Case Blog

This past week we heard from Fed Chairman Ben Bernanke that the U.S. recovery would continue to be slow and uneven and that the unemployment rate would remain stubbornly high into 2012. “Of course, even as the Federal Reserve continues prudent planning for the ultimate withdrawal of extraordinary monetary policy accommodation, we also recognize that the economic outlook remains unusually uncertain,” Bernanke stated. (NY Times 7/21/10)  In his second day of testimony before Congress, Bernanke clarified his statements from the day before and assured them that he would take action if necessary and the Fed could extend very low rates of interest out into the future to insure that we do not fall back into recession and a perilous deflationary spiral.  The term “unusually uncertain” had clearly roiled the markets during his first day of testimony.

The Federal Reserve, together with the Obama administration and both houses of Congress, needs to understand the necessity of restoring both business and investor confidence to get the economy growing at an acceptable pace once again. Raising taxes during this low point in the recovery, combined with consistent criticism of business, particularly our financial institutions, is not going to give anyone the reassurance needed to start adding jobs. A focus on tax incentives to create new jobs would go a long way to restoring both business and shareholder confidence and to get the economy growing at more than 3%-4% again.

Both parties need to “Cool the Populist Rhetoric.” I called for this in January and it remains true now. Restoring our economic engine remains a bipartisan task and voters, particularly those that are unemployed or underemployed, will remember those who focused on job creation and those who did not when they go to their polling places this November.

On a much more positive note, Mary Claire and I spent several vacation days this past week in Healdsburg, California (Sonoma County) with our good friends Elise and George Riggs. We did not have to drive too far from home (less than 2 hours) to be reminded of simpler times and the true beauty of the Golden State.

We spent our first afternoon over a leisurely lunch at Copain with Wells Guthrie, the proprietor. (Copain’s tasting room sits on Eastside Road in Healdsburg, with gorgeous views.) Guthrie’s focus on quality and the need to pair wines and food is consistently on target.  Back in the winter of ’09, Eric Asimov, who writes The Pour, wrote in the New York Times (3/11/09): “As the rain slanted down onto the vineyard around Copain Wine Cellars, just outside this town in northern Sonoma County, Wells Guthrie, the proprietor, poured a glass of one of his 2006 pinot noirs. The wine was fresh and light with aromas of flowers and red fruit. Even in the gray dimness of his tasting room I could see my fingers on the other side of the glass through the pale ruby wine. It was vibrant and refreshing, nothing like the dark, plush, opulent wines that have made California pinot noir so popular. Mr. Guthrie used to make wines more along those heavier lines, but not anymore. After the vinous equivalent of a conversion experience, with his 2006 vintage he renounced the fruit-bomb style in favor of wines that emphasize freshness and delicacy.”

The next night we went for dinner to Cyrus, in downtown Healdsburg, and we paired a 2007 Copain Wentzel Pinot Noir with an extraordinary dining experience.  Cyrus lives up to its two-star Michelin billing.

Finally, we took the time to make the trip up Spring Mountain to Pride Mountain Vineyards, in St. Helena, California. This spectacular vineyard straddles the border between Napa and Sonoma counties. This mountain winery makes outstanding Cabernet Sauvignon. We also enjoyed a delightful picnic lunch, paired with their ’09 Viognier.

On Sunday evening we welcome back Mad Men and the enigmatic Don Draper!

After months of turmoil in the Eurozone and the continuing environmental disaster in the Gulf of Mexico, the world was ready for some Summer Competition. Last weekend all the world turned to South Africa for the start of football’s World Cup. The host South Africa played Mexico on Friday to a 1-1 tie to kick off the “beautiful game’s” global tournament. At the outset we were introduced to the vuvuzela. I trust many of you, as I did, tried to no avail to remove the annoying buzzing from your sound by adjusting the volume. Last Saturday we saw the United Kingdom and the United States, both Group C teams, put their special relationship to a test as they played to a surprising 1-1 tie on goalie Robert Green’s poor attempt to stop Clint Dempsey’s soft shot. Whether it was the design of this year’s ball or a lack of concentration on Green’s part, the result had many proclaiming U.S. football (soccer in the U.S., Canada and a handful of other countries) had come of age. Friday’s 2-2 comeback tie against tiny Slovenia’s tough squad kept expectations in line for the U.S. team. England played Algeria to a 0-0 draw in its second match. We will have to wait until Wednesday to see which teams emerge from Group C for the next round.

