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December 8,  2009

Written by Bob Meyer, Editor of BarterNews

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From the desk of Bob Meyer...12/08/2009

$1 Billion Cash Loan To Be Paid Off In
Airline Miles
 

It there was ever a question of whether the airlines have established their own currency of frequent flier miles or not, it is no longer. For years airlines have bolstered their balance sheets by pre-selling billions of miles (for about 1¢ a mile) to other merchants.

Citigroup Inc., which gives away American AAdvantage miles to credit-card customers, agreed in September to lend American $1 billion. This loan will be repaid between 2012 and 2016…not in cash but in airline miles.

IRTA’s Suplizio Leads European Barter Congress

The re-establishment of Europe as a chapter of the International Reciprocal Trade Association (IRTA) took place early December in Istanbul, Turkey. It was sponsored by Turk Barter and Paul Suplizio (the original executive director of IRTA and present IRTA board member) led the conference for the European exchanges.

Consumers — Key To Job Creation

The largest impediment to new hiring is weak sales. Since January 2008, more owners have reported lower sales (quarter over quarter) in every month, mostly by double digit margins. In November, a small 15% reported gains in sales, while 43% reported sales were still declining.

In short, consumers are the key to job creation. When businesses have more customers, they will hire more workers.

WSJ Publishes Article On Restaurants Using Trade Exchanges

Restaurant owners are embracing barter (via trade exchanges) according to an extensive article in the December 3 issue of The Wall Street Journal. Bartering is especially useful for independent restaurants that, unlike some chains, lack access to corporate credit lines or cash. Trading food for needed services from trade exchange members is especially valuable in a tight economy.

Named and quoted in the article were Rob Miller, president of the Arizona Trade Exchange, and Ric Zampatti, CEO of The Barter Company based in Atlanta.

All back issues of "From the Desk...” can be accessed by clicking here.

(Please feel free to forward our newsletter to your friends and colleagues. We have a “box” at the end of the newsletter for your convenience. See you next week. . .)


Sandra Bullock Barters Way To Small Fortune

The Blind Side, a football movie starring Sandra Bullock, has been in theaters less than two weeks. The family-friendly film has grossed nearly $107 million at the box office…more than triple the $30 million needed for production costs. It was produced and marketed by Alcon Entertainment, a small 12-year-old production company owned by FedEx CEO Frederick W. Smith.

The entrepreneurial production company persuaded Ms. Bullock to accept a small upfront payment (far below her usual multimillion-dollar fee) in exchange for a substantial percentage of the company’s profits—in the neighborhood of 25%.

The company expects to pay box-office bonuses to many actors, as well as the movie’s director, all of whom claimed a percentage of the film’s profits in exchange for reduced payments upfront.


Attention Trade Exchange Owners. . .It’s GROW OR GO!

The magic bullet for growth is sales, always has been and always will be...yet the industry’s overall growth is anemic. Why? Maybe it’s because we’re not providing on-going education about our unique way of doing business. Knowledge is always a pre-requisite to taking sustained action.

And for those newcomers, the lifeblood of an exchange, awareness of and understanding about the value of trading is even more important.

If you expect prospects to come aboard and your members to be more active traders, but you are perplexed when the results are less than you desire...there’s a good reason. You must continually educate and motivate every month--month after month after month!

Such action is necessary because, let’s face it, more cash business, not trade, is of paramount importance to your members. You must break through this “cash only” focus and redirect their thinking toward barter. Although most exchanges don’t see the importance of doing so, many industry leaders are taking action and so can you.

As the owner of your own operation, there is an easy and inexpensive solution for moving forward...look into using The Competitive Edge newsletter. It’s a camera-ready, 4-page, professionally written, informational marketing tool...available in PDF format as well as print. So regardless of how you reach your prospects and clients, you will have the necessary vehicle.

Written especially for you, the busy trade exchange owner, I am certain it will be the best investment you ever make.

For more information about The Competitive Edge, and how it can benefit you click here.


Cruise Industry Adds Capacity Despite Slow Economy

The Cruise Lines International Association estimates North American capacity will grow 8% in 2010 and 5% in 2011, despite our current economic malaise. The growth of capacity is due to the cruise industry having to take the long view, as ships take about three years to build. (They have a lifespan of 30 years or more.)

Just launched is the largest cruise ship ever built, Oasis of the Seas, by Royal Caribbean Cruises. With 5,400 passengers aboard, it towers 20 stories above the sea and is almost four football fields long (400 yards). The 225,000 gross-ton ship is about double the tonnage of a typical cruise ship and has 13 retail shops, 21 pools, and 24 restaurants plus a 300-foot water slide.

