Friday, March 6, 2015

POSTED: Friday, March 6, 2015, 9:31 AM

Projecting U.S. spending on local water projects, Ryan Connors, veteran utility analyst, covers a lot of ground in a short report today to clients of Boenning and Scattergood, West Conshohocken:

 - PENSION BUSTING BENEFITS: "Municipal bond issuance more than doubled in February to $32.4 billion, water utility employment is hitting multi-year highs, and water pricing is re-accelerating" after years of budget tightening by cash-srapped municipal governments, Connors writes. The U.S. Supreme Court's M&G v. Tackett decision, which held that "municipal workers’ healthcare benefits cannot be construed as lifetime" unless guaranteed by union contracts, will make it easier for towns to stiff retires and cut costs. That, plus Detroit's "recent precedent on reducing pensions in bankruptcy," will make it easier to cut retirement payments to ex-city workers, enabling towns "to increase funding for other budget priorities, such as infrastructure."

 - HOUSING RECOVERY SOLID: "Helped by the improving jobs picture and low interest rates, housing permits (+19% from last year) and starts (+8%) are running well above year ago levels, and homebuilders are reporting strong order growth" and boom-era backlogs. More homes = more utility hookups. 

 - FACTORIES STILL SLOW: Cheap oil doesn't seem to have hurt energy companies' water demand, but manufacturing capacity is still below 80%, so higher spending from that sector "is unikely in the near-term."

POSTED: Friday, March 6, 2015, 9:00 AM

After three quiet quarters, Safeguard Scientifics, the Wayne-based, publicly-traded healthcare and software investment company, "is primed for an acceleration in liquidity events {that's venture-ese for 'they will probably sell more companies') after an eleven-month period of zero catalysts" (no recent sales), writes analyst Paul Knight in a report to clients of Janney Capital Markets, Philadelphia.

"These events could be spectacular in size," especially for digital-ad auction site MediaMath, based in New York with offices across the U.S. and foreign markets, and Maine-based veterinary drugmaker Putney Animal Health, Knight adds.

Safeguard's investment of around $25 million in MediaMath in 2009 and 2011 could be worth as much as $250 million, if Yahoo's purchase of BrightRoll for 6.4x past annual sales is a guide. Similarly, Putney, which raised $15 million from Safeguard in 2011 and is on track to sell $30 million of pet therapies this year, "could generate significant returns" if a buyer juices the price to approach what a rival, startup NextVet. raised in its initial public stock offering, Knight writes.

POSTED: Friday, March 6, 2015, 8:28 AM

(UPDATED with company comment) SAP SE, the German-based business-software company with North American headquarters in Newtown Square, says it will cut 2,200 of its 74,000+ worldwide jobs as it pushes cloud-based and in-memory database services, to offset the drop in sales growth for enterprise software systems as old-line business-software giants like SAP, Oracle and IBM compete more with specialized vendors like Salesforce.com.

SAP, which employs 2,500 in Newtown Square, will keep hiring: "We're looking for people who can contribute to growth," who have "networks" of business contacts they can approach to sell SAP's newer products, SAP spokesman Andy Kendzie told me.

SAP is pushing sales of Hana in-memory-database-based services and other products corporations can use to speed connections between their secure data in remote (cloud) servers, with staff and customers in the field, via smartphones and iPads, SAP spokesman Andrew Kendzie told me. He added that the company hopes not to have to lay off most of the 2,200, instead not replacing people who leave voluntarily and shifting employees in surplus jobs to new positions.

POSTED: Thursday, March 5, 2015, 3:38 PM

When, after years of late hours writing it, software works -- when, after months of sales calls, clients start buying it -- then the talk gets big: “We are changing the way code is built,” says Chris Gali, cofounder of Enterprise
Cloudworks.

“Right now we are 52 people. By the end of the year we will be 75 or 80. My belief is that in two and a half years we’ll be 350, 400, right here on Market Street, Philadelphia,” says Jim Rourke, the firm’s president.

Enterprise Cloudworks’ chief product is Graphite GTC (Graph To Code, corrected), a software platform Gali says you don’t have to be a programmer to use. 

POSTED: Thursday, March 5, 2015, 1:51 PM

Ten cold protesters from a national group called Fed Up gathered at the Federal Reserve of Philadelphia in the storm this afternoon to urge the Fed to pay more attention to boosting employment and listening to groups representing wage workers and poor people.

