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The Tuesday Report

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December 13, 2005

Written by Bob Meyer, Editor of BarterNews

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Barter�s Use Grows Among Corporate America With �Product Philanthropy�

According to a survey by the Conference Board, a New York business research think tank, for the first time ever, more than half of all charitable contributions by U.S. companies�54.2%�were in the form of merchandise not cash. That�s up from 35% in 2002, at which time total corporate charitable deductions reached $10.3 billion.

The recipients, nonprofit organizations, charities and churches, especially those offering assistance to the poor, say they welcome the trend and that their clients are grateful for receiving free products.

Trading Products In Exchange For Tax Advantages

The growing trend stems in part from the 1976 tax provision by Congress that allows major companies to take up to twice the tax deduction normally received if they donate goods to charity, instead of discarding them. (Generally, companies that discard unsold items can only expense their cost.)

In short, companies can deduct up to double their manufacturing cost (their cost basis) when the products go to a nonprofit organization, �solely for the care of the ill, the needy, or minor children.� By law, the products received by the nonprofits can�t be resold or bartered.

Providing products in exchange for added tax deductions is only half the benefit. Another important consideration comes into play...the chance to reduce excess inventories brought about by obsolete or improved products and packaging, or returned by customers and no longer salable at retail.

It should be noted that many companies make in-kind donations of their goods and yet don�t spend the time necessary to pursue the added deduction.

Of course, as more excess inventories are moved in this manner, they won�t be available to the corporate barter marketplace, heretofore one of the outlets for Corporate America�s excess inventories. Factor in the growing proliferation of outlet stores across the country and the burgeoning use of the Internet as a liquidating mechanism, and one can envision changes occurring in the corporate barter world.
 

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Free Trade Fatigue Evident

The world economy today is more seamlessly integrated than ever before and most governments believe that trade boosts growth...yet trade negotiators at this week�s meeting of the World Trade Organization in Hong Kong are no longer assured of a preliminary agreement. In fact talks are in such disarray, that a victory may be claimed if they can just agree to meet again early next year!

In the U.S. there�s a growing furor over outsourcing, as jobs that had long been considered domestic preserves�in fields such as computer programming, bill collection and radiology�suddenly aren�t.

What�s the problem? Free trade has made world business even more competitive and employees (also known as voters) increasingly worry that they�ll lose their jobs to foreign competition.

More and more around the globe there is an awareness of the same calculation�imports equals job losses. The game now is to push the other guy to make concessions first. And nearly every country has an agenda. 

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Hotel Industry Outlook Bullish

Robust business and leisure travel, combined with 42,000 hotel rooms knocked out by Hurricane Katrina and continual condominium conversions of hotel rooms, all contribute to an extraordinary outlook for the hotel industry.

Revenue per available room�an indicator of industry health�is expected to be up 8.1% this year and continue growing through 2007.

PKF Hospitality Research in Atlanta reported that the average daily room rate at the end of the year will be about $105.16, except on the West Coast where it will be $114.92. The supply of new hotel rooms will be only 1.4% in 2006.

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


International Monetary Systems Upgraded To �Strong Buy�

Investrend Research analyst Gary Vassalotti has upgraded the IMS stock (OTCBB:INLM) to a �Strong Buy/5.� The full report, including important disclosures and disclaimers, is available at www.investrendresearch.com.

IMS is enrolled in Investrend�s pioneering professional research program, which facilitates independent analysts to provide coverage for shareholders in companies that otherwise would have little or no analyst following.

International Monetary Systems� President Don Mardak is pleased with the latest rating. �We believe that Investrend�s projections are well in line with our own. Furthermore, as a result of our recent presentations at the EdgeWater and Arch Investment Conferences, along with our continuous flow of good news, our stock�s trading volume has been steadily increasing.�

DailyTrends.com Also High On IMS

On December 7, Chris Lahiji, President of Small Cap Research at DailyTrends.com, selected INLM as his �Stock Pick of the Week,� placing a $0.55 twelve-month price target on the International Monetary Systems� stock. He� a regular guest on Fox Business Television and the founder of Lahiji.com.

Lahiji�s investing talents were written about in a Business Week Magazine feature article in 2003. DailyTrends.com is an Internet based financial web site that provides self-directed investor information on selected public companies that in the opinion of DailyTrends.com have great investment potential.

For more information visit: www.DailyTrends.com.

Low-Priced Brokerage Aims To Shake Up Real Estate Industry In California

Seventy-four-year-old Hal Ellis, a former originator of Grubb & Ellis Realty, is now bucking the established way of selling homes and openly mocking his rivals.

Ellis is the founder and CEO of CataList Homes, a well funded company that�s engaged in a sometimes caustic campaign to upend the traditional way homes are sold in California.

His strategy: charge home sellers half of what most commission-based brokerages do�3% of the sales price, instead of 6%�without scrimping on service.

Ellis further bucks the established brokerage system by paying his agents as full-time employees, instead of independent contractors, and using the CataList web site as a consumer-friendly portal for all local housing-price data. Such information until recently had been for brokers� eyes only.

According to Ellis, CataList is no different from Charles Schwab & Co. and Southwest Airlines�companies that have attacked entrenched commission-based business models to become low-cost leaders.

While lower-priced real estate brokerages are nothing new (consider Help-U-Sell, Assist2Sell, ForSaleByOwner.com, and ZipRealty), CataList�s model is designed to bridge the gap between low fees and full service.

To survive in the long run, Ellis has corralled a stable of top-flight private investors. Real estate investment firm Marcus & Millichap has an 8% share, strategic consultant Bain & Co. has taken an equity stake in lieu of fees, and two other Silicon Valley venture funds have also chipped in.

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Here & There...

  • David Johnstone, managing director of Bartercard Australia for the past two years, is leaving that position. He will move into a newly created role within the company which will focus on corporate trading and international development. Replacing Johnstone as managing director will be Trevor Dietz, a 12-year veteran of the company. Dietz joined Bartercard in 1993 as general manager, and most recently worked for Bartercard International as a director.
     

  • The SEC has proposed a plan that would let publicly-traded companies post their corporate election materials on the Internet rather than sending them out in mass mailings to shareholders. It�s a move that could save as much as $1 billion a year.

    Under a separate rule, now in effect, companies will be able to release the final prospectus for new securities offerings on the web. The new SEC Chairman, Christopher Cox, is trying to make the modernization of the SEC�s communications a priority of his tenure.
     

  • Robert J. Coen, high-profile forecasting director at Interpublic Group�s Universal McCann, has once again revised his prediction downward for U.S. advertising growth in 2005. The latest number is a rise of 4.6%, dropping from the previous 5.7% prediction in June and 6.4% in January. The reason for the lower prediction, Coen says, is a result of cautious attitudes toward ad spending by major advertisers.
     
  • 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!
     

  • Gift card usage continues to grow, as shoppers are increasingly spurning traditional gifts such as jewelry and clothes. Last year gift cards represented 13% of spending, or about $30 billion in holiday sales. This year�s projection is that gift cards will account for 15% of holiday spending, says the International Council of Shopping Centers. (Fifty-nine percent of consumers said they purchased at least one gift card last year.)
     
  • There�s a new software program on the market, created by a patent attorney, costing less than 10% of the typical $5,000-plus patent charge. PatentEase (www.inventorprise.com) simplifies the process of filing for a patent, letting you prepare and file your own patent application with the U.S. Patent and Trademark Office�all without having to hire an attorney.
     
  •  In our November 1 issue we reported that General Electric is the world�s largest landlord with a portfolio valued at $29 billion. The following week we noted that GE�s in-house law firm, with 1,150 lawyers, ranks the company among the largest global law firms.

    Now this: GE is the nation�s largest issuer of private-label credit cards, with 36.6% of the nation�s 500 million private-label cards, according to the Nilson Report. Plus GE is working to make it even easier for consumers to obtain credit by installing self-service kiosks at Ikea and Wal-Mart stores, where a consumer can apply for�and receive�a temporary credit certificate that can immediately be used at the store.
We welcome your comments, questions, and observations.
� Copyright BarterNews 2005. Redistribution of BarterNews content expressly prohibited without the prior written permission of BarterNews.

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