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September 30, 2003

Written by Bob Meyer, Editor of BarterNews

CEO Magazine's Editor Writes Article On The Right Way To Barter

In the October issue of Entrepreneur, Ms. Prince, the executive editor of CEO Magazine, wrote a fine article on the way corporations should transact "direct trades" with one another. (The following is a brief recap.)

Quoted in the article was Mark DeFond, professor of accounting at the University of Southern California's Leventhal School of Accounting in Los Angeles. He pointed out that companies should simply exchange services, rather than constructing two separate transactions, with each side writing a check to the other. In that way no accounting games are played.

J. Edward Ketz, associate professor of accounting at Pennsylvania State University, says it's all in how you account for swaps, and the rules are quite clear: "If the swap involves dissimilar resources—a car for a computer, for example—then record the new asset at its fair value, take off the swapped asset at its book value, and record the difference as a gain or loss." And "if the swap involves similar resources, one bandwidth for another, then record the new asset at the book value of the swapped asset. Don't recognize any gain or loss."

Joe Carcello, associate professor of accounting and business law at the University of Tennessee, Knoxville, says the challenge comes when you have to assign a price tag to a product or service that's difficult to value. Both parties have to demonstrate that they made a good faith effort to come up with a defensible valuation. "Don't walk into the transaction with the intent of trying to boost revenues as a result of the structure of the transaction. Account for the transaction on its economic merit."


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For information on The Barter Market Place click here.


ITEX Continues Divesting Corporate Offices

In June, ITEX (OTCBB:ITEX) announced its intent to sell all five of its corporate-owned brokerages. In August two were sold, and a third, located in Sacramento where the company is headquartered, is expected to close in October.

Ms. Kristen Feuz, currently the Senior Trade Director for the Sacramento office, has signed a Letter of Intent with the ITEX Corporation. She will be the principal shareholder of a newly formed corporation to complete the transaction.

Steven White, Chairman of the Board said, "Ms. Feuz has worked with ITEX since 1993 and knows the Sacramento client base. She's well respected within the ITEX broker network; we believe her expertise, enthusiasm, and drive will create an upward revenue trend for this office."

White explained that selling corporate-owned brokerages will enable the company to reduce overhead while pursuing the company's goal of focusing on the expansion of the existing broker network. For more information contact alan.zimmelman@itex.com, or www.itex.com.


Every barter company in the world is listed on our web site, click through to our Global List of Barter Companies.


Bentley Enters Into Agreement To License VirtualBarter

Bentley Communications (OTCBB:BTLY) has entered into an agreement in principal with VirtualBarter to license the exclusive North American rights to its online barter management system and integration with its global trade marketplace.

VirtualBarter is produced by Independent Broker Alliance. (Bruce Kamm, well-known within the barter industry, has been the architect of VirtualBarter.) The software offers exchanges the ability to maintain their own brand, with name and logo on all screen views. It gives trade exchange members the ability to manage their own accounts as they can post transactions, view online statements, check transaction history, and search local and global member directories.

Robert Schumacher, Bentley's president and COO, declared, "In our opinion, VirtualBarter is the best for our member exchanges. It's the most scaleable. We were extremely impressed with the current product, but the new version will put us at the forefront of the barter industry."


If you haven't read the current issue of BarterNews, get yourself a copy now—issue #61 has just been released! Orders are shipped the same day we receive them. (Click on Order Form )


Autumn Trade Fairs & Holiday Expo's....

October 25: San Diego BXI Fall Trade Fair will be held at Natural Reflections, 190 Wilshire Road, Oceanside (CA)...on Saturday 10 a.m. to 5 p.m.

(Send your "holiday fair/expo information" to: bmeyer@barternews.com)


Nineteen years ago, in issue #8 of BarterNews, we reported on an entrepreneurial California vintner who embraced barter to build his winery...we feel his thinking about barter's applicability is as relevant today as that of two decades ago.

Vintner Finds Answer In Barter For Building Business

Wine is not every man's drink in the U.S., as it is in Europe. One man trying to change the wine image is Napa Valley wine maker Hamilton Vose III. He advertises his slightly sweet White Zinfandel through a print ad that places a bottle of wine next to an elegant wine glass overflowing with...popcorn!

Mr. Vose's innovative thinking is not limited to his unusual advertising message. He's also creative in his marketing methods. He's an avid barterer! And well he should be, as the California wine industry is extremely competitive.

The six largest wineries account for 80% of the wine sold in the state. Such overwhelming dominance means that the 90 smaller wineries must battle hotly for business. Vose, through his bartering efforts, moves his wine while acquiring the necessities for building his business.

