IT Companies Helping Make Smart-Grid Vision A Reality

Of DOW JONES NEWSWIRES

NEW YORK (Dow Jones)–The vision: It’s 2 a.m. and the dishwasher starts after receiving a signal from the utility company because demand is low and electricity is cheap.

The reality: Electricity grids sprawling across the U.S. are in need of an upgrade, and large information technology companies are entering the arena in a bid to drag the grids into the Information Age.

In a “smart-grid” world, not only could appliances be triggered to run in off-peak hours, but power companies would be able to instantly alert consumers when power shortages strike and have better estimates when power levels should return to normal.

Helping press the charge is $16 billion in potential funding from the federal government’s stimulus package and private investors. The payoff would be smart-grid investments that grow into a $64 billion market over the next four years, according to energy consulting firm KEMA.

“Bring to mind the craze of ‘dot-com’ investments and telecom mergers and acquisitions, and a reasonable picture starts to emerge of what can be expected of smart-grid investments and merger and acquisition in the next five to 10 years,” said David Leeds, an analyst at market research company Greentech Media.

With annual revenue of roughly $300 billion, the U.S. electric utility sector is twice the size of the telecommunications industry. Future smart grids could help cut consumers’ monthly electricity bills and reduce utility companies’ operational costs, while IT companies will see a new business of “grid computing.”

International Business Machine Corp. (IBM), Cisco Systems Inc. (CSCO), Oracle Corp. (ORCL), Google Inc. (GOOG) and others are already working to cultivate the existing market and compete with each other for future market share.

IBM Global Financing has set aside $2 billion to help jump-start projects in smart-grid and related technologies, and its parent IBM has created an alliance of industry players.

“This is a complex problem with a lot of different layers and applications,” said Michael Valocchi, lead consultant at IBM’s energy and utilities sector. IBM is working with General Electric Co. (GE), Cisco and Honeywell International Inc. (HON) in networking gear and manufacturing supply.

“You will see in different times we are partners with people you would assume are natural competitors,” said Valocchi.

Cisco announced last month a three-year partnership with Duke Energy Corp. (DUK) to work out a two-way digital communications architecture.

“What we do with Cisco is primarily about getting the things done in architecture, standardization, and further design and review of the smart grid and ‘energy Internet,’” said Todd Arnold, senior vice president for smart grid and customer systems at Duke.

Rick Geiger, director of business solutions with Cisco, said the company is working to build intelligence and security into the grid with secure and scalable communications infrastructures.

Oracle has created software to link utilities operations and consumer access to detailed consumption data. Google is testing free Web-based software to track and manage daily energy consumption for buildings.

“In certain levels of certain products, we are competitors; in other areas, we complement each other in smart grid and energy,” said Guerry Waters, Oracle vice president of industry strategy.

As the market matures, Waters said, some of the smaller players will be absorbed by bigger players. “We will certainly be moving into that consolidation period in the next couple of years.”

-By Kate Zhao, Dow Jones Newswires; 212-416-2665; ying.zhao@dowjones.com

Washington’s ‘Green’ Agenda To Aid Building Efficiency Cos

The Empire State Building’s windows are getting a makeover, and Johnson Controls Inc. (JCI) is set to cash in.

Like many buildings and homes across the U.S., the landmark building is turning more environmentally friendly. Johnson Controls is one of a handful of companies that are poised to benefit from that and other opportunities as energy efficiency becomes more popular and as the Obama administration pushes its “green agenda” aggressively.

Johnson Controls, which provides products and services that optimize energy use in buildings, won’t disclose exactly how much it is getting for its work on the Empire State Building. Among other energy management improvements, the Milwaukee company will help refurbish the building’s windows to cut its summer heat load and its winter heat loss.

Empire State Building Co. is spending $20 million for the energy efficiency upgrades, which include the work being done by Johnson Controls and other firms, and expects to cut its energy use by 38% annually.

Johnson Controls has been awarded about $25 million in government contracts under the American Recovery and Reinvestment Act’s stimulus package, which makes allocations to improve energy efficiency. It is bidding on 2,700 stimulus funded projects worth about $800 million that will help in coming quarters.