Given the 2009 fourth quarter’s soft cruise demand, 2010 should be good for cruise barter-inventory as this capacity expansion sparks barter deals.

* * ANNOUNCEMENT * *

25 Years Of BarterNews Issues Now In Digital Format

Welcome to the largest repository of barter contacts, strategies, and barter techniques in the world. All 64 issues of BarterNews now available in digital format at http://www.barternews-ezine.com.


·         International visitors look for BARTER CONTACTS in our Global Barter Section. If YOUR exchange isn’t listed see the forms on the lower left of the page. (Click here.)

·         Attention trade exchange owners...thousands of visitors every month visit our BARTER CONTACTS section on our web site where we have names & addresses of barter companies in the USA. If YOUR exchange isn’t listed, or the information is incorrect, you can correct the situation by using the forms to the lower left of the USA map. (Click here.) 

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ITEX CEO Steven White Reviews 2009

(An open letter to the stock-holders)

This past year has certainly strained many companies throughout the world and I am pleased to report that ITEX has remained focused, executed well on its core business, implemented several strategic investments and experienced growth during a very difficult economic time.

As in my past letters to you, I can once again boast that our company is moving in a positive direction. In particular, our financial condition continued to improve over the past year and has never been stronger. We increased revenues when many companies in the U.S. experienced declines; we retired all long-term debt when many businesses have become more burdened with debt; and we increased cash and assets when many saw their balance sheets contract.

We ended the fiscal year with more than $2.5 million in cash and almost $2.9 million in operational cash flow. Our operational income increased in each of the four quarters of last year, from $22,000 in the first quarter to $426,000 in the fourth quarter. Our credit facility with U.S. Bank recently increased from $1.5 million to $2.5 million, with an exceptional 2.25% interest rate (adjustable), displaying the bank’s confidence in us.

We attribute our financial success in part to our disciplined, conservative and astute management of our finances, our ability to run the company with a lean, smart and dedicated staff, and our understanding that in order make forward leaps, we need to follow our entrepreneurial drive and fearlessly pursue opportunities.

The four acquisitions we have undertaken since August 2005 were calculated risks that have made us a larger and stronger company. Our strategic initiatives, commenced in the past two years, have been gaining momentum; adding revenues, cash flow, more brand recognition and strengthening our position as the de facto industry leader for barter and trading communities.

During fiscal 2009, we continued to allocate resources to personnel, franchisee support and development, as well as technology; and toward a number of strategic initiatives such as developing our Web Services program, executing a national strategic partnership strategy, launching ITEX Media Services, and beginning a national advertisement campaign in premier business publications. Many of the expenses incurred were for start up and one-time costs. However, we do expect to continue to further invest in some of these initiatives in 2010.

As unemployment and under-employment continues to impact more than 17 million nationwide, we believe many of these individuals will take the future into their own hands. As entrepreneurs they will start their own businesses and search for innovative ways to generate sales. ITEX continues to be a perfect solution for these new business owners.

Stockholder Value

We work very hard to create value for our stockholders. Since 2005, stockholder equity has increased more than 182%. Though we are pleased with this result, we understand for many stockholders the most important metric is share price.

As a smaller public company, we continually seek to balance our desire to create value for stockholders with the need to use our resources wisely. We are cognizant of the burdensome costs of being a public company. We seek to establish effective internal control over our financial reporting in a cost-effective manner.

But primarily, we seek to emphasize corporate performance. Focusing on our core customers, ITEX members and franchisees, and managing the resources our customers generate is paramount to me and the corporate staff. While corporate governance ratings are increasingly important to investors, having the highest corporate governance quotient or the most rigorous internal control system is not my primary goal, particularly if such efforts impact our service to our customers or significantly deplete our resources.

Organizational Priorities

Our corporate headquarters employ 20 dedicated individuals who are responsible for strategy and long term planning, branding, technology, accounting, legal, investor relations, processing transactions for the trading community, and customer relations. For 20 individuals to manage 90 offices (who collectively employ some 400 individuals), generating $16.5 million in annual revenue spreads everyone quite thin. We have no time to waste and expect extraordinary performance from everyone on our team. My priorities for running the organization are:

·         Increase the value proposition to our members by making participation in the ITEX Marketplace cost effective, easy and profitable;

·         Provide exceptional service to our franchisees and pay an equitable revenue share to help them succeed;

·         Fairly compensate our employees and provide a secure, innovative work environment that provides opportunity for professional advancement;

·         Increase stockholder value by improving operating performance, building net assets and long-term potential.

For more information on ITEX go to www.itex.com.

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