KevinRyan1
- 1. Kevin Ryan’s garage hobby has turned into a lucrative career 27 years later. His shop in Westminster is small and mostly anonymous with a tinted black window. Ryan has been riding a trend in the guitar industry: an increasing demand for high-quality, custom steel string acoustics. Before he started building instruments, solo guitar makers were lucky to give away their instruments for $400. His custom-made acoustic guitars today fetch upward of $30,000 each. Story on Page 3 Kevin Ryan Guitars builds custom-made instruments that sell for top dollar. I grew up really poor, so for me, I never really expected to make a lot of money and the fact that there are guitars selling for a lot of money, I just think, ‘Well this is great.’ ” K E V I N R Y A N , A B O V E ‘‘ INPURSUIT OFPERFECTION ANGELA PIAZZA, ORANGE COUNTY REGISTER STATUS UPDATE: Orange County entrepreneur helps fight mosquitoes in Uganda. Page 2MADE IN O.C.TODAY’S FOCUS WEDNESDAY, SEPT. 4, 2013 BUSINESS Our occasional look into business patterns explores the latest merger mania: PLUS: Communication gi- ant Verizon is making a huge, nervy bet on its own business, agreeing this weekend to pay $130 billion to Britain’s Vodafone for the 45 percent of its namesake wireless business Verizon doesn’t own. Why? Ponder your own ever-growing wireless bill and then know that this business – with deep Cali- fornia roots – spits out $20 billion-plus in annual oper- ating profits. Still, $130 billion is a lot of money. It’s curiously rough- ly equal to the Wall Street value of all of Verizon, which also owns major East Coast landline phone companies. Or it’s roughly the annual gross domestic product of Nevada. Or, for the same money, Verizon could have bought all the stock of the entire U.S. auto industry – Gener- al Motors, Ford and Chrys- ler (through its owner, Fiat). MINUS: Microsoft an- nounced a curious wireless deal of its own Tuesday: It’s buying the handset-making LANSNER’S SCORECARD Wireless deals don’t look like clear connections JONATHAN LANSNER REGISTER COLUMNIST business of Finland’s Nokia. The U.S. computing pow- erhouse is trying to win greater share of the wire- less game, where it badly trails Apple and Google, to name a few. This deal gives Microsoft control of the cellphones that handle its own wireless system. Consider the giant dol- lars of the Verizon deal – and you might dream of be- ing a ground-floor investor in the wireless game. Imag- ine that you had bought shares of the global market leader in cellphone-making way back in 2000. Namely, Nokia! So much for early entrants: Nokia shares – even after the news that Microsoft is paying $7 billion for Nokia’s handset business – have fallen 90 percent-plus from their peak of 2000. EQUALS: Stories like No- kia’s fall from power – plus many merger misadventur- es in recent years – scare al- ready penny-pinching CEOs from the deal making scene. A recent tally of modest- size acquisitions – so-called midmarket mergers – shows that in July only 193 middle-market deals were made, according to invest- ment bankers at R.W. Baird. That’s the slowest month since 1995. Those deals were worth $26 billion – one-sixth less than in July 2012. Plenty of academic re- search shows that mergers fail to meet pre-deal finan- cial goals more than half of the time. Plus, there’s a ris- ing stock market. That makes many compa- nies very pri- cey to buy. That’s why CEOs are as reluctant to hire deal-making investment bank- ers as they are to add worker bees. Shares of Capstone Financial Group Inc., an investment banking and wealth management firm headquartered in Ir- vine, are expected to begin trading pub- licly today. Executives said the move will allow the com- pany to raise capital to support Capstone’s rap- idly expanding oper- ations. “The purpose is so we can make strategic ac- quisitions to grow the firm,” said Chief Execu- tive Darin Pastor. “We have three acqui- sitions (that will) close just after we go public.” Launched late last year by a team of advisers from Prudential Financial Inc., Capstone has expanded to 65 employees from five. In addition to its 10,000- square-foot headquarters, the firm, which includes Capstone Affluent Strat- egies and two other subsidiaries, has 10 smaller offices around the country. Pastor said he hopes to grow the firm to about 200 employees, and he expects to do that in part through acquisition. He would not disclose details about the three acquisitions in the works other than to say they include wealth manage- ment and advisory businesses. Capstone’s growth push reflects a broad trend in the wealth management industry. A recent report from research firm Aite Group found that as the econo- my has begun to recover, wealth man- agement firms of all sizes have been ag- gressively expanding through acquisi- tions and partnerships to take advantag- es of cost savings that come with greater size. Capstone is expected to begin trading publicly on the OTC Bulletin Board, a Irvine wealth manager to go public Trading is to begin today over the counter. The company, formed late last year, seeks rapid growth. SEE CAPSTONE ● PAGE 3 RICHARD CLOUGH REGISTER WRITER MARKET RECAP 10-year Treasury: Close: 2.86% Change: +0.07 Oil per barrel: Close: $108.54 Change: +$0.89 O.C. gas prices: Gallon: $3.837 Change: +0 Dow Industrials Close: 14,833.96 Change: +23.65 Nasdaq Index Close: 3,612.61 Change: +22.74 S&P 500 Index Close: 1,639.77 Change: +6.80 MORE ON PAGE 5 SCHOOLYARD RUMBLE Lunchables has a new competitor, Revolution Foods Meal Kits. The kits are the first foray into the grocery store by Revolution Foods, an Oakland company founded by two women seven years ago to supply school cafeterias with healthier prepared foods. Page 4 MICROSOFT-NOKIA DEAL Microsoft said it had reached an agreement to acquire the handset and services business of Nokia for about $7.2 billion in an audacious effort to transform Microsoft’s business for a mobile era that has largely passed it by. Page 5 MODEST STOCK GAINS The Dow logged modest gains as renewed worries about a U.S.-led attack on Syria dampened an early rally. The index was also held back by losses for Microsoft and Verizon. Page 5 MORE INSIDE The monthlong blackout of CBS and Showtime programming for Time Warner customers came to an end Monday, res- toring service for 2 million customers in Orange County and Los Angeles. But cable and satellite TV watchers should expect similar disputes to contin- ue for years. At the core of the dis- putes are the ballooning fees paid by cable and sat- ellite companies to show broadcasters’ program- ming. Those fees will double, from $3 bil- lion this year to $6.1 billion by 2018, ac- cording to Robin Flynn, a senior analyst at SNL Kagan. The fees come from a 1992 law that let broadcasters like CBS ask for a cable re- transmission fee for their programming. That fee provides broadcasters a revenue stream in addition to advertising – and hands them negotiating power. A lot has changed in 21 years: the Inter- net arriving, for one thing. The 1992 re- transmission rules tip the balance of nego- tiations in favor of broadcasters, say ana- lysts and critics, because cable providers now have some real competition, partic- ularly from satellite companies. “The cable industry regrets the fact Expect more blackouts over cable fee disputes SEE CABLE ● PAGE 3 IAN HAMILTON REGISTER WRITER SEC: Business DT: 09-04-2013 ZN: 1 ED: 1 PG #: 1 PG: Cover_D BY: wfawthrop TI: 09-03-2013 17:47 CLR: CMYK