The stimulus plan, enacted to drag the U.S. economy out of the downturn by increasing government investment in infrastructure, is set to become a major alternative source of revenue for suppliers of “green” products and services. Under this act, the government is offering rebates and tax credits to companies that adopt green technologies. The act has authorized $4.5 billion for the transformation of federal facilities into “green” buildings.

Johnson Controls is also an automotive supplier, and the benefits from “green” incentives could help offset some of the pressures it has felt from the slump in the automobile and construction industries.

Honeywell International Inc. (HON) also recently received orders from the U.S. Army Corps of engineers to make federal facilities more energy efficient. The pact could bring in as much as $650 million over three years.

While Johnson Controls and Honeywell are some of the larger players in the field, small and mid-sized companies are also benefiting.

Echelon Corp. (ELON), a marketer of systems that make everyday products more energy efficient, recently signed a contract with the city of Palo Alto, Calif., to upgrade its street lights with new technologies to control individual lights.

To be sure, green suppliers still face an uphill battle. Many potential customers are still unaware of the potential long-term financial benefits of energy efficiency.

“The largest barrier to adopting a green building policy nationwide is buyer awareness of the significant savings that can be achieved by incorporating these features,” said Helen Kendrick, spokeswoman for SunPower Corp. (SPWRA), which supplies solar panels to buildings.

According to Kendrick, for an average solar customer who wants to install panels, the net cost stands at about $10,000 to $20,000 for each building after rebates from the state and federal government. The payback is energy bill cuts. For example, SunPower has worked with Japan’s Shiseido Co. (4911.TO) to help its New Jersey-based plants save more than $100,000 annually.

On July 9, the Treasury Department issued its long-awaited rules and procedures for applying for cash grants or tax deductions under the stimulus package. Eligible applicants may receive tax credits or a deduction of up to 30% of the cost of refurbishing their properties to improve energy efficiency or changing them into renewable energy facilities.

Some of the benefits to these companies may linger on even after some of the credits and rebates have expired. Ron Bernstein, executive director of LonMark International, a nonprofit that works in the renewable energy space, says building owners themselves will jump in later on when they see real, justifiable returns on investments.

Despite the potential benefits of government awards, it hasn’t been smooth sailing. Johnson Controls recently said that stimulus-related projects are being awarded at a slower-than-expected pace, but it expects the stimulus program to help its financial performance in the second half of fiscal 2010. The company’s fiscal year ends in September. Bruce McDonald, chief financial officer of Johnson Controls, in a recent conference call said the company is “still seeing temporary contracting delays as the funding guidelines aren’t clear.”

-By Kate Zhao, Dow Jones Newswires; 212-416-2665; ying.zhao@dowjones.com

The Empire State Building’s windows are getting a makeover, and Johnson Controls Inc. (JCI) is set to cash in.

Like many buildings and homes across the U.S., the landmark building is turning more environmentally friendly. Johnson Controls is one of a handful of companies that are poised to benefit from that and other opportunities as energy efficiency becomes more popular and as the Obama administration pushes its “green agenda” aggressively.

Johnson Controls, which provides products and services that optimize energy use in buildings, won’t disclose exactly how much it is getting for its work on the Empire State Building. Among other energy management improvements, the Milwaukee company will help refurbish the building’s windows to cut its summer heat load and its winter heat loss.

Empire State Building Co. is spending $20 million for the energy efficiency upgrades, which include the work being done by Johnson Controls and other firms, and expects to cut its energy use by 38% annually.

Johnson Controls has been awarded about $25 million in government contracts under the American Recovery and Reinvestment Act’s stimulus package, which makes allocations to improve energy efficiency. It is bidding on 2,700 stimulus funded projects worth about $800 million that will help in coming quarters.

The stimulus plan, enacted to drag the U.S. economy out of the downturn by increasing government investment in infrastructure, is set to become a major alternative source of revenue for suppliers of “green” products and services. Under this act, the government is offering rebates and tax credits to companies that adopt green technologies. The act has authorized $4.5 billion for the transformation of federal facilities into “green” buildings.