Basketball is the only sport that rivals football for worldwide interest, and it does not get any better than the Boston Celtics and Los Angeles Lakers playing for the NBA Championship. Between them, the Celtics and Lakers have played in more than half of all the league’s finals, with Boston going into this year’s series holding a slight edge. On Sunday evening with the series back in Boston and tied 2-2 in the best-of-seven finals, Paul Pierce put on a shooting display while the Lakers seemed to forget that they needed to play defense to allow Kobe Bryant to dominate. The Lakers left Boston down 3-2 with a 6th and possible 7th game back home at the Staples Center in Los Angeles.  On Tuesday evening the Lakers finally played four quarters of team basketball and got a strong showing from Pau Gasol, who had been tied up in the previous games by Boston’s tenacious defense. Up until the 7th game, Celtics coach Doc Rivers had the edge over Phil Jackson, who with 10 championship rings between Chicago and Los Angeles had coached more championship teams than any other NBA coach in the long history of the league.  Everyone knew that Thursday evening’s 7th game in Los Angeles would not disappoint. The stars were out in force, led by the ever-present Jack Nicholson. The “will to win” was on display on the Staples stage. By midway through the 3rd quarter, the Celtics appeared to have a commanding lead, but the Zen Master coach, Phil Jackson, remained calm and the world’s greatest basketball player, Kobe Bryant, with strong support from Derek Fisher, Gasol and Ron Artest, came roaring back to hold on to a 83-79 victory for the Lakers’ 16th championship. This was Kobe’s 5th championship as a player and Phil Jackson’s 11th as a coach. Artest has been toxic since the brawl at the Palace, but he played the best game of his career as the Lakers’ supporting cast delivered in the 7th and final game.

Mary Claire and I are visiting our children in Boston on this Father’s Day weekend.  As I write this on Saturday our attention will shift to that golf mecca, Pebble Beach, for the final two rounds of the U.S. Open.  Tiger Woods ran away from the field at Pebble Beach in 2000 to win the Open, but despite making the cut this year he remains 7 strokes back of the leader and is clearly not the Tiger of old. Phil Mickelson, who has finished number 2 too many times at the U.S. Open, has moved into contention in the #2 position after a flawless 66 on Friday. I have been reminded this week that I need to schedule another trip in August or September to Pebble Beach to have the unique golf experience that only Pebble Beach and a handful of other great courses around the world can provide.

For two summer wine recommendations, I turn to the oft-slighted Rose, which this summer seems to have come back in vogue in New York restaurants:

Copain Wines
Tous Ensemble Rose at $15 provides great value and with a slight chill is perfect for a warm summer day. www.copainwines.com

Landmark Vineyards
They produce a Rose for their mailing list customers and it also provides great value at $20.
www.landmarkwine.com

Enjoy the summer!

Two years ago today I wrote in The Masters Tradition: “There is one weekend every spring that I clear my calendar from early afternoon until early evening, the weekend of the Masters. I find myself seduced by the beauty of the course, particularly Amen Corner, combined with the challenge it holds for the world’s best golfers and its unique traditions. There is something special at the end of this tournament when the prior year’s winner puts the Green Jacket on the new champion. It was fitting that Phil Mickelson won his first major here several years ago and that Zach Johnson, last year’s winner, will have the honor of putting the Green Jacket on this year’s winner. Both of them entered Sunday at -2 and too far off the pace of Trevor Immelman at -11 to catch him.

Tiger Woods did not disappoint us on Saturday and played himself back into contention at -5. Tiger has won the Masters 4 times and has a profound understanding of the importance of this tournament. If anyone could close the gap of 6 strokes on the final day at the Masters it was Tiger…”

As we fast-forward to this year’s Masters, we know that Tiger set a new record for consecutive days on the cover of the New York Post for “sexploits” off the course, but he chose to return to the Tour in Augusta. It proved to be the right venue for him. Tiger did not embarrass himself on the course and finished 4th, but he was in the hunt right through Sunday’s back 9. Phil Mickelson, the fan favorite, who in many ways represents the human side of every golfer, made a charge on Saturday with back-to-back eagles on 13 and 14 and had a near miss on 15. I believe 3 consecutive eagles in a major would have established a new record! He entered Sunday 1 stroke off the pace.

