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Strategies & Market Trends : The Residential Real Estate Crash Index -- Ignore unavailable to you. Want to Upgrade?

To: XoFruitCake who wrote (150298)	9/25/2008 2:09:21 PM
From: Smiling Bob	Read Replies (2) \| Respond to of 306849

I question the soundness of businesses that can't function without bank credit. Again, I'm not talking about companies in which money is their business. I'm considering retailers, manufacturers, transport, pharmaceutical, tech, service. If your cash flow alone isn't paying the bills on such a continual basis that you're regularly depending on loans to survive, then you're already on fragile ground. Yes, we can take the risk. It's part of the cycle of weeding out the weak. And I think I am arguing the other side of the story. i.e. right now every business has a random chance of going bk because the banks/finance companies that offer them credit are on the brink edit here's a perfect example DIN made a mistake counting on easy and cheap credit to finance a rash and stupid move to begin with DineEquity slides amid credit concerns Wednesday September 24, 5:20 pm ET By Betsy Vereckey, AP Business Writer Analyst says DineEquity exposed to tightening credit, softening consumer spending NEW YORK (AP) -- Shares of DineEquity Inc., which operates IHOP and Applebee's restaurants, slid on Wednesday as an analyst said investors may be concerned about the company's exposure to the ongoing credit crisis and softening consumer spending. DineEquity has been working to franchise many of its company-owned Applebee's locations since buying the chain in 2007 for $1.9 billion. During the second quarter, DineEquity swung to a loss, mostly because of a hefty $41.4 million impairment charge for the sale-leaseback of 181 company-owned Applebee's restaurants. At the time, DineEquity said the charge reflected a deterioration in domestic real estate and credit markets. In a sale-leaseback, a company sells properties and then leases them back from the new owner. Morningstar analyst John Owens said the credit crisis is "probably putting a cloud" over attempts to refranchise the Applebee's restaurants, especially if financing remains tight. "They have some exposure here with the credit crisis," Owens said, noting that the company must remain in compliance with its debt covenants. "If they trip up on their covenants, they could be in trouble." Separately, Owens said DineEquity has suffered as consumers continue to scale back on spending, which has hurt other restaurant operators. Rising gas prices, a softening labor market, and continued tightness in the credit markets have made it harder for the industry to post robust sales growth. In July, DineEquity Chairman and Chief Executive Julia Stewart said customer traffic weakened at the end of the first quarter and worsened in the second quarter. Looking ahead, the company said it planned to change its menu in 2009 and implement new marketing strategies to help results. Meanwhile, DineEquity is still searching for a permanent chief financial officer after Thomas G. Conforti resigned to pursue other opportunities. Vice President and Controller Greggory Kalvin is serving as interim CFO until a permanent successor is named. Shares of DineEquity slid 95 cents, or 5.1 percent, to $17.77. So far this year, shares have lost more than half of their value.