Trump Loses Nearly $19 million and News on Other Financially Challenged U.S. Companies for May 13

The items below are taken from the Credit Manager’s Weekly Summary of Financially Challenged Companies. A full issue contains information on more than 200 companies. Please visit the insideARM bookstore for information on subscribing to the Summary.

Borland Software Corp. sold its CodeGear operations to Embarcadero Technologies Inc. of San Francisco, for $23 million. Borland will keep the unit’s accounts receivables valued at $7 million. Also, Borland reported a loss in its first quarter of $23.9 million, more than double its loss a year ago. Revenue sank to $58.3 million, down from $70.9 million.

Circuit City Stores Inc., in an about-face, will allow Blockbuster Inc.’s biggest shareholder, Carl Icahn, to look at its books, in a move that essentially puts the consumer-electronics retailer up for sale. Circuit City had held Blockbuster at arm’s length since receiving a $1 billion buyout offer from the video-store company, but now Mr. Icahn is saying that he would be willing to acquire Circuit City if Blockbuster can’t put together the financing or if it can’t muster shareholder approval for such a deal.

Harris Corp., a Melbourne, Fla. electronics and defense manufacturer, is looking at strategic options in a move that could, according to some analysts, result in the company putting itself up for sale.  Harris has benefitted from military contracts since 9/11 but the company is also starting to worry that new defense spending could peter out. For its twelve months ended 3/28, Harris, now capitalized at about $7.3 billion, had net income of $410 million on revenue of $5.1 billion.      

Harry & David Holdings Inc., a Medford, Ore.-based supplier of fruit baskets and other gourmet food items, reported a third quarter loss of $20.8 million, compared to a $16.8 million loss in the year-earlier period.  Sales fell to $68.3 million, down from $73.3 million a year ago. Harry & David, which is privately held, blamed the results partly on having shifted its Fruit-of-the-Month Club product shipments from the third quarter to the second quarter.

John B. Sanfilippo & Son Inc., an Elk Grove, Village, Ill. processor of nuts and candies, reported a third quarter net loss of nearly $8.8 million. The results included restructuring and debt-extinguishment charges of $7.1 million. Revenue was virtually flat at $107 million.

McCormick & Schmick’s Seafood Restaurants Inc., the Portland, Ore.-based upscale restaurant chain, reported that its earnings plunged 98% in the first quarter–to $100,000, or a penny a share, significantly shy of analysts’ predictions of 13 cents a share. While revenue was up 13%–to $92.3 million, thanks to new locations, same-store sales sank 6% and new-store opening costs tripled. McCormick & Schmick’s, with eighty-five restaurants including its Boathouse format in Canada, expects revenue of between $410 million and $420 million for the year.

Origen Financial Inc., a Southfield, Mich. home lender, is closing down its Texas operations and shuttering a service center in Fort Worth.  The company recently announced the sale of its serving platform assets and said it would transfer $1.6 billion in loans to Green Tree Servicing LLC of St. Paul, Minn.

Pope & Talbot Inc., Portland, Ore., asked the U.S. Bankruptcy Court to convert its Chapter 11 reorganization to a Chapter 7 liquidation, saying that without further financing it cannot continue operating. Pope will end operations at its pulp mill in Halsey, Ore. and shut down its remaining pulp mills in British Columbia.

Sun-Times Media Group Inc., Chicago, reported a widened first quarter loss of $35.8 million, more than seven times its loss in the year-ago quarter. Revenue sank almost 12%–to $81 million, amid a 13% drop in ad revenue and an 8% decline in circulation revenue. Meanwhile, the publisher of the Chicago Sun-Times could be headed for the sales block, as the company has sent out its financial records to a number of potential suitors.

Tribune Co. reportedly finalized an agreement to sell control of its Newsday tabloid Newsday unit in Long Island, N.Y. to Cablevision Systems Corp. for $650 million. Cablevision, Bethpage, N.Y., will hold 97% of Newsday Media Group, allowing Tribune to keep an interest in the venture, which besides Newsday includes AM New York, a free paper, and other publications in the New York area. Tribune gets $612 million in cash from the transaction, plus the 3% equity ownership, and real estate that includes Newsday’s headquarters and a Melville, N.Y. printing plant. Rupert Murdoch’s News Corp., which had earlier bid $580 million for Newsday, withdrew its offer. The sale of Newsday should close in the third quarter. Separately, Tribune’s operating results continued dragging in the first quarter. While the Chicago, media firm reported a $1.8 billion profit, that was propped up by $1.9 billion in nonrecurring gains. On an operating basis, profit at its publishing unit tanked 74%, with an overall 21% decline in operating profit–to $143 million. Ad revenue was down 15%, and interest expenses soared threefold from a year ago–to $263 million. Overall, the company reported a $30 million loss from continuing operations. Total revenue slumped 8%–to $1.1 billion.

Trump Entertainment Resorts Inc., Atlantic City, N.J., reported a first quarter net loss of $18.6 million. Revenue fell 3%–to $228 million.

Vonage Holdings Corp., Holmdel, N.J., reported a narrowed first quarter net loss of nearly $9 million, down from a $72 million loss in the year-earlier first quarter. Revenue increased 15%–to $225 million. While the Internet phone-services provider signed up a net 30,000 new subscribers, ending the quarter with 2.6 million customers, its rate of subscriber growth slowed from a year ago and its turnover rate picked up a bit. Vonage, which has overcome some legal issues regarding its Internet phone service, still must deal with financing its operations, a problem that recently led its auditor to issue a “going concern” warning.