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April 9, 2002

Barter Deals Expand 700% At Siebel

In the software industry barter deals are called "concurrent transactions," and they're quite common. Last week Siebel Systems reported their barter efforts accounted for $76.4 million, or 7.2% of its total software license revenue in 2001, up from $11.6 million, or 1% in the previous year.

The disclosure is the latest sign of a growing use of barter transactions, where typically a vendor and a customer agree to exchange/buy each other's products. Siebel says it's been aggressive in extracting revenue from business partners and using its clout to require partners to prove their commitment by using Siebel products. (Siebel does business with suppliers AT&T, Bank of America, and Cisco.)

CEO Tom Siebel says he discloses barter transactions because they follow a realistic and conservative interpretation of accounting rules. He also questions why other software companies don't disclose such transactions, which comes down to "a fundamental issue of transparency."

Editor's Note: This example of barter between corporations points out the use of barter goes far beyond that of the commercial barter industry, where companies use trade exchanges and corporate barter companies as a middleman.

Barter On The Big Easy Is Coming

The National Association of Trade Exchanges will be holding their 26th Annual Convention in New Orleans next month...May 16-18. This year's focus, "How to make big money managing your business!" For more details go to:

Surprise, Surprise...Workers Were Big Winners In the '90s!

A cover story in BusinessWeek showed that the big winners from the productivity boom in the '90s were the workers, who received 99% of the gains from faster productivity growth at non-financial corporations.

Low unemployment rates drove up wages, the education level of many Americans made an impressive leap in the '90s (putting them in a better position to qualify for the sorts of jobs that the New Economy created), and a torrent of foreign money ($1.3 trillion) coming into the U.S. created new jobs and financed productivity-enhancing equipment investment.

Shelf Space Incentives Include Barter Deals

Industries of every type use incentives to build and expand their brands. Notable for using such incentives are the food manufacturers who compete feverishly.

But, until recently, and a FASB (Financial Accounting Standards Board) ruling, just how much was spent by food manufacturers was always a closely-guarded secret. Now the figures are out, as the food companies had to provide a one-time look at what they paid for shelf space.

Incentives take the form of give backs, rebates, and the bartering of additional merchandise. Added together, the total amount of the incentives reported by food manufacturers totaled $60 billion for the year 2001. (Major brands spend 13% to 15% of their sales for shelf space.)

The Federal Trade Commission is investigating whether such practices (paying for shelf space) is anti-competitive, after smaller companies complained they are shut out of stores. Stay tuned...

Here And There. . .

  • Interested in reaching the entire barter marketplace? May 15 is the date all ads for the coming issue of BarterNews must be in. Go to "Advertising" on web page,, or call Bob Meyer at (949) 831-0607.

  • Global financier George Soros shows how wealth is created. In exchange for making a commitment to provide $4 million in financing (on a standby basis until Jan. 1, 2003) to Bluefly Inc., he received a warrant to purchase 100,000 common shares at an exercise price of $1.68. (Stock is selling at $1.80.) Soros is a beneficial holder of around 78% of the company's common stock.

  • Coming next week...information on banner ads in selected locations on the BarterNews web site. Traffic is growing 10% per month! Get your company's message out in front of those really interested in barter.

    E-mail for more information...first come, first served.

  • Mike Ames, founder of TradeAmericanCard in Orange County (CA), was nominated last month for The Inaugural Excellence in Entrepreneurship Awards. The Orange County Business Journal sponsored the recognition program to honor individuals for their entrepreneurial success.

  • Technology expenditures continue to push new innovation worldwide. The U.S. leads in high-tech, spending $203 billion in R&D (research & development) annually. The European Union (15 nations in Europe that trade freely with each other) spends $135 billion. The totals include both industry as well as government funding.

  • Standard & Poor's reports that more than $1 billion of the $12.5 billion in hotel loans were delinquent at the end of the first quarter. Lodgings in resort areas have been hit the hardest.

  • The nation's businesses vacated a vast 26.4 million square feet in the first quarter due to ailing and consolidating businesses...the national vacancy rate is 14.7%.

  • Dawn Hudson, Chairperson of the Association of National Advertisers, says the average American receives more than 3,000 marketing messages a DAY. Therefore, Hudson suggests, advertising has never been more relevant.

  • Intangible assets continue to play a prominent role in corporate America. The Federal Reserve Bank of Philadelphia estimates that annual investment in intangible assets (research and development, software purchases, and advertising) rose from 4% of gross domestic product in 1978 to almost 10% in 2000!

    Fifty years ago, tangible assets such as real estate, equipment, and inventories represented 78% of the assets of U.S. non-financial corporations. Today, the proportion is 53%.

  • Premium hotels are aiming to compete with their peers (other high end hotels) through onsite restaurants run by celebrity chefs. W Hotels, a part of Starwood Hotels & Resorts Worldwide, has included a destination restaurant in each of its properties. The current scenario is a reversal of the typical pattern where the hotel would bring cache to the restaurant, now it's the other way around.

  • It's been noted in earlier issues of Tuesday Report that the consumer has been the driving force to keep the current downturn/recession a mild one.

    Reinforcing that fact further is a report of the government's house price index which surged 9.2% in 2000, and 6.9% in 2001. The remarkable real-estate rally has seen home equity growing by $1.2 trillion, somewhat offsetting American's stock portfolios drop when the dot-com implosion hit.
We welcome your comments, questions, and observations.
? Copyright BarterNews 2003. Redistribution of BarterNews content expressly prohibited without the prior written permission of BarterNews.