Lowell's

Implosion: The Decline and Fall of Lexmark

I have written a great deal about the failure of CentrePointe, the downtown Lexington development which has failed to produce promised jobs and economic contributions to our city.  It has left a scar in the middle of our city which has persisted for the better part of a year.  It has exposed just how flawed Lexington's planning and economic development processes are.

As much as I have commented on CentrePointe, however, it is primarily a failure of omission, of delivery.  There is a far larger and more important story about a failure which has actively destroyed jobs and economic contribution in our city.

It is a story of the colossal mismanagement of one of Lexington's biggest employers.  It is a story of the destruction of shareholder value and the bleeding of high-tech jobs in Lexington.  It is a story about how a $12 billion company became a $1.2 billion company in just 5 years.  It is a story of wasted opportunity.

It is a story which serves as a damning indictment of the failed executives who have presided over this corporate implosion.

This is a story of the decline and fall of Lexmark International.

About 5 years ago, Lexmark had a market value of over $12 billion, and its stock was over $95 a share.  As of this writing, it is worth less than $1.2 billion, and its stock is struggling to stay above $15 a share.  What happened?

Through a series of misinvestments and strategic blunders, Lexmark's executive management has simultaneously squandered a huge pile of cash, strangled most of their inkjet division, and destroyed some $11 billion in shareholder value. 

In this post, we'll explore a big strategic mistake which is leading to the downfall of Lexmark's inkjet division.  Then, we'll look at how management has failed to invest properly for the Lexmark's future.  But in order to understand the true extent of this failure we need to start with how a printer company makes money.

Business Model
Essentially, a printer business has two major components: 1) Printers and 2) Supplies for printers.  (Lexmark has also been trying for years to expand a services business for corporate customers, but we'll keep it simple here.)  Lexmark has two major divisions: the Printing Solutions and Services Division (or PS&SD) which focuses on enterprises and uses more-expensive laser-based technology; and the Imaging Solutions Division (ISD - formerly known as the Consumer Printer Division, or CPD), traditionally a more consumer-oriented division which mainly uses cheaper inkjet technology.

The printers are relatively expensive to buy, but are narrowly profitable or even unprofitable - especially with inexpensive 'low end' inkjet printers - for their makers.  Printer sales can be fairly volatile - up one quarter, down the next.  All of the active printers that a manufacturer has in the market are considered the 'installed base' of printers. 

Compared to printer costs, supplies tend to be relatively inexpensive.  Even though they cost less to customers, they offer a high profit percentage for their makers.  Supplies sales also tend to be much more stable and reliable, because supplies are generated from multiple years of sales of printers.  In other words, supplies are not generally subject to excessive swings like printers are.

Most of the printer industry tries to offset each high-dollar, low-margin printer with several low-dollar, high-margin supplies sold over the life of that printer.  The initial printer sale yields little profit (or a loss - as Lexmark has admitted they lose money on many of their inkjet printers), while supplies sales from that printer help (eventually) drive high profits. 

This business model is often called a razors-and-blades model for its similarity to how Gillette made enormous profits: Sell the razors for as little as possible, and make it up with profits from blades.

As the installed base of printers ramps up, more and more of the company's revenues (and, of course, profits) come from supplies sales.  Eventually, the more stable and reliable supplies business will outpace the more volatile printer business.  Over the past 5 years, supplies have accounted for between 60 and 70% of Lexmark's revenues. 

Upside-Down Economics
In order to get access to the market, most inkjet products are sold through major retailers like Walmart, Best Buy, and Staples.  These retailers wield enormous influence over printer manufacturers. 

Retailers are driven to maximize the profitability of their limited shelf space.  If a product isn't creating enough selling "velocity" for a given space, then the retailer will discontinue, or "de-list" it.  And because manufacturers are in a blind competition with one another for shelf space, de-listing poses an enormous threat to future supplies sales.  Lexmark's competition for retail shelf space is intimidating: it includes market-leader Hewlett-Packard (HP), as well as Canon, Epson, Brother, and Kodak.

To ensure continued access to the retailer's customers (and to the future supplies sales), manufacturers often feel compelled to sweeten the pot for retailers when their selling velocity isn't high enough.  Most often, this comes in the form of price cuts for printers. 