On Sunday, again on 13, Mickelson found himself with a second shot off the pine straw and a slight view of the flag from between two trees. He took his 6 iron, and with a gambling instinct that has often gotten him into trouble, put his 2nd shot on the green, leaving himself a short putt for another eagle. This time he missed the putt and had to settle for a birdie, but he was not going to be denied his third Green Jacket and ended up finishing 3 strokes ahead of Lee Westwood with a birdie on 18. He then had a memorable embrace with his wife, Amy, who has been fighting breast cancer over the past year. He clearly represented the American Eagle on this special weekend in Augusta.

On Saturday evening, my alma mater, the Boston College Eagles, played the Wisconsin Badgers in the Frozen Four Final at Ford Field in Detroit for the NCAA hockey championship.  Coach Jerry York, who has gotten his team into 9 of the last 13 Frozen Fours behind very fast front lines, coached the Eagles to this year’s national championship, their third during York’s tenure.  With a flourish of goals in the 3rd period, the Eagles coasted to a 5-0 victory over the much larger Badgers. (York also coached Bowling Green to a national championship prior to coming to Boston College.)  The trophy moved from one end of Commonwealth Avenue, home of Boston University, last year’s winning team, to the other end in Chestnut Hill.

Finally, after waiting more than a decade and eventually forgetting about my request to get on the mailing list for Screaming Eagle Cabernet Sauvignon, one of the most difficult cult wines from northern California to secure, I received notification that I could place my order for my three-bottle allocation. After much back and forth with myself, I placed my order for a wine that Robert Parker gave a 96-98+ score, but wrote: “The 2007 Cabernet Sauvignon may merit a three-digit score if it continues to evolve as it is currently.”

April has arrived with the sighting of many Eagles!

As we close out the first quarter of the new calendar and fiscal year, almost all businesses are finding that their year-over-year performance has improved significantly. The first quarter of ‘09 represented the depth of the Great Recession, when the world as we knew it unraveled before our eyes. When earnings are released for the first quarter of ‘10 we will see, without exception, improvements in all sectors of the business media, including those newspapers that survived the downturn. This will provide momentum for continued improvement as we head into spring and leave behind a difficult winter on the east coast.

Mary Claire and I returned last week to Blackhawk for the first time since early January. The Bay Area’s spring is in full bloom. Spring shipments from Napa and Sonoma are arriving, most from the ‘07 vintage. As many wine critics have reported, ‘07 represents the best vintage for most varietals in Northern California wine country since ‘97. It is time to restock the wine cellar, with many wineries actually lowering their prices to reflect the reset that has taken place in the consumer economy!

While we continue to see the U.S. and U.K. economies recover and grow, albeit at slower paces than we saw in the fourth quarter of ‘09, the eurozone remains challenged by its PIIGS.  ”Greece, along with Portugal, Ireland, Italy and Spain, are Europe’s PIIGS - euro-zone members with fragile economies and large debt loads. Fitch Ratings poured fuel on the euro fire last week by downgrading Portugal’s long-term foreign- and local-currency debt to a notch, to double A-minus, with a negative outlook, meaning another downgrade is more likely than not. The euro promptly fell to 10-month lows against the dollar before rebounding Friday.” (“Helping Hand for Greece Also Helps Hedge Funds,” Barrons, March 29, 2010)  Those of us who have business interests in the eurozone will continue to monitor the German-French brokered deal to keep Greece from defaulting. I was surprised to see Chancellor Merkel prevail on the side of fiscal discipline and the IMF being invited to join the bailout of Greece in order to preserve the Euro.

I wrote back in September of ‘07 in Global Brands, “In our global economy, even proud islands like the UK need to acknowledge that we all operate in a very interconnected world. Will the pound some day give way to the Euro?” I stand corrected; the Pound Sterling will survive and will continue to show strength versus the Euro. I was much closer to the mark in my last post, The Pound Sterling. We will continue to watch with great interest the upcoming spring election battle of Labour vs. the Tories. Closer to home and after our long health care debate, I recommend you read “Game Change: Obama and the Clintons, McCain and Palin, and the Race of a Lifetime,” by John Heilemann and Mark Halperin.