Johnson Controls is also an automotive supplier, and the benefits from “green” incentives could help offset some of the pressures it has felt from the slump in the automobile and construction industries.

Honeywell International Inc. (HON) also recently received orders from the U.S. Army Corps of engineers to make federal facilities more energy efficient. The pact could bring in as much as $650 million over three years.

While Johnson Controls and Honeywell are some of the larger players in the field, small and mid-sized companies are also benefiting.

Echelon Corp. (ELON), a marketer of systems that make everyday products more energy efficient, recently signed a contract with the city of Palo Alto, Calif., to upgrade its street lights with new technologies to control individual lights.

To be sure, green suppliers still face an uphill battle. Many potential customers are still unaware of the potential long-term financial benefits of energy efficiency.

“The largest barrier to adopting a green building policy nationwide is buyer awareness of the significant savings that can be achieved by incorporating these features,” said Helen Kendrick, spokeswoman for SunPower Corp. (SPWRA), which supplies solar panels to buildings.

According to Kendrick, for an average solar customer who wants to install panels, the net cost stands at about $10,000 to $20,000 for each building after rebates from the state and federal government. The payback is energy bill cuts. For example, SunPower has worked with Japan’s Shiseido Co. (4911.TO) to help its New Jersey-based plants save more than $100,000 annually.

On July 9, the Treasury Department issued its long-awaited rules and procedures for applying for cash grants or tax deductions under the stimulus package. Eligible applicants may receive tax credits or a deduction of up to 30% of the cost of refurbishing their properties to improve energy efficiency or changing them into renewable energy facilities.

Some of the benefits to these companies may linger on even after some of the credits and rebates have expired. Ron Bernstein, executive director of LonMark International, a nonprofit that works in the renewable energy space, says building owners themselves will jump in later on when they see real, justifiable returns on investments.

Despite the potential benefits of government awards, it hasn’t been smooth sailing. Johnson Controls recently said that stimulus-related projects are being awarded at a slower-than-expected pace, but it expects the stimulus program to help its financial performance in the second half of fiscal 2010. The company’s fiscal year ends in September. Bruce McDonald, chief financial officer of Johnson Controls, in a recent conference call said the company is “still seeing temporary contracting delays as the funding guidelines aren’t clear.”

-By Kate Zhao, Dow Jones Newswires; 212-416-2665; ying.zhao@dowjones.com

Rigel Pharma’s Arthritis Drug Trial Fails, Sends Shares Down

By Kate Zhao
   Of DOW JONES NEWSWIRES

NEW YORK (Dow Jones)–Shares of Rigel Pharmaceutical (RIGL) fell 14% Friday after its oral rheumatoid arthritis drug failed a mid-stage trial, but analysts said the market overreacted as a potential partnership with other companies would improve its success.

“I still think [the drug] is well positioned for a partnership,” said Brian Abrahams, an analyst with Oppenheimer & Co. “Based on the large market opportunities, the stock has the potential on a rally.”

Shares plunged about 30% in after-hours trading Thursday after the results were announced but bounced back somewhat Friday. The stock was recently off 6.3% at $10.83.

Rigel said last month it expects to seek a partnership because the existing cash to fund its operations can only last until the first half of 2010.

As part of the trial, patients who had failed to respond to at least one biologic treatment were treated with R788, or fostamatinib disodium, but didn’t report significantly higher response rates than the placebo group at three months, meaning the trial didn’t meet its efficacy endpoint.

Analysts also said besides the efficacy problem, the safety concerns still remained as the medication will raise blood-pressure baseline while other options are available in the market. As such, Citigroup downgraded the stock to hold Friday morning.

Rigel has another meeting regarding the test and trial with the FDA in October.

“We believe that potential partners would prefer to wait until after the FDA meeting before signing on the dotted line,” Simos Simeonidis, an analyst with Rodman & Renshaw LL, said. He expects a partnership to work out in late 2009 or early 2010.