Lexmark was in the vanguard of the low-priced printer movement, offering the same (or more) functionality for lower prices than the competition.  For a few years, this was Lexmark's main competitive edge in the inkjet market.  But in 2003, HP - who had almost always used its market leadership to demand premium prices - changed its strategy and began to match Lexmark's pricing.

Over time, the printer industry kept giving more and more ground in this Faustian bargain with retailers, driving printer prices lower and lower, until they ultimately lost money on many of the printers they sold in order to get access to profitable supplies sales. 

But when a company loses money on its initial printer sale, funny things start to happen to the business model.  If it grows too fast, then the losses from printers can drain the profits from supplies: In other words, building the business for long term profit can require the sacrificing of profitability in the short term.  Conversely, if printer sales drop dramatically, then the business can appear enormously profitable: Management can enhance short-term profit even while destroying long-term business fundamentals.

These upside-down economics can be difficult to manage, especially during strategic shifts: it is expensive and uncomfortable to change, but it is also expensive and uncomfortable to remain in place.  In the case of Lexmark's inkjet-focused ISD, Lexmark executives failed to manage those economics - to the detriment of the ISD business.

Strategic Blunders
For several years, Lexmark executives have signaled their intent to get "higher-usage customers" for ISD.  The premise of these announcements was that Lexmark would sell fewer printers, but that they wouldn't lose (as much) money on printers and would simultaneously gain enormously-profitable customers who used lots of supplies. 

HP has traditionally been very strong among small businesses and other high-usage customers, and Lexmark was attempting to crack into that market.  Repositioning to get higher-usage customers would also be a marked departure from Lexmark's history (and its brand image) of cheap, low-end inkjet products.

Trouble is, the executives never identified any sustainably differentiated qualities in their high-end products which would tempt customers to leave the vaunted HP brand for the Lexmark label.  To date, Lexmark's products are "me-too" products: the same basic functions, features, and performance as the products offered by other printer manufacturers.  The few differentiated features that Lexmark has introduced (wireless printing, for example) have been quickly matched by rivals.

And it isn't clear that Lexmark has, in fact, gained higher-usage customers with the few printers it has managed to sell.  Spot-checking product prices in stores and online, it is common to see Lexmark's "high-end" inkjet products at nearly half the price of competitive products from HP.  This is a clear signal that Lexmark's products aren't getting the velocity of HP's products, and that retailers are extracting price concessions as a result.  Further, as these high-performance, heavily-featured products drop in price, two other upside-down dynamics kick in:

• The magnitude of losses for high-end products might be greater than the losses for low-end products.
• The lower prices likely appeal to the same lower-usage consumers which Lexmark is attempting to avoid

An example: a feature-laden product designed for the, say, $200 price point might lose even more money when repriced to $149 than a sibling product which was designed for $49 and reduced to $29.  And that bigger financial hole might be even harder to get out of if Lexmark "wins" customers who don't print frequently.

So, how did this "repositioning" strategy play out?

With new ISD leadership in 2008, Lexmark began to aggressively abandon low-end printers in the pursuit of the high end of the printer market.  Almost immediately, Lexmark's retail presence was dramatically reduced as it was de-listed at or kicked out of retailer after retailer, ending up with a significant presence only at Walmart and Circuit City - not the kinds of retailers where higher-usage customers would be expected.  Perhaps feeling the sting of being locked out of so many retailers, a more flexible Lexmark began regaining listings earlier this year. 

By the end of 2008, the damage was done: Lexmark lost almost half of the printers sold in 2007.  2008 revenues were down 22% from 2007, while profits were up 47% in the same period.  Remember when we said that a dramatic drop in printer sales usually creates a temporary boost in profits?  Well, in this case, Lexmark's supplies revenue and profit - usually the most stable part of a printing business - have also been dropping, which is a particularly worrisome trend.  This implies significant deterioration in Lexmark's cash cow - its installed base of printers.

In the past 5 years, the attempts to move to the high end have has disastrous effects: Since 2004, ISD has lost two-thirds of its printer sales and 40% of its revenues.  Profits in the division have dropped by nearly 60%.  And the prospects for the future are not good.

Death Spiral
When the most stable generator of cash (supplies) starts drying up, it can put a printing company in a kind of death spiral.  Because of its leveraged, upside-down economics, the company can no longer fund the aggressive growth initiatives which could help pull it out of the downward spiral.