After a U.S. jobs report from the Labor Department showed modest gains in November, last Friday’s report for December showed a loss of another 85,000 jobs. We also learned on Friday that the Eurozone’s unemployment rate has now joined the U.S. at 10%+. These unemployment rates remain stubbornly high, in spite of the fact that both economies grew in the second half of ‘09. (FT 1/9/2010)

So it’s not surprising that job creation remains at the top of the list in most political polls, but politicians on both sides of the Atlantic seem more interested in tax increases, as opposed to tax incentives, to drive job creation. For example, the U.S. Congress is starting to once again discuss changing the way “carried interest” is taxed for venture capital partnerships. (Yes, I am backed by Austin Ventures, but I have held this belief for more than 20 years.) I believe a more productive discussion would be how to incentivize venture capital firms to make more investments that lead to new jobs, rather than trying to tax their partners’ gains as ordinary income. To get a better understanding of this issue, I recommend visiting the site of the National Venture Capital Association and reading “Carried Interest Tax Policy.”

President Obama did acknowledge that the December data represented a setback, “while outlining plans to deliver $2.3 billion in tax credits to spur manufacturing jobs in clean energy.” (NY Times 1/9/2010) As I have stated in the past, the U.S. midterm elections in the fall will revolve around jobs and both parties will need to address this issue. This will also be a major issue in the U.K. election this spring that will determine if the Tories replace Labour.

As we have made our way through this very difficult economy, most of my wine recommendations during ‘09 were driven by value. I decided to kick off 2010 on a more optimistic note, at a small dinner party Mary Claire and I hosted at our home in Blackhawk, by tasting several older California cabernet blends. I went into my cellar and chose three wines:

1982 Dunn Howell Mountain: Randy Dunn has a long history working at some of northern California’s best-known wineries, including Caymus and Pahlmeyer. His Dunn Vineyards offerings have a storied past, particularly his Howell Mountain wines.

1985 Rubicon Estate: This is the flagship release of Francis Ford Coppola’s Rubicon Estate. Coppola is still best known for the Godfather, which was released in 1972. 1985 was a very good year in Napa Valley.

1995 Dominus Estate: This winery is owned and operated by the celebrated French winemaker Christian Moueix, of Château Pétrus fame.

The votes came in and gave a slight edge to the Godfather’s ‘85 Rubicon,over the ‘82 Howell Mountain. Both wines still had fruit that was remarkably young, soft tannins and excellent balance.  The only disappointment was the Dominus, which did not stand up well next to the two other contenders.

Here’s to the winners and a recovery that creates jobs in 2010!

This Thursday when we sit down to Thanksgiving dinner with our family and friends the majority of us will be thankful for surviving the Great Recession and seeing a very challenging year for the global economy come to an end. While we are cautious in our outlook for 2010, we know that the first and second quarters will show significant growth over ‘09, when we were still in free fall.  Earlier this week, Treasury Secretary Tim Geithner appeared on Capitol Hill before a Joint Economic Committee hearing and discussed winding down the TARP program. In a “sometimes contentious” hearing he made the point that the economy is in much better shape than when the Obama administration took office in January. (NY Times 11/20/09)  In spite of Representative Kevin Brady, a Texas Republican, calling on him to resign because the economy “was such a mess,” Geithner held his ground that there has been significant improvement.

As we move into 2010, I would like to see President Obama and his administration focus on job creation. With the unemployment rate over 10 percent and forecast by most economists to remain there for all of next year, we will not see sustainable growth until we move toward a significantly lower unemployment rate. This will require a more open and trusting relationship with the business community and a more realistic approach to tax policy at a time when the economy remains under pressure. As we move toward the mid-term elections next November, job creation and unemployment will be the key issues.

We are starting to see signs of the private equity market coming to life in the media and business information sectors. During the first week of November, IMS Health (RX), the leader in providing “market intelligence to the pharmaceutical and healthcare industries,” announced that its board had entered into a definitive agreement to be acquired by TPG and the CPP Investment Board. (IMS Press Room 11/5/2009) Goldman Sachs (GS) will provide the debt financing to take IMS private.  The total value of the transaction will be $5.2B and represents a significant premium for the public shareholders.

IMS was founded in 1954 and was acquired in 1981 by Dun & Bradstreet (DNB). It was later spun out of D&B as a separate NYSE company. Several years ago, VNU, later renamed Nielsen, announced plans to take over IMS and reunite A.C. Nielsen and IMS, which had both been spun out of D&B, but the shareholders revolted over the poor performance.  Management was forced out and eventually VNU was taken private by five large private equity players and now operates privately as Nielsen.  This transaction when completed will represent the largest leveraged buyout of ‘09. (WSJ 11/06/09)

I will close with some wine tips to accompany your Turkey Dinner!

Blankiet
This small winery is an inspired producer of outstanding wines. The 2006 Rive Droite is a Saint-Emilion styled, limited production (only several hundred cases) wine that will complement your meal and not overwhelm it. www.blankiet.com

Kistler
I just received my fall shipment of Kistler Chardonnay and Pinot Noir. The ‘07 Pinot Noir Sonoma Coast (RP 91-93) would be an excellent choice for Thanksgiving dinner. www.kistlervineyards.com

Merryvale
A more value-oriented selection would be Merryvale’s ‘07 Pinot Noir, Carneros. This is one of my longtime favorites to visit in Napa. www.merryvale.com

Miguel Mendoza Malbec, Reserva
This 2006 Malbec is for those of you looking for something different that also provides great value. This wine retails for under $20 and can be found at Sherry-Lehmann online or at their Park Avenue retail store.  www.sherry-lehmann.com

Mary Claire and I are headed to Boston to have dinner with our family and our car will be filled with the wines listed above. Happy Thanksgiving!

Yesterday Mary Claire and I flew back to our Blackhawk home in northern California. Blackhawk sits in the East Bay at the base of Mt. Diablo, which provides the highest vista in the Bay Area. The weather in the East Bay is much closer to that in Napa and Sonoma Valleys than the weather in San Francisco.  The cool morning air with gradual warming during the day, along with all the winery information I have received lately, reminded me that harvest is in full swing.  The early predictions are for an excellent harvest that should yield, in several years, some spectacular ‘09 vintage wines.

The fall harvest in wine appellations around the globe reminds one of the rhythms of life that we often take for granted.  The fall is a special season beyond what crops are harvested and eventually make their way to our dining room tables, and in some cases to our wine cellars to age and mature — it is also the season that gives us football. On campuses across the country the stadiums are once again filled on Saturdays with fans pulling for their school’s team.  At this point Florida is #1 in all the polls, followed by Texas and Alabama. We will take in the Boston College vs. North Carolina State game in two weeks in Chestnut Hill. In spite of this year being billed as a rebuilding year, the Boston College Eagles have remained competitive in the ACC and find themselves 4-1 as the showdown in South Bend with the Irish of Notre Dame looms on October 24th.

On Sundays our attention turns to the NFL. With only four games played in a 16-game season, it is much too early to predict the February Super Bowl combatants, but with Eli Manning and the Giants matching his brother Peyton Manning’s Colts 4-0 record, there is an outside chance that we could see an epic brother vs. brother Super Bowl. I trust that I will hear from many friends and colleagues with alternative scenarios and teams!

Fall is also an excellent time for those of us in the advertising business to focus on closing out ‘09 and preparing for ‘10, where we all hope that we will find improved fortunes for our own companies and our industry. For a look back at the advertising industry in the ’60s, I recommend AMC’s superbly written drama Mad Men, built around the fictional Sterling Cooper advertising agency. It is written and produced by the talented Matthew Weiner. Weiner’s previous credits include being an executive producer and writer on The Sopranos.  John Hamm plays the lead as the creative director Don Draper, around whom there is always mystery and intrigue.  In many ways it carries us back to a simpler time in the ad business, when campaigns and fortunes were built around relationships often forged over long lunches and dinners. I must admit, though, that I do not recall all of the office drinking, which is a staple in the offices of Sterling Cooper. Perhaps those of us on the media side missed what really was driving the creative?

As we prepare for ‘10 and try to forget the pain of ‘09, it would serve us well to remember that even in the age of Google and automated, search-driven advertising, relationships matter, and we need to partner with our clients to find new and creative ways for them to reach their target audiences in a way that will be impactful.  Search or lead generation will continue to be an essential part of the marketing mix, but our clients are looking for opportunities that will allow their products and services to be distinguished from their competitors, and in this way we have much in common with Don Draper and the Sterling Cooper team.

For those of you who cannot get enough of Mad Men and would like a Monday morning analysis of each Sunday’s episode, I highly recommend MediaPost’s MADBLOG, by Dorothy Parker. You can sign up to have it delivered by email to your inbox at www.mediapost.com.

We were originally planning to head to Blackhawk this week, but two very exciting transactions that we will announce shortly will keep us in New York City for the next two weeks.  While we  await the time when we can make these announcements, I thought I’d share some excellent diversions to tide everyone over as summer gets under way.

Within the past week, Mary Claire and I have paid two visits to what we lovingly refer to as my cousin’s cafe, Salumeria Rosi Parmacotto, which is the well-known Tuscan chef Cesare Casella’s latest creation. It is located on the Upper West Side of New York City (above Columbus Circle, on Amsterdam Avenue near 73rd Street). I knew we would be back this weekend, after having brunch last Sunday and Mary Claire telling Cesare that his caponata (cooked vegetable salad, with the primary ingredient being aubergine) was the best she had ever tasted.  He has taken a small plates approach, which is taking hold across the country, particularly in wine bars, and is very attractive in the current economic climate.  I trust that we will make one or two more visits before we head west. www.salumeriarosi.com

Tonight, I look forward to watching Phil Jackson coach the Lakers to his 10th NBA championship. With this win, he will stand alone. He has been tied at 9 with the legendary Celtics coach Red Auerbach. Looking back on Jackson’s record with the Chicago Bulls and Michael Jordan and now with the Lakers and Kobe Bryant, it is clear that he knows how to put together a winning team with the chemistry necessary to carry them all the way to the pinnacle of success. I am confident that this record will stand for many years.

If you make it west to Sonoma County this summer and are looking to have a spectacular dining experience, I strongly recommend that you make a reservation, well in advance, at Cyrus in downtown Healdsburg, just off the square. Their champagne and caviar cart to start the meal is exquisite. www.cyrusrestaurant.com

For wines I am going to focus on the much-maligned chardonnay and recommend several special wineries that consistently produce outstanding chardonnays.

Aubert: I have referenced Mark Aubert previously with regards to his outstanding Pinot Noir wines. His chardonnay releases are my personal favorites. www.aubertwines.com

Copain: With a slight detour from the chardonnays listed, if you are looking for something very different for a summer day, I recommend Wells Guthrie’s Tous Ensemble Rose, which is dry and crisp.  www.copainwines.com

Martinelli: Their winemaker/wine consultant, the legendary Helen Turley, consistently releases outstanding unfiltered chardonnays from several vineyards. www.martinelliwinery.com

Rochioli: This Sonoma-based winery consistently produces excellent chardonnays and sauvignon blancs. www.rochioliwinery.com

Williams Selyem: This legendary winery is known primarily for its pinot noir releases and has a huge fan base. While I continue to enjoy their pinot noirs, I am always intrigued by their chardonnay releases, which are very limited but are truly outstanding. www.williamsselyem.com

Starting on Thursday we will have golf’s U.S. Open Championship to focus on, with its return to the Bethpage Black Course on Long Island. Is Tiger Woods back in full force to defend his amazing ‘08 championship, and will he once again tame Bethpage Black as he did in ‘02? Will Phil Mickelson, a crowd favorite in New York, challenge him or will we see one of the younger pros in their 20’s make their move? Regardless of who triumphs, it will hold our attention as only a fabled major golf championship can.

Back in mid-February, I wrote in Transparency: “The current financial crisis, which has resulted in the worst recession since World War II, will come to an end when confidence is restored in our global financial institutions. Treasury Secretary Tim Geithner learned very quickly last week that the markets want more than a blueprint, they want a specific plan that will lead to the balance sheets of our largest money center banks being healthy and the subprime toxic assets isolated.”  Part of the specific plan that emerged was the “stress test” for 19 large banks around the country. At this point it not clear to me whether Secretary Geithner or Larry Summers or someone else within the Obama administration came up the idea of a stress test to determine if the banks’ balance sheets were strong enough to weather a continuing and deepening recession, but I am willing to give credit to the Obama team for finally demonstrating to everyone that the worst is behind us.

The back and forth between the Treasury Department and several of the banks, for example Wells Fargo (WFC), reminded me of the process that those of us on the deal side often experience in finding a common ground for valuation of a company prior to an acquisition or investment. In other words, I think it was a healthy process and in the end all of the banks worked within the guidelines and are now going forward raising additional capital where necessary.   It is clear that of the largest bank holding companies, JPMorgan Chase (JPM) and Goldman Sachs (GS) are very strong and will be able to pay back the government before the end of this year.  Bank of America (BAC) and Citigroup (C) still have some work in front of them, but they are clearly in stronger shape than some analysts would have had us believe, which was reflected in the significant share increase they both realized this past week. In the case of Bank of America, it would appear that the Merrill Lynch acquisition, while problematic, should play out in a positive way over the next several years.

