CNYB 08-18-08 A 1 8/15/2008 8:59 PM Page 1 TOP STORIES BUSINESS LIVES Cash-rich buyers Vacations take center stage full of in property market learning PAGE 2 ® PAGE 25 Designer jean shops VOL. XXIV, NO. 33 WWW.CRAINSNEWYORK.COM AUGUST 18-24, 2008 PRICE: $3.00 invade Manhattan Many go PAGE 2 IAC bust in spinoffs expected to do better on mortgage their own PAGE 4 meltdown REPORT Home loan mess SOMEONE’S IN blamed for 31% rise BUSINESS OF GREEN THE KITCHEN: Joanne Sepetjian in bankruptcies Mayor’s plan for (left) enrolled at Manhattan’s cleaning up NYC Institute of BY DANIEL MASSEY is wilting Culinary PAGE 7 Education following 16 the mortgage crisis that years at sparked a wave of foreclosures is Citigroup. now responsible for a rising tide of bankruptcies across the city. Fueled in large part by the num- buck ennis ber of homeowners who could not BACK TO SCHOOL keep up with monthly payments on subprime loans, 14,407 people filed for bankruptcy in the New York area during the first seven months of this year,compared with Cooking up new careers 11,026 in that period last year, ac- cording to bankruptcy court other position in finance. double major in management and records. As economy flails, After some soul-searching, the culinary arts. While the number of bankrupt- students flock to 16-year Citigroup veteran, most “My friends and family mem- cies is not as high as it was during recently a U.S. equities business bers say I’ve lost my stress and seem the previous economic downturn New York’s two manager, decided instead to fulfill so happy,” Ms. Sepetjian says. in 2001, the filings this time culinary institutes a lifelong dream to work in the As the economy falters and around are increasing at a greater restaurant business—a goal her people lose their jobs, many are re- rate, rising 31% from January parents had discouraged her from examining their careers and decid- through July versus the year-earli- BY JOYCE HANSON pursuing as a teenager. ing it’s time for a change. More See BANKRUPTEDon Page 22 In May, the 40-year-old execu- than a few are headed to the city’s when joanne sepetjian’s boss at tive began taking an eight-month- two culinary schools, ICE and the PREDATORY ADVISER A firm AT DEADLINE Citigroup Inc. told her in January long career program at The Insti- French Culinary Institute. Both promising relief for debtors gets that her job was being eliminated, tute of Culinary Education on report rising enrollments, and stu- shut down for deception AS OF AUG. 16, AIR she briefly considered finding an- West 23rd Street, where she is a See EXECS COOKING on Page 24 Page 3 TRAVELERS ARE ALLOWED TO leave their laptop computers in carrying cases when passing through security gates at airports.The change Tech community wants some respect is an effort to speed up security lines and a response to customer complaints.The Transportation Security New York still lags Boston, Silicon Valley, Administration requires but the city has made some gains this year travelers to have a “checkpoint friendly” bag preneur, built the 15,000-square- that has a designated laptop BY AMANDA FUNG foot facility to attract “cool and section and cannot have smart”tech entrepreneurs—and to any metal snaps, zippers or earlier this month, 150 of New boost New York’s profile as a hub buckles in that section. York’s geekiest gathered in the for innovation. There can be no extra pockets Flatiron district to celebrate David “New York is now a serious inside the laptop section, and Rose’s new tech incubator. Mr. player in the business of technolo- See AT DEADLINE on Page 2 Rose,the patriarch of angel invest- gy,” says Mr. Rose. “We’re no Sili- ing in New York and a serial entre- con Valley, but at least we’re not dismissed anymore.” That’s cold comfort for a city 33 5 used to being on top. New York is No. 1 in everything from finance and media to nightlife and culture. But when it comes to tech, the city is still struggling to make its mark. neff david “In New York, tech is one in- ROSE GROWS IN MANHATTAN: Investor and entrepreneur David Rose built a 15,000-square-foot NEWSPAPER See TECH COMMUNITY on Page 24 incubator to house tech firms, in hopes of boosting the city’s image as a hub for innovation. 71486 01068 0 CNYB 08-18-08 A 2 8/15/2008 8:24 PM Page 1 AT DEADLINE Continued from Page 1 month, according to Fox-Pitt Cash-rich buyers no other items may be packed in Kelton analyst David Trone. the same section with the Despite the heavy loss, Mr. laptop. Images and official Trone said in a report Friday guidance are available at that Lehman will not have to www.tsa.gov. raise additional capital, in part seize their moment because it raised $6 billion when RICHARD ANDERSON, it reported a $2.8 billion PRESIDENT OF THE NEW YORK quarterly loss in June. Lehman Snap up major towers as leveraged players falter Building Congress, estimates was Wall Street’s leading dealer that the city will gain a record in subprime mortgages and is 37,000 new housing units this now struggling to keep afloat. If BY THERESA AGOVINO year.The high number was its mortgage portfolio continues boosted by developers who were to decline in value, analysts say, in recent years, Shorenstein scrambling to get projects the firm may have to unload its Properties stood by as competitors underway before the 421-a tax Neuberger Berman asset abatement program expired in management unit to raise cash. repeatedly topped its bids on June.New building permits, Manhattan office towers. however, have fallen WARNER MUSIC GROUP In June, with the real estate market in dramatically since the beginning STRUCK A DEAL WITH of the year. Mr. Anderson Microsoft to sell music videos the grip of the credit crisis, the San predicts the number of new through its Xbox 360 Francisco-based company’s luck finally units will be much lower next entertainment console at $1.99 turned. It bought two of the seven office year and in 2010. a download.The deal opens up a buildings the once high-flying Harry market of 12 million Xbox users MANHATTAN RESEARCH FIRM to Warner, which, like the other Macklowe was forced to return to EMARKETER REDUCED ITS major music labels, has been lenders when he couldn’t repay a loan. online ad spend forecast for the struggling as traditional ways of The buildings’ price tag of about $940 year by 4%, to $24.9 billion.The selling recorded music have million was roughly 30% less than Mr. firm also slashed its projection been in decline. Xbox has had a for online video ads by 64%, to similar deal with Sony BMG Macklowe had paid just 16 months $505 million. Despite the since December. earlier. slowdown, online advertising Shorenstein typifies the new type of THE FAMOUS ANNUAL BARNEYS CAPITAL GAINS: revenue is still expected to grow “What’s more cash-rich, conservative buyer that is while ad sales at traditional WAREHOUSE SALE—WHICH important is where media outlets continue to started last Thursday and runs prices will be in 5 beginning to dominate the market.The decline. Overall, online ad until Sept. 1—is offering double or 6 years—we breed’s rise comes after the demise of spending will be up 17.4% and its usual inventory, sources say, think they’ll be higher,” says lax lending standards that allowed video will be up 55.9% from in an effort to unload excess Shorenstein’s buyers to snap up properties using 2007, according to eMarketer. designer shirts and shoes. Robert Underhill. “The luxury market is certainly mountains of debt and only a sliver of LEHMAN BROTHERS WILL not immune to the general equity. Such highly leveraged buyers are LIKELY SUFFER A $3.6 BILLION lackluster fashion retail now sidelined. write-down and post a $1.8 environment,” says Roseanne billion loss when it reports Cumella, senior vice president “Sixteen months ago, we couldn’t get third-quarter results next of The Doneger Group. close to some of these buildings because all people cared about was price and not CORRECTION anyone’s ability to actually close a deal,” The increase in second-quarter net interest income at Signature Bank this year was 23%. The number was misstated in a chart accompanying the story “Banks’ silver lining” in the Aug. 11 says Robert Underhill, Shorenstein’s issue. Manhattan-based head of capital See CASH-RICH on Page 24 THIS WEEK IN CRAIN’S buck ennis WEEK IN REVIEW ---------------------------5 REPORT: THE BUSINESS OF GREEN-------------------------------------------7 Denim riding high as new NEIGHBORHOOD JOURNAL------------------------------------------14 Apple.More than 11 speciality jean day,” says Michael Londrigan, Posh specialists shops have opened here in the past chairman of the fashion merchan- SMALL BUSINESS ------------------- 15 buck the recession; two years. Liz Claiborne’s Lucky dising department at the Laborato- 26 ALAIR TOWNSEND -------------------17 Brand, for example, has launched ry Institute of Merchandising. some makers offer three stores here since 2006,includ- “People will pay high prices for a REAL ESTATE DEALS--------------18 a downgrade ing Lucky Kid on Prince Street. good pair of jeans that fit well.” While malls and department Shoppers who plan to dig deep THE WEEKS AHEAD ---------------- 19 stores nationwide cry for mercy and into their pockets for dungarees BY ADRIANNE PASQUARELLI CLASSIFIEDS ----------------------------------20 retailers of all stripes sputter, denim prefer to do so at specialty stores is enjoying a boom.