Our first encounter with the Voses was at the Southern California Business Exchange (BX) Faire. Hamilton and his beautiful wife, Lourdes, had journeyed over 500 miles to trade their wares.

We enjoyed our brief meeting with the Voses and found them, as well as their wine business, most fascinating. To learn more about Vose's wine trading techniques, as well as take a peek at the industry itself, a BarterNews representative traveled north to their 300-acre mountain vineyard estate, located in the world-famous wine region of Napa Valley.

The day chosen to interview Vose was cold and rainy, no day for a picnic. Driving up Mount Veeder through a patch of dense, towering trees one rounds a sharp bend and sees acres of orderly sown grapevines. A small wooden sign is nailed to a lone pine in this quiet, tranquil setting. It reads: "Pinot Chardonnay, Planted 1973 by H. Vose III."

After a brief tour of Vose's Redwood Ridge Ranch, we proceed to the wine tasting room where we can talk.

BarterNews: Hamilton, how did you get involved in the wine business?

Vose: I've been asked that question a hundred times! I grew up in California, went to school in Santa Barbara, so I was acquainted with the famous Napa Valley region and its reputation for producing fine wines.

After college and the service, I settled in Chicago. There I operated a commercial paper company, selling high-grade paper to printers and lithographers. We represented such mills as Mead, Hammermill, St. Regis, as well as becoming the largest distributor for Kimberly-Clark coated paper in the country.

My next endeavor was a warehouse business back there, which had 160,000 square-feet of space to rent out.

Although my businesses were successful, I wasn't completely satisfied. I'd always dreamed of being a farmer...working the land, so to speak. After a lot of thought and research, I settled on the Northern California area. The isolated mountain land was relatively inexpensive. I could afford to build a vineyard here and grow high quality grapes.

Superior grapes come from areas there they have to struggle a bit. My goal was to build and maintain one of the finest vineyards in the country.

When I achieved that goal and started selling my grapes to people who were making great wines, I became intrigued with the possibility of producing wine myself. Since I had already learned the vita-cultural aspects of the business, I decided to go into wine-making too.

To be continued next week...
We will see how Vose built his wine business with the help of four trade exchanges.


Get New Money-Making Ideas And Valuable Contacts!

You can obtain useful, informative ideas and contacts in every available back-issue of BarterNews.


Here And There. . .

  • Mark Zandi, chief economist and co-founder of Economy.com, says all that's needed to move the economy forward is for one company from each industry to decide that it's time to grow, and everyone will follow.

    Instead, businesspeople are sitting there looking at each other and saying, "Who's going to go first?" Ultimately someone does, and everyone else has got to go with them...otherwise they're toast. Hopefully, that's what we'll see.

  • Robert Shiller, professor at the Yale School of Management's International Center for Finance, says the housing boom we've seen since the stock market peaked in 2000, is another sign of the decline of trust in stocks. He contends that the housing-price boom is a direct result of people's preference to invest in something tangible and real, and for which they don't need to trust accountants or mutual fund managers to make sure it's still there.

    Shiller says that trust in our financial institutions is a precious thing. And although New York State Attorney General Elliott Spitzer's charges of improper trading practices (by several leading mutual fund families) is exactly the kind of thing that must be done for the long run to help promote trust, his revelations may, however, have negative effects on market valuations for decades to come.

  • Trafficking in pirated DVD-Rs and DVDs is almost 100% more profitable than trafficking in heroin, according to intellectual-property experts.

  • The number of black households with incomes of $100,000 or more has grown to 5.6 million in 2001, up from 3.1 million in 1991, the U.S. Census data reports.

  • The former chairman and CEO of Nasdaq, Wick Simmons, says the new stock option accounting (eliminating stock options) will cut 3.5% off the GDP over the next decade-a staggering $2.3 trillion loss of economic output.

    Simmons believes stock options are not the problem, and expensing them is not a solution. The key to the U.S.' unprecedented economic prosperity is a system that recognizes the best talent and ensures that it is always available to the most promising ventures.

    (Sacrificing that competitive advantage for a cosmetic change in accounting rules may appeal to some today, but it will prove to be horribly shortsighted in the years to come.)

  • The recent news about domain name Shopping.com, being acquired for $500,000 from online search engine AltaVista, which paid $257 million in 1999 for that domain name, succinctly reinforces the craziness of the dot-com era!

  • Have you signed up to receive a summary via e-mail of the Tuesday Report every week? If not, go to the top of this issue (right hand corner) and sign up!

We welcome your comments, questions, and observations.
Copyright BarterNews 2003. Redistribution of BarterNews content expressly prohibited without the prior written permission of BarterNews.