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Winners and Losers: Firms Try to Adapt to Changing Scene – Winners

EBay Retailers See Market for Service The Silicon Valley met the San Fernando Valley when mortar and brick retailers began erecting EBay stores from Studio City to Simi Valley. Though San Jose-based EBay had been a popular service since the dot.com boom of the late 1990s, many consumers never offered their wares online, finding the process too complicated and time-consuming. When entrepreneurs began offering to act as middlemen, handling the entire EBay process for a cut of the final sale price, they found a wide-open and lucrative market. Encino-based, The Garage Seller, has profited handsomely off of this trend. Opening in March, The Garage Seller soon merged with QuikDrop, another EBay auction house. Still headquartered in Encino, QuikDrop has become an international company, opening up 26 locations, including stores in the United Kingdom and Australia. The company has increased 25 percent in sales each month and has doubled its sales since its inception. QuikDrop currently has Valley stores in Encino, Simi Valley, Studio City and Woodland Hills. Peter Mehrian, QuikDrop’s vice-president of marketing, attributes the success to one word: convenience. “It’s really convenient for the sellers. It’s the best way to get rid of their items. They just drop their stuff off and we take care of the rest for them. People have items lying around and they don’t know what they’re worth. When you put it on EBay, you’re advertising to 210,000,000 people,” Mehrian said. Jeff Weiss Real Estate Brokers Have Hot But Busy Year as Sales Frenzy Continues The number of homes and condominium units sold in 2004 dipped slightly versus 2003 but the relentless increases in sale prices more than made up for the decline as far as real estate brokers and agents doing the selling are concerned. Although brokers complained that housing stock was in short supply, anyone with a listing saw an average 27 percent increase in the median price of a single family home in the San Fernando Valley through October, according to data from the Southland Regional Association of Realtors. Despite about a 5 percent drop in the number of homes sold through October, compared with the same period last year, most homes that came on the market sold within 30 days. But it wasn’t all gravy. With many homes on the market less than 10 days in the early part of the year, 2004 was a very difficult year for a broker trying to find a home for a client. And the competition among home buyers meant some who rushed into an agreement later pulled out, increasing the stress levels for brokers along with their seller clients. As the year wore on, the market cooled, and brokers now are seeing a 90-day supply of inventory compared to the 30-day supply and less that characterized much of the year. But for brokers at least, the good outweighed the bad in 2004. “The year was an incredible market,” said Lynn Rinker, president of the Southland Regional Association of Realtors and a realtor with Coldwell Banker. “It was extremely hot through most of the year, and for most of us there was an unprecedented level of activity and a shortage of homes available for sale.” Shelly Garcia Low Cost Services Lucrative for United Online United Online, a Woodland-Hills based Internet service provider set records for revenue and income in 2004. United Online saw sales skyrocket to a record $110.7 million during the third quarter, versus $88.8 million in the like period last year. The company behind low-cost Internet brands, NetZero, Juno and BlueLight, racked up a record $20.5 million in net income in the third quarter vs. $13.8 million in the third quarter of 2003. Additionally, the company’s number of pay subscribers increased in recent months, as they added 43,000 subscribers in the third quarter alone. They currently provide Internet to 3.2 million accounts. Mark Goldston, the chairman, president and CEO of United Online, attributed the company’s success to a fiscally efficient business infrastructure and effective marketing. “United Online is a pioneer in the Internet access space and was at the forefront of offering value-priced Internet access. By leveraging an incredibly efficient corporate and technology infrastructure, United Online has been able to execute on its mission of being a leading provider of Internet subscription services,” Goldston said. “The company has some of the most recognizable brands on the Internet today in NetZero, Juno and Classmates, which is a testament to the marketing acumen of our team.” Jeff Weiss WellPoint Merger Good for Officials It was the merger that almost didn’t happen. Anthem Inc. announced its intentions in 2003 to acquire WellPoint Health Networks Inc. and create the largest health insurer in the nation. In 2004, after Insurance Commissioner John Garamendi temporarily blocked the merger, the companies were forced to invest in California’s and several other states’ health care systems and guarantee that the merger would not be financed by higher premium increases. The merger was completed on Nov. 30, 2004. For WellPoint chairman Leonard D. Schaeffer, his fellow executives and thousands of shareholders, it was worth the wait. A total of 293 WellPoint employees are eligible to receive retention or severance bonuses that could end up costing between $250 million and $356 million, and that’s before stock options are even considered. Schaeffer himself is in line to receive $47 million in cash, and he’s holding stock options that could be worth up to $188 million. Garamendi expressed shock over the size of the bonuses, and only approved the transaction after the companies promised to invest $265 million in California health care programs. Georgia’s insurance commissioner extracted a similar deal, giving his approval and removing the final obstacle in the way of the merger after getting $126.5 million from Anthem for the state’s health care programs. Jonathan D. Colburn

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