Will the move to higher-usage printers pull Lexmark out of the death spiral?  No.  As we outline above, Lexmark has failed to offer truly differentiated products with a compelling business model, and it appears that the aggressive move upmarket may actually speed the division's demise. 

What's even more troubling are the warning signs of a similar death spiral in Lexmark's larger, more-business-focused PS&SD.  While not as volatile as ISD, the same patterns are emerging to point toward flat or falling supplies revenue: declining overall revenue, declining printer sales, and what appears to be a shrinking installed base.  Once both divisions have entered the spiral, it will be difficult for Lexmark to maintain long-term viability.

Cash Burn
For years, Lexmark's executives have touted the company's amazing ability to generate cash from its supplies-heavy business model.  But how have they deployed that cash for investors' and the company's benefit?  They haven't.  It is another troubling example of the mismanagement of the company.

At a recent meeting with analysts, Lexmark executives crowed about returning $3.2 billion to shareholders through stock buybacks.  As we delve into the effects of those buybacks, we have to wonder what they were so proud of...

With a buyback, management essentially tells shareholders, "We've determined that the best investment we can make is in our own company, so we're going to buy back our own stock."  After a buyback, since there are fewer shares on the market, each remaining share owns a bigger chunk of the company. 

Normally, a buyback is a great thing for long-term shareholders.  Because each share owns a bigger chunk of the company, the share's price usually goes up.  And a buyback usually acts as a signal from management that they believe in their company's health and prosperity.

But sometimes, buybacks are used by management as a weak attempt to prop up the share price of a flagging company.  Buybacks are especially worrisome when they are the primary use of cash by technology companies: Executives are signaling to shareholders that they can find no innovative technology more worthy of investment than simply plowing that cash back into the company's stock.  As a result of depriving technology development and acquisition, a buyback company's technology often falls far behind that of competitors.

In Lexmark's case, the buybacks have backfired.  Over the past 5 years, management has used $3.2 billion to buy back some 59 million shares of Lexmark stock at an average price of approximately $54 a share.  At $15 a share, that $3.2 billion investment is now worth about $900 million - a loss of over 70%. 

But it is worse than that.  The 59 million shares Lexmark's executives repurchased represent about 45% of the shares they started with in 2004.  So each share should have nearly doubled in value.  Without the buybacks, Lexmark's share price would likely be around $8, instead of $15.    All in all, Lexmark's value has dropped by a scandalous 90%.

In 2004, Lexmark was sitting on $1.5 billion in cash and securities.  By 2008, Lexmark had burned through that cash (and other cash it had generated since 2004) through share buybacks.  So, it took on a $650 million long-term loan, and began using that to continue purchasing new shares. 

Rather than deploying this arsenal of cash to fund growth with significant new technologies (which might have helped to differentiate their products - see discussion above), Lexmark invested in its failing status quo.  And, by any measure, that investment failed.  Miserably.

Is this executive incompetence?  Perhaps.

But there is another, equally-distressing, explanation for why Lexmark's management engaged in this failed buyback strategy on such a massive scale: They were protecting themselves.

When a company builds a large mountain of cash, it becomes an attractive takeover target.  In Lexmark's case, this is especially true, because it has also had (until recently) a reliable stream of cash from its supplies business coupled with a depressed stock price.  A private equity firm would look at buying the firm and using the cash and future profits to finance the acquisition.  In 2005, one of the industry's best analysts (Toni Sacconaghi, now with Bernstein Research) suggested that Lexmark was ripe for precisely such a scenario.  

By buying back almost half of Lexmark's outstanding stock, executives could solve multiple 'problems' at the same time:

• They reduced their cash holdings, thereby reducing their attractiveness as a takeover target;
• They could potentially buy out dissatisfied shareholders (further reducing takeover potential); and,
• They could prop up their flagging stock price, with the hopes of deferring shareholder judgment on their failures.

All in all, such a strategy would have allowed Lexmark's executives and board to maintain and concentrate control of the company.  In the process, however, they have failed their shareholders, their employees, and the communities in which they live and work (especially Lexington).  

Incompetence.  Or self-interest.  Neither explanation is satisfactory.  And both are deeply troubling.