With confidence restored in our major banks, I trust that we will start to see more signs of recovery in June and into the third quarter. We will also start to see more signs of consolidation within several sectors, including media, as the strongest companies look to take advantage of the current low valuations to improve their market share.  Will Microsoft (MSFT) make one last run at Yahoo (YHOO) to improve its fortunes in search?

As we enter mid-May the second round of the NBA playoffs are starting to give us a hint of what the finals, in early June, will look like. Can any team in the east stop LeBron James and the Cavaliers? The defending champion Celtics without Kevin Garnett do not look like they have the bench to pull it off, particularly after a long struggle in the first round with the Chicago Bulls.  In the west, it is clear that the Lakers, once again, will be the team that someone will have to beat to make a trip to the finals. Could we end up with that made-for-TV finals of LeBron vs. Kobe?

While taking some R&R last week, Mary Claire and I had the pleasure of dining at Spago on Maui. While trying to decide on a red wine to accompany a Kobe style flank steak, I noticed a Syrah from a small winery out of Washington state, DeLILLE Cellars. A friend and colleague from earlier in our careers, John Koenigs, had dropped me a note recently about DeLILLE’s Syrahs. While I was familiar with them, I had not had the pleasure of trying their Doyenne Syrah. We went with the ‘05 Doyenne Syrah (RP 91) and found it to be an excellent full-bodied wine with hints of cassis, blackberries, pepper and espresso.  It is 97% Syrah and 3% Viognier.  DeLILLE’s current ‘06 release is available through their website for $49. www.delillecellars.com

As we emerge from the long winter recession, once more the debate is underway about whether marketers should spend any of their budget on branding or focus entirely on lead generation. I, for one, believe that this is not an either/or decision. The best marketers, those who have created growth during this downturn, continue to rely on a marketing mix that includes both.  Amazon (AMZN) has seen dramatic growth since they introduced their Prime membership program, which included free shipping. There were many skeptics, but this innovative approach fueled their recent growth at the expense of their major competitors, Borders (BGP) and Barnes & Noble (BKS).  In the case of Amazon, they also regularly communicate by email with their large, established customer base. They also gained market share in the consumer electronics category when Circuit City committed so many missteps that they found themselves forced to declare bankruptcy and close their doors.  Once again Amazon has innovated with the Kindle 2 and has been rewarded.  Mary Claire and I each have one and love the flexibility they provide when we travel.

Apple (APPL) is another example of a company that has continued to successfully invest in branding. Apple has one of the strongest consumer brands, one that stands for innovation and style. They have taken this strong brand and turned the smartphone market on its head. Apple and AT&T (ATT), their distribution partner in the U.S., both reported strong earnings last week because of the iPhone, which continues to eclipse all of its competitors.

As B2B marketers, we need to offer our clients opportunities for both brand building and measurable lead generation opportunities. We must do this across multiple platforms, both online and offline, through opportunities like live events. I hear more and more clients asking for “thought leadership opportunities” tied to whitepapers and conferences. Those among us that are most responsive to the unique marketing needs of our client base will emerge from the downturn stronger and with increased market share. Stephen Moylan, who joined us at Asset International a short time ago as Executive Vice President of Sales & Marketing, is one of the best marketers I have had the pleasure of working with over the years. He listens to customer and client needs and is then able to respond with creative programs tailored to help them meet their specific goals. In many ways, in this weekend of the NFL draft, Stephen is my go-to guy, the person I can depend upon to make certain that our customer base is receiving the attention and creative programs they deserve.

On Saturday, the first day of the NFL draft, we drove up to Hafner Vineyard, www.hafnervineyard.com, just north of Healdsburg in Sonoma County. The Hafner family has an annual luncheon for their best customers to show their appreciation. They have 120+ people to their home, which has magnificent views out over the valley and their 1,000+ acres. They have never used the retail channel, because they found it too impersonal. They only sell to a small select group of restaurants and individuals by direct marketing. Their client base is very loyal (we have been customers since 1992, when we moved to the Bay Area) and is appreciative of the number of ways that the Hafner family has found to say thank you.  A long time ago I attended a lecture by Peter Drucker and came away with one memory, which I will paraphrase: the primary objective of a business is to create a customer. As we work our way out of this deep recession, we would all do well to celebrate and recognize the unique contributions of our customers.