them with his letter suggesting they vote not to take a position, VICA did an excellent job of demonstrating grassroots democracy and perhaps proved secession or not it is in a position to speak authoritatively on behalf of the business community in the future. There. The next notable thing was how many people that day told me what “good news” this all was. Not necessarily just that VICA members voted favorably, but that they voted at all. VICA Chairman Fred Gaines called the vote in favor of secession an “overwhelming response.” However, according to my calculator, the 86 yes votes divided into 174 votes cast is 49 percent, and 30 percent of the 285 who were eligible to vote. But perhaps I quibble. It reminds me of another package of information about the Valley business community that arrived from another source last week: Deloitte & Touche’s Fast 50 list of fast-growing Los Angeles area technology companies. Twenty-three of those 50 are in the Greater San Fernando Valley and, in Deloitte’s own words, “In this era of rapid economic acceleration and intense competition, it is truly remarkable to achieve an outstanding level of growth.” The only problem is, we cover many of these companies and, for some of them, the growth lately hasn’t been all that outstanding. Net Sol Technologies, for instance, No. 2 on Deloitte’s Fast 50 list, reported a $14.1 million loss on $6.7 million in revenue in 2001. You may remember NetSol as the company we reported on last year when a dissident group of stockholders, accompanied by armed guards, took over the company’s headquarters briefly before a judge named a receiver to run it. MRV Communications, at No. 40, reported a loss of $21.1 million in the last quarter on revenues of $61.6 million (which is, however, better than the same quarter a year earlier when its loss was $94.1 million on $89.5 million of revenue.) Poor Vitesse Semiconductor (No. 25 on the list) has lost 93 percent of its value since the beginning of the year and is now trading at 85 cents a share. Nevertheless, Deloitte’s partner responsible for the Fast 50 program, Gary Dickey, said, “We want to show that these companies are not a flash in the pan.” I’m not really interested in disparaging poor Vitesse or MRV, or even whoever’s doing the math at VICA. However, all this “good news” that’s being spun off of what is a mediocre poll result at best (followed a day later by a report that the secession movement can’t pay its ad agency) and the disappointing performance of companies that seemed to offer so much promise a year or two ago tells me we may have a business leadership that is out of touch with its constituency. The same day VICA announced its “good news,” The Conference Board reported its consumer confidence index fell for the fourth straight month, the DJI reached a four-year low and Thomas First Call announced that its previous forecast that the earnings of the S & P; 500 would increase 20 percent in the third quarter was cut to 8.5 percent. Here in the San Fernando Valley, there are thousands of business owners who don’t belong to VICA, don’t read the Business Journal, don’t know how to pronounce Deloitte & Touche and never heard of The Conference Board. They are running small manufacturing operations, restaurants, retail stores, fulfillment houses, delivery services, medical offices and a hundred other kinds of businesses. They don’t need the Business Journal to tell them that consumer spending which was supposedly keeping the economy propped up has slowed; they’ve got their daily receipts to tell them that. The sentiments of VICA’s members about secession mean less to them than the payroll they face at the end of the week. People are waiting for a war, secession advocates can’t raise enough money to make their case, nobody’s ordering the products the Valley’s tech companies are making and small businesses are struggling to get customers in their doors. But our business leaders have “good news.” Michael Hart is editor of the San Fernando Valley Business Journal. He can be reached at [email protected].