A call for change
CEO Paul Curlander, ISD President Paul Rooke, and PS&SD President Marty Canning have all been with Lexmark for over a decade.  They presided over the destruction of 90% of Lexmark's market value.  They have marshaled failed (and failing) business strategies.  They have continually pursued failed financial strategies through stock buy-backs.  They have destroyed some 600 mostly-local US jobs.

By every meaningful business measure, they have failed.

It is time for Lexmark's board to act decisively.  Lexmark needs a vibrant new strategy 1) to survive and 2) to grow profitably.  The current standard-bearers are clearly not up to the task.  My hope is that the board can bring in new executive management who can articulate and execute that strategy. 

As a Lexington business owner, I want and need Lexmark to thrive.  Lexmark's current leaders have failed its shareholders, its employees, and our community.  It is time for meaningful change at Lexmark.

* * *

A few disclosures are in order: 

• As a former Lexmark employee, I'm prohibited from using knowledge and insights I gained while I was employed by the company.  I'm not allowed, for instance, to talk about how board meetings are orchestrated.  I also can't use the insights I may have gained in meetings with current and former executives at Lexmark.  I can't talk about the specific products, internal strategies, and personalities which might have led to the failures which I document here. 
• As a result, this story is stitched together entirely from studying publicly-available financial statements, presentations to analysts, and other public releases from the company and others.
• I have not owned Lexmark stock for over 1 year.
• I have friends, family, and customers who still work at Lexmark.  This in no way reflects their views, or conversations I may have had with them.  I did not consult with any of them before writing this.  These observations are mine and mine alone.
• Finally, this critique is aimed squarely at Lexmark's executive management.  The failures I document here are theirs, not the failures of Lexmark's smart and creative rank-and-file employees.

We Were Wrong

Six months ago, the Lowell's Corporate Office of Fearless Predictions forecast that "Gasoline will be well above $3 a gallon by June, if not sooner."  As part of the prediction, we also said oil prices would reach $80 a barrel.

Well, we were wrong.

As of this writing, most stations in Lexington have gasoline at $2.65, and oil has been around $71 a barrel.

At the time of our forecast, gas was about $1.49 a gallon, and oil stood at $39 a barrel.  We predicted that a number of forces (weaker dollar, production cutbacks, greater demand, and speculation) would come together to drive oil prices upward.  We were generally right about the forces driving prices up, but we were wrong about their strength and timing.

In particular, it appears that the economic rebound and infrastructure build-out we foresaw to drive greater demand really didn't kick in as soon or as strongly as we expected.  We're slowly starting to see some signs of the rebound, but it didn't happen when we said it would.

We still expect $3-a-gallon gas by the end of the summer, and wouldn't be surprised to see $3.50 to $4 a gallon by the end of 2009.

That's what we see in our crystal ball.  What do you think?  Where will gas and oil prices go from here?

Tangled Webb

At the Lexington Forum last week, CentrePointe's developer spun a dazzling and dizzying tale about the history and the future of the pit in the middle of our city. 

His presentation resonated with the receptive Forum audience.  Looking around the room, filled with many of Lexington's other business and civic leaders, I was a bit confounded.  While many in the audience seemed familiar with the ongoing controversy of CentrePointe, few seemed knowledgeable about the actual details.

I then began to realize the scope of the challenge for CentrePointe critics: How do we effectively demonstrate the full extent of our skepticism and concern to the uninitiated or uninvolved (in other words, to the majority of our citizens)?  CentrePointe is an elaborate project with an equally elaborate backstory.  It is a complex web which is difficult for newcomers to disentangle.

Even so, there are at least 5 distinct patterns which lie within the web: 1) Secrecy, 2) Runaway Optimism, 3) Loss of Credibility, 4) Contingency, and 5) Victimhood.  These patterns form the basis of our critique of the project, and should raise important questions about CentrePointe for any public official, business associate, or concerned citizen.  

Secrecy.  From the beginning, CentrePointe was shrouded in secrecy, and the developers have been hostile to reasonable inquiry into the details of the project.  While seeking public commitments for tax increment financing (TIF), they refused to disclose the name of their secret financier.  They failed to disclose that their financier had been dead for six months.  On Thursday, the developer announced two new financial backers, but wouldn't disclose their names either.

