Picking up the Pieces
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nb32p01qxp.qxp 8/3/2007 8:16 PM Page 1 TOP STORIES BUSINESS American, Delta LIVES shoot it out at JFK NEIGHBORHOODS for international Priced out but passengers grandfathered in PAGE 2 ® PAGE 29 State looking at 400 NYC firms over tax breaks VOL. XXIII, NO. 32 WWW.NEWYORKBUSINESS.COM AUGUST 6-12, 2007 PRICE: $3.00 PAGE 2 Citigroup’s stock takes a beating; Picking up the pieces it’s time to buy IN THE MARKETS, PAGE 4 100-plus businesses THE BIG CLEANUP: Businesses are coping Ask.com in quest still disrupted by with construction for more share of steam-pipe blast; crews and scaffolding. Web search market not enough aid PAGE 10 What killed Wicks BY AMANDA FUNG reform; private nearly three weeks after a equity titans open steam-pipe explosion forced the their wallets for evacuation of several midtown blocks, more than 100 shuttered or candidates displaced businesses are still feeling THE INSIDER, PAGE 14 the pain. One of those compa- nies is Sophie’s Cuban MIDTOWN BLOWOUT MURDOCH DEAL: Cuisine restaurant on Lexington Avenue be- Buildings and retailers still closed THE AFTERMATH tween East 40th and on Aug. 3 after steam-pipe explosion. G New York’s tabloid East 41st streets. The I Stores I Office buildings I Restaurants wars spreading to eatery has been closed broadsheets? PAGE 3 since July 18, when the E. 42nd Street G blast enveloped the K&G Fashion Battle restaurant in a cloud of Classic Nails of the muddy steam. So far, business Pret A Manger Barami Studio news Sophie’s has sustained $300,000 worth of loss- E. 41st Street X Explosion site channels es in spoiled food and PAGE 3 370 Lexington 369 Lexington* ruined equipment. Sophie’s Cuban G News- “This incident has Cuisine papers opened a vein in our must face neck, and now we are E. 40th Street Lexington Ave. the music watching the blood *Scheduled to reopen Aug. 6. PAGE 13 See FIRMS on Page 8 buck ennis AT DEADLINE Glaring spotlight turned on Undoing THE FILM AND TELEVISION PRODUCTION INDUSTRY added nearly 2,000 jobs during the of Trump first six months of the year, an subprime mortgage insurers increase of 5.1% from 2006, according to economist cial Group Inc., Mortgage Barbara Byrne Denham.The Stocks of local firms which quietly ring IN A NUTSHELL rise stems largely from the up fat profits year in MBIA, Ambac fall; MBIA Ambac record 11 television pilots that and year out by in- Weak market, grand on hook for billions FOUNDED 1973 1971 were shot in the city this past suring bonds against ambitions, exec’s spring. Overall, 64 television in loan guarantees default, have seen 2006 REVENUE $2.7 billion $1.8 billion shows and 15 feature films are their stocks pound- troubles doom firm under way. ed lately. 2006 NET INCOME $819 million $876 million BY AARON ELSTEIN Both stocks tum- STANDARD & POOR’S bled 8% in a single day last week. ket no one wants any part of now.” BY TOM FREDRICKSON DOWNGRADED its credit a couple of large but little-known MBIA’s share price has slumped MBIA has guaranteed $5.1 bil- outlook for Bear Stearns, players on the normally placid 28% in the past three months, and lion worth of subprime mortgages. donald trump has pulled the saying the investment bank’s fringes of the credit market are be- Ambac’s has dropped 34% in the Mr. Haines calculates that those plug on Trump Mortgage less than reputation has been damaged ing sucked into the center of Wall same period.Investors fear that the obligations could result in as much two years after its launch. See AT DEADLINE on Page 2 Street’s subprime mortgage storm. firms could be forced to make good as $1 billion in losses for firm, Plagued by bad timing and the MBIA Inc. and Ambac Finan- on their guarantees of billions based in Armonk, N.Y. disclosure that the firm’s chief ex- worth of subprime bonds, whose That’s a lot of money in one ecutive had inflated his credentials value has plummeted in recent shot for an outfit that has lost a to- in his official biography, the mort- 32 weeks. tal of only $600 million in its 34- gage brokerage never came close to 5 “We’re talking about the possi- year history. reaching its financial goals. Ob- bility of unprecedented losses,” Mr.Haines has not yet calculat- servers say another reason the ELECTRONIC EDITION says Rob Haines, an analyst with ed a loss estimate for Ambac. He company stumbled is that it ex- CreditSights.“There’s a lot of con- notes, however, that the Manhat- panded too quickly, instead of tak- cern about how exposed these tan-based firm’s guarantees on a ing the time to build relationships NEWSPAPER companies are to a part of the mar- See SUBPRIME on Page 8 See TRUMP on Page 8 71486 01068 0 CNYB 08-06-07 A 2 8/3/2007 7:43 PM Page 1 AT DEADLINE Continued from Page 1 privately owned apothecary, by the recent collapse of two in- which sells traditional and house hedge funds.The fallout holistic medicines, has signed a over the funds’ demise, along 15-year lease for 1,700 square with the fact that Bear has taken feet at 370 Lexington Ave., at on additional debt as investors East 41st Street. But the lose their taste for leveraged building, which was damaged in buyouts, could cause revenues the blast, remains closed for and earnings to fall, according to cleaning and repairs. ProHealth, S&P,which had given Bear an set to take possession on Aug. 1, A+ rating as recently as June. has pushed back at least until Hours after the S&P January the opening of what will announcement Friday, Bear’s be its second location. Matt chief executive, Jimmy Cayne, Cohen, a broker at Lansco held a conference call to say that Corp., represented ProHealth in his firm’s franchise is healthy. the lease deal. Jonathan Krieger of Robert K. Futterman & TAKING A PAGE FROM CONDÉ Associates negotiated on behalf NAST, WHICH RECENTLY began a of owner Broad Street AMERICAN AIRLINES is in second ad campaign Development. Asking rent was the midst of a “win back” championing the power of $135 per square foot. campaign, trying to recover lost customers. magazines,Time Inc. has launched its first corporate RESTAURATEUR FRANK promotion campaign. Media- TSIAMTSIOURIS is planning a buying heavies including 4,000-square-foot restaurant at George Janson from 109 W. 14th St., at Sixth mediaedge:cia and Robin Avenue.The 24-hour Good Steinberg from MediaVest are Stuff Diner will open for featured in the campaign, which business in two weeks. Mr. touts Time Inc. properties like Tsiamtsiouris operates a handful Real Simple and People.The ads of other diners in the city, will run in the company’s including City Diner and Metro magazines and in trade Diner on the Upper West Side. publications, as well as on taxi Aaron Gavios, an executive vice tops and in Times Square, president at Square Foot Realty, through November. represented the tenant and the lindström bekka property owner, Stonehedge THE MIDTOWN STEAM-PIPE Partners. Asking rent was $90 EXPLOSION is delaying per square foot.The lease ProHealth Pharmacy’s includes a 4,000-square-foot expansion in the city.The basement. I Clash of titans at JFK CORRECTIONS Former Attorney General Eliot Spitzer did not lose a trial in a case he brought against former American, Delta spar over international passengers New York Stock Exchange chief Richard Grasso; the case has not gone to trial. This was misstated in the July 30 Viewpoint section. BY HILARY POTKEWITZ Reed Smith’s deal to lease 50,492 square feet at 599 Lexington Ave., which took place last year, should not have been included in CoStar’s July 30 list of the largest Manhattan office leases in first-half 2007; also, Studley represented Reed Smith. Premiere Radio’s lease american airlines is spending a lot of money to establish its dominance at John F. Kennedy renewal for 45,787 square feet at 1270 Sixth Ave. in the Plaza District should have ranked International Airport. In a few weeks, the Dallas-based carrier will unveil a completed 50th; the tenant rep was CBRE, and landlord Tishman Speyer represented itself. $1.4 billion terminal. It is also moving aggressively to expand domestic service and upgrade business class—measures designed to raise its profile in New York. But the entrenched giant is facing increasing competition from a resurrected competitor: THIS WEEK IN CRAIN’S Delta Air Lines. For the past two years, even while in bankruptcy reorganization, Delta has been focusing its efforts on New York. It has been quietly adding international flights and NEW YORK, NEW YORK--------- 6 30 See CLASH on Page 9 VIEWPOINT-----------------------------------------12 VALERIE BLOCK ---------------------------13 THE INSIDER------------------------------------14 WEEK IN REVIEW -----------------------15 Warnings to Empire Zone REAL ESTATE DEALS--------------16 Empire Zone program. But 3,000 throughout the city’s 11 Empire REPORT: EDUCATION------------ 17 404 city businesses firms statewide—roughly a third of Zones. M.B.A. PROGRAMS ------------20 not meeting targets, the program’s total—have failed to The state’s official tally appears deliver even 60% of the new jobs or to tell a damning story: More than SMALL BUSINESS --------------------23 get letters; some data investments they pledged. Those half of the businesses failed to add companies could face removal from jobs, and 153 even reduced staff, ac- THE WEEKS AHEAD ---------------- appear muddled 23 the program or, in the worst case, be cording to 2005 data they supplied.