The group, which includes labor union and church groups as well as local affilates such as North Philadelphia-based Action United, says its national leaders met with Federal Reserve Chairman Janet Yellen in Washington last year, but they have had a tough time getting Fed officials who oversee regional banks and regulatory teams, such as Charles Plosser, the free-market economist who retired in March (corrected) as the Philly Fed President, to take them seriously. Other Fed Up affilates held protests in New York, Charlotte, St. Louis, and other Fed cities today. More are planned, said Shawn Sebastian of the liberal, Brooklyn-based Center for Popular Democracy, one of the groups supporting Fed Up.

"Plosser never gave us a meeting," said Action United leader Kendra Brooks, who said she's been organziing poor people to press for improved government job, education and housing programs since she was laid off from her management job at an Easter Seals affiliate in 2012. Philly Fed corporate secretary Herb Taylor and other local Fed officials did meet with a Fed Up delegation last fall, and Philly Fed leaders have also held meetings with labor unions and community groups, Fed spokesman Jim Ely reminded the group.

POSTED: Wednesday, March 4, 2015, 1:59 PM

Pennsylvania Gov. Tom Wolf's new budget proposes several steps he says will trim $10 billion from the $50 billion-plus shortfall between what the state has invested to pay hundreds of thousands of retired teachers and state workers, and the much larger sums it will have to pay them.

(The shortfall forces state Treasury and school district property tax "contributions" to the pension fund higher every year -- which is why ex-Gov. Tom Corbett called pensions "a tapeworm" -- and is a leading reason Pennsylvania has the third-worst Moody's credit rating of any state: only Illinois and New Jersey, which have also over-promised and under-funded pensions, rate worse.) I reviewed Wolf's pension plans here, and sent a copy to Wolf's office with a request for further comment. "Thanks, Joe. I don't have anything to add right now," Wolf spokesman Jeff Sheridan told me. So I asked around:

1) MONTCO'S VANGUARD WAY: Josh Shapiro, the ambitious head of Montgomery County's Democratic-dominated government, is cheered by Wolf's proposal to fire high-fee "Wall Street" (as Wolf calls them) investment managers and replace them by low-fee "passive" managers like the ones Shapiro and colleagues hired to run Montgomery County's pension fund in mid-2013.

POSTED: Tuesday, March 3, 2015, 2:52 PM

CloudMine, the Philadelphia software firm that says it is developing the "most secure cloud mobile platform," says it has raised $5 million in its first venture capital fundraising. The funding was led by Wayne-based Safeguard Scientifics. Other investors include MentorTech Ventures, DreamIt Ventures, DeSimone Investments, state-backed Ben Franklin Technology Partners, Mid-Atlantic Angel Group, Robin Hood Ventures.

CloudMine says it will use the money "to enrich its product and expand marketing and sales." Founded in 2011, CloudMine says its system helps developers build, update and secure mobile and networked-device apps for workers and consumers.  

In a statement, CEO and co-founder Brendan McCorkle said CloudMine counts Endo Pharmaceuticals and Digitas Health among its clients.  Cloudmine unites legacy, cloud and mobile "to create scaleable enterprise-grade mobile aplpications," said Safeguard managing director Philip Moyer in a statement.  

POSTED: Tuesday, March 3, 2015, 2:41 PM

Renmatix, a King of Prussia company that developed the Plantrose supercritical water process to speed conversion of organic waste into cellulosic sugars that may be processed into fuels and plastics, is raising around $50 million from investors including Total, the French oil company, and Philadelphia investor David Haas, along with prior investors BASF and Kleiner Perkins Caufield & Byers.

Rather than building its own large refineries as previously proposed, Renmatix has licensed Total, BASF and other manufacturers to use its processes in new refineries, Renmatix chief executive Mike Hamilton, a former executive at Philadelphia’s Rohm and Haas, now part of Dow Chemical, told me. Besides the King of Prussia offices, Renmatix has a lab in Georgia.

Total hopes to develop “fuels, lubricants, special fluids and chemicals,” using Renmatix technology, said Total senior vice president Bernard Clement in a statement.

About this blog

PhillyDeals posts raw drafts and updates of Joseph N. DiStefano's columns and stories about Philly-area finance, investment, commercial real estate, tech, hiring and public spending, which he's been writing since 1989, mostly for the Philadelphia Inquirer.

DiStefano studied economics, history and a little engineering at Penn, taught writing at St. Joe's, and has written the book Comcasted, more than a thousand columns, and thousands of articles, and raised six children with his wife, who is a saint.

Reach Joseph N. at JoeD@phillynews.com or 215 854 5194.

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