The developer claims that private property rights let him maintain secrecy, even as he publicly sought specialized TIF tax status.  The premise of tax increment financing is that today's public debt would be paid for by future tax increases (the "tax increment") which arise from property improvements (increased property values, increased commercial activity, etc.).  While the developer maintains his right to secrecy, the special status which the public granted to his property should require him to be more forthright and more detailed about the project's timing, financing, and business model.  Or, the special TIF status should be removed.

Runaway Optimism.  The few details which have emerged have shown that the developers frequently engage in runaway optimism.  They bank on the flimsiest of commitments, and lean on them to demonstrate the viability of the project.  They are willing to mislead people to believe these commitments are real.  

In last week's presentation, the developer stated that one of the first calls he got upon announcing the project was from Hard Rock Cafe, who wanted to locate in CentrePointe.  This was met with murmurs of approval from his audience.  

Trouble is, it wasn't Hard Rock.  And they didn't initiate contact with the developers.  And they aren't coming to CentrePointe.  As Dr. Nick Kouns chronicles, Kouns initiated contact with House of Blues, who felt that Lexington wasn't a sufficient market for their brand, but met with the developers out of courtesy.  So the 'commitment' was never much more than an exploratory discussion.

Alas, such optimism pervades CentrePointe.  On Thursday, the developer announced that he had 65 'almost-certain' prospects for his 91 condominiums which will sell for an average price of $1.2 million.  Trouble is, only 10 million-dollar properties sold in all of Fayette County in all of 2008.  In today's even-more-depressed market, what would enable the developers to attract 6 times more luxury property commitments, just for an unbuilt CentrePointe alone?  Runaway optimism.

Loss of Credibility.  The trouble with runaway optimism is that, eventually, reality sets in.  And as the developer's gossamer threads of optimism unravel, they reveal his profound credibility problem.  

For the better part of a year now, the developer has continually decommitted from prior public statements.  These decommitments have been on videotape, in print, and to the Urban County Council, and have touched on all major dimensions of the project: its financing, its business model, and its timing.  The pattern which emerges is one in which the developer continually bends facts (and history) in the attempt to prop up his faltering story.

The developer rushed to create the pit in the center of our city last July, and was scheduled to begin construction on CentrePointe in 60 to 90 days.  As the months dragged on, he claimed that the permitting process was holding him back from doing anything else with the property, but that he expected the permitting issue to be resolved in 60 to 90 days.  Only later was it revealed that, even as he made such statements, he knew that his primary financier was dead.  But even though the financier was dead, the developer told the Urban County Council he was certain that construction would begin in 60 to 90 days.  Last week - some 60 days after he announced the death of his financier - the developer expected the financing to be resolved in 60 to 90 days.  

Contingency.  CentrePointe is a complex $250 million development with several intertwined components: over $100 million from 91 condos, a $100 million 250-room hotel, and some $50 million from retail and office functions in lower floors.  There has been a year-long delay in securing financing.  Construction has been delayed many times.  Every piece is contingent on the others, and it all has to come together flawlessly for CentrePointe's business model to 'work'.  And there are enough doubts about every single component that public officials, business associates, and concerned citizens should be worried.

As outlined above, the condo plans seem over-ambitious.  While Marriott has expressed interest in and support for the hotel, they aren't actually financing it, and the higher-than-average occupancy at higher-than-average room rates assumptions used in the CentrePointe business model are far from viable. The fact that the developer is willing to mislead a prominent audience about a major retail tenant raises questions about the rest of the project's business model.  The continual delays in securing financing and beginning construction - coupled with the secrecy of every major aspect of the project - have contributed to the mounting skepticism about whether CentrePointe is truly viable.

Victimhood.  In his public addresses, the developer often adopts a persecuted posture, which often positions him as a blameless victim of the sinister agendas of press, of bloggers, and of ambitious politicians.  He claims not to understand all of the fuss.  He just "wants to shut these people up".  

Let's take a look at the explanations the developer has provided for us:

• The financier was secret because he feared public backlash.  When he died, that was kept secret because it wasn't going to affect financing.  But when the financier's heirs wanted to know whether he had sufficient assets to cover obligations like CentrePointe, the assets were tied up in numbered Swiss bank accounts.  They couldn't get access to the accounts unless they also took on the obligations, which creates a Catch-22: the heirs can't see the assets without accepting the obligations, but won't accept the obligations without seeing the assets.  But even though the heirs can't be certain of the dead financier's assets, the developer somehow is...
• Last week, the developer introduced two new financing sources.  But both sources - an individual and an investment bank - also demanded anonymity.
• Even though the developer has always claimed the financing was rock-solid, last week he introduced three additional contingency plans.
• When challenged on the viability of CentrePointe's condominium assumptions, he claims that 65 of the 91 condos are 'spoken for' through undocumentable 'handshake deals'.  He also names vague tenants for the properties - horse farms in Ireland and Dubai and vintners in Napa Valley.
• He claims that people are lining up for the retail and restaurant spaces, but the one deal he has detailed to the public was both wrong and unconsummated.
• Every time he provides an update on the project, the projected start date is 60 to 90 days hence.  Unfortunately, '60 days from now' never arrives. 

To the extent he is a victim, he is the victim of his own machinations.  If he really wanted to shut these people up, he would simply provide some proof that his critics are wrong.  But the proof which would silence his growing list of critics never arrives.  

* * *

Looking through the tangle of explanations and the patterns outlined above, one is forced to make one of two conclusions about the developer's ability to silence his critics:

1. That he is the unluckiest man alive (every opportunity to exonerate himself is confounded by another unfortunate twist in his story);
2. That he is simply lying (every opportunity to exonerate himself is confounded by another convenient twist in his story).

Until we get a full and clear accounting for CentrePointe's real-world status, I, for one, choose not to be silenced.

An update on CentrePointe

At the Lexington Forum this morning, CentrePointe's developer updated the public on the status of the faltering project in the center of our city.  As he has done in other venues, he laid much of the blame for any CentrePointe controversy at the feet of bloggers and the media.

In his presentation, he revealed a few new details about the secretive project, along with several layers of backup plans.  In this post, I'll outline some of my notes and some questions which arise from the developer's presentation.  In a future post, I'll share more of my thoughts on the development in the wake of this morning's presentation.

Plan A

• The dead financier (call him Mystery Investor 'A' - or MIA, for short) was introduced to the developers by a pre-eminent, distinguished American who was heavily involved in the Justice Department.
• MIA was committed to 5 such projects around the world involving some $800 million, including 3 in the US worth some $550 million.
• He went into some detail on the reason that MIA's estate was held up.  He characterized it as a chicken-and-egg problem.  The heirs aren't sure they wanted access to the 'numbered Swiss bank accounts' until they knew whether those accounts had enough to cover the estate's liabilities (like CentrePointe).  The accounts and the liabilities seem to be a package deal, but the heirs are blind to the numbered accounts: They can't know what the actual assets of the estate are unless they also accept the liabilities.
• Question: If MIA's heirs don't have confidence that MIA had enough assets to cover these deals, then what makes CentrePointe's developers so confident that the money is there?

Plan A Minus

• If the developer's 'Plan A' falls through, he has an intermediate plan ('Plan A Minus'?).  In the last couple of days, he has talked with someone who happens to have 20 to 30 thousand cubic yards of dirt for free, so filling in the site is an option if the current plans fall through.  He also mentioned that he had talked with someone who hydroseeded strip mine sites who might be willing to help seed the place.
• The developer claimed "It is not our intent to embarrass the community" for the World Equestrian Games.  He hates to do it, but is tempted to backfill the pit and plant seed "even for 60 to 90 days, just to shut those people up".  The friendly crowd roared with laughter.  Later he said he thought about "putting in a liner and turning it into a lake".  More laughter.

Plan B

• CentrePointe now has a 'Plan B', complete with a Mystery Investor 'B' (MIB) who has recently come forward to express interest in the project (should 'Plan A' with MIA's estate fall through). They are "ready to go" if 'Plan A' does fall apart.
• Question: If MIB is so "ready to go", then why not relieve the heirs of MIA's estate of their burden and allow MIB to take over financing for the deal? 

Plan C

• Even though MIB is ready to go, there is also CentrePointe 'Plan C' involving a Mystery Investment Bank 'C' (MIC) who will put up $30 million, and the developer briefly mentioned some sort of 'bond arrangement' to finance the rest of it.
• Question: If Plans A and B are really viable, then why does CentrePointe need a Plan C?
• