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Future shock: Predictions revisited

BY HBSDEALER Staff

When most magazines make predictions, they are long forgotten by the time actual events reveal the forecasts to be accurate or embarrassing. Not so here at Home Channel News. We keep track of our predictions. And sometimes we even publish the results.

Back in January, this editorial space looked into the seeds of time with industry predictions for 2008. Some of them were bold, some were cautious, but all of them were offered in the spirit of “use at your own risk.”

Here’s a recap of some of the major predictions.

Prediction: After a tumultuous 2007, Home Depot will experience a relatively quiet year.

Actuality: You can read all about it in the special section that begins on page 17. The year was far from quiet, but CEO Frank Blake told us directly: “2007 had a lot more moving parts.” If you’re keeping score at home, count this one as a push.

Prediction: Credit card debt will emerge as a bugaboo of the business pages to rival the “subprime crisis.”

Actuality: You don’t hear the phrase “subprime” as much as you used to, but you certainly see tremendous concern over the related issue of bad investments in mortgage-backed securities. Meanwhile, a Market Watch headline recently reported: “Bad credit-card debt could be next shot to rip through economy.” Score this one another push.

Prediction: Lowe’s Canada will grow its business organically, despite suggestions that an acquisition is necessary in a mature market.

Actuality: That was January. In July, the company announced plans for three Canadian stores to open in the fourth quarter. How did we see the future so clearly? It was written in black and white in Lowe’s annual report.

Prediction: ProBuild Holdings will grow at a pace of one significant acquisition per month.”

Actuality: Pretty close. Since January, we’ve watched six companies join the ProBuild group: Jasper Lumber, Northeast Panel & Truss, Collins Truss Systems, Khempco Building Supply, Big Buck Building Centers and CTX Builders Supply. That’s six. We were 50 percent right.

Prediction: Ace will ride out its accounting error, while avoiding the kinds of mass defections suffered by TruServ almost a decade ago.

Actuality: It is fair to say that this prediction has come to pass. The rank and file appear to be looking ahead. Without trivializing the seriousness of the accounting error and its impact on members, the $150 million scope of the accounting discrepancy seems to fly below the radar, especially as it contrasts to the truly massive figures being tossed around through corporate scandals or federal bailouts.

Prediction: For the 56th consecutive election, voters will elect a male for president.

Actuality: Bingo. This forecast didn’t seem nearly so obvious back in January. It’s worth repeating, this prediction did not constitute an endorsement.

Prediction: After a roller coaster year on Wall Street, the Dow Jones Industrial Average will finish on a high note at 13,500.

Actuality: Generous reader, as the DJIA hovers around 8,600, let us turn our eyes from this forecast and reflect upon the difficulty of short-term stock market predictions.

The editors of Home Channel News encourage you to send us your best predictions for 2009. But be advised: we keep track.

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Hines Horticulture purchased by creditor

BY HBSDEALER Staff

Black Diamond Capital Management, a private equity and hedge fund based in Illinois, has become the new owner of Hines Horticulture. The commercial grower was purchased by its largest unsecured creditor in a deal approved by a federal bankruptcy court in Delaware.

Hines filed a voluntary petition for Chapter 11 bankruptcy protection on Aug. 20, citing a rise in production costs, pricing pressure from large customers and weather-related factors. The Irvine, Calif.-based company is the industry’s largest producer of ornamental shrubs and container-grown plants in the country, operating seven nurseries in four states. It sells to more than 6,670 retail outlets. Its customers included Home Depot, Lowe’s, Wal-Mart and many independent garden centers.

Black Diamond Capital Management, which was Hines’ largest unsecured creditor, held a majority of its $175 million in senior subordinated notes. In earlier court papers, the fund offered $58 million in cash for the company.

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Consumer confidence shaken

BY HBSDEALER Staff

The Conference Board’s Consumer Confidence Index in December fell to 38.0, down from 44.7 in November. The new figure is the lowest since 1967, when the business group began tracking the index. A reading of 100 represents 1985 levels of confidence.

Also on the decline were the Present Situation Index, down from 42.3 last month to 29.4 in December; and the Expectations Index fell from 46.2 to 43.8.

“The further erosion of the Consumer Confidence Index reflects the rapid and steep deterioration of economic conditions that occurred in the fourth quarter of 2008,” said Lynn Franco, director of the Conference Board Consumer Research Center. “The Present Situation Index is now close to levels last seen in the months following the 1990 to 1991 recession, but is not as low as levels reached during the 1981 to 1982 recession. Declines in the Expectations Index appear to be moderating, but this index continues to hover at historical lows. Both sub-indexes bear careful watching over the next several months to see if they are starting to show signs of approaching a bottom. In the meantime, however, the overall economic outlook remains quite dismal for the first half of 2009, and only a modest recovery is expected in the second half.”

Consumers’ short-term outlook was only moderately more pessimistic. Those anticipating business conditions to worsen over the next six months increased to 32.8 percent from 28.3 percent, while those expecting conditions to improve rose to 13.4 percent from 11.5 percent.

The Consumer Confidence Survey is based on a representative sample of 5,000 U.S. households. The monthly survey is conducted for the Conference Board by TNS.

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