Rigel said earlier it won’t pursue late-stage trails of R788 without a partner.

Jim Birchenough, a biotech analyst at Barclays Capital also sees Rigel with the rheumatoid arthritis drug in development as ripe for partnership agreements or acquisitions.

Big companies, such as Pfizer Inc. (PFE), have competed with Rigel over oral rheumatoid arthritis drugs, but Pfizer hasn’t tested in a separate trial in the scale of patient population as Rigel did this time.

Rigel and Pfizer have collaborated before to advance small molecule compounds to the clinic to treat asthma and other diseases.

Brooklyn’s Immigration Project Final Version

Here is the official link for Sarah and my immigration project in Brooklyn. We had a wonderful working experience together and I used my language capiblity to do in-depth interviews with the Fujianese immigrants living in Sunset Park, Brooklyn.

http://nycitynewsservice.com/2009/06/05/cd-7-praising-the-lord-in-mandarin/

 

I also contributed to Mike Reicher’s team piece on public housing in Brooklyn, here is the link:

http://nycitynewsservice.com/2009/06/05/cd-16-isolated-in-public-housing/

I have to say multi-media storytelling is a way of future journalism.

DJ EMISSION CRITICAL: Carbon Accounting Adds Up To A New Market

By Kate Zhao

Of DOW JONES NEWSWIRES

 

NEW YORK (Dow Jones)–The increased focus on a company’s carbon footprint is creating a business opportunity for those that account for and manage emissions.

The market is nascent but growing – it is expected to expand to $3.5 billion by 2010 from $250 million last year, according to one market participant. Fueling the growth are widely expected limits on greenhouse-gas emissions, with the U.S. Senate considering sweeping climate-change legislation and the U.S. Environmental Protection Agency having proposed an economy-wide system for reporting carbon dioxide output. And a lack of generally accepted accounting rules increases the need for professional help.

“Climate change now is a very serious business issue, and it posts financial risks, but also opportunities with future regulation,” said David Rich, an associate in the Climate and Energy Program at the World Resource Institute, an environmental think tank.

Dipping into the new green accounting business are big companies like Johnson Controls Inc. (JCI) and SAP AG (SAP), and small start-ups and consultancies such as Groom Energy Solutions and Hara Software.

“This is a new process,” said Jon Guerster, CEO of Groom Energy. “You have to start from scratch.” Groom Energy provided the $3.5 billion estimate for the size of the market in 2010.

Based on a recent survey by business analyst AMR Research, nine out of every 10 companies believe reducing carbon emissions can ultimately save them money, and Wyeth (WYE) is an example of that. Since 1997, the company has spent $58.7 million on its energy-savings and greenhouse-gas-reducing projects, and it has saved $123.8 million as a result. The company also has cut carbon emissions relative to revenue by 40% since 2000.

Not all companies, though, have reported such dramatic change. Millipore Corp. (MIL), a life sciences company, has spent about $1 million on energy-savings projects over the past three years, and has registered $470,000 in savings.

The average payback period of new emission management is about two years, experts say.

“The savings are important to companies,” said Michael Harris, vice president at Johnson Controls, one of the carbon-accounting software providers, adding that there are other benefits, such as using the carbon-footprint database as a management tool. “When you are tracking, you can see how your business is performing.”

As new business opportunities are created, competition in emission management is expected to become fierce. Currently, about 50 companies are competing with each other, Groom Energy estimates, with only four or five likely to become market leaders in 2010.

SAP expects to be one of the survivors. “If you take a look at the history of the industry, there is apparent advantage of having scale,” said Scott Bolick, vice president of SAP sustainability, a division of the software giant.

SAP began to provide carbon-footprint tracking and energy-efficiency business solutions to clients from the late 1990s, helping to embed environmentally friendly innovations into clients’ daily businesses. And in May, the company acquired Clear Standards, a start-up making carbon-footprint accounting software.

Stephen Stokes, vice president of AMR Research, said that aside from carbon emission accounting software, consulting in how to manage a carbon footprint and improve energy efficiency also is a sizable market, attracting consulting service providers such as McKinney & Co.

 

-By Kate Zhao, Dow Jones Newswire; 212-416-2665; ying.zhao@dowjones.com

Recession Makes Parents Scrimp On Own Clothes, But Not Baby’s

By Kate Zhao
   Of DOW JONES NEWSWIRES

NEW YORK (Dow Jones)–The littlest consumer is the best consumer.

While parents may scrimp on their own clothing allowances during the recession, they won’t on their baby’s, making basic baby apparel one of the most defensive discretionary consumer categories in the economic downturn, several industry watchers said.

Main sector players Carter’s Inc. (CRI) and Gap Inc. (GPS) saw good numbers in the baby clothes business in the first three months of the year, and market watchers and retailers expect the trend to continue when second-quarter results are issued later this month and next.

Newborns bring excitement to parents and a strong incentive for them to shop for baby clothes. Additionally, the turnaround rate of baby clothes is faster than for kids and adults, giving baby-product makers better immunity to the economic downturn. Young parents are more willing to sacrifice extra little luxuries for themselves to pay for a one-piece outfit or cotton baby sleepwear.

Research firm IBISWorld Inc. says the current recession will be have a moderately negative impact on the industry, with price-conscious parents and other consumers only cutting back on their spending for children’s clothing a little.

Revenue from infants’ and children’s apparel in the U.S. stood at $10.5 billion in 2007, falling only 1.8% in 2008, according to IBISWorld senior analyst George Van Horn. While IBISWorld projects a 0.9% drop this year, the research firm sees a 2.5% rebound in 2010. By comparison, the overall apparel market, which includes accessories and footwear, stood at $322.5 billion in 2007, and fell about 2.3% in 2008 to $315.1 billion.

“Kids’ clothing is less responsive to economic conditions than men’s and women’s clothing…as children are growing and parents find it difficult to cut back on spending for their kids,” IBISWorld said in a research report.

Carter’s “Just One Year” line sold exclusively at Target Corp. (TGT) has seen strong sales, said Target spokeswoman Jana O’Leary, who declined to give specific sales numbers for baby apparel, adding only that “baby apparel sales are performing well.”

Carter’s is also seeing better sales in its once high-flying OshKosh B’Gosh line. The toddler apparel brand, which sustained losses for the company in 2007 and early 2008, has recently seen strong demand from parents despite the deepest recession in decades.

Scott Krasik, an analyst from C.L. King & Associates, raised Carter’s fiscal 2009 estimate to $1.73 per share from $1.58 per share and reiterated his “strong buy” rating on the stock last week, increasing his price target to $30 from $26.

Carter’s shares have risen nearly 67% over the past year, changing hands Wednesday at $23.11. However, Gap, which has a much broader range of clothing lines, including adult, has fallen nearly 10% over the past 12 months, trading Wednesday around $15.13.

“With the OshKosh turnaround on track and the opportunity to exceed expectations over the next few quarters, we believe a premium multiple for [the stock price] is warranted,” said Krasik.

During a conference call in June, Carter’s said it has seen over the past 18 months an increase in coupon use and better response to its sales. While parents are purchasing more basic clothing items, they are cutting back on the special occasion outfits. Thrift consumers are also asking for more durable clothes. Carter’s has introduced more mix-and-match products that can be worn for different occasions and matched with other outfits.

Over at Gap, Evan Price, vice president of investor relations, said in a conference call in June that “on a comp basis by division, baby performed better than kids and adults” in April and May.

Adult clothes aren’t really necessities in an economic crisis, said Julie Hennessy, a consumer behavior and marketing strategy professor at Kellogg School of Management at Northwestern University, adding that Carter’s and OshKosh should do well during the economic downturn because they are “fairly basic brands in infant wear.”

“You can wear what you’ve worn last year, but babies cannot,” she said. “Parents, especially parents expecting their first child, are extremely emotionally involved in what they buy their children.”

-By Kate Zhao, Dow Jones Newswires; 212-416-2665; ying.zhao@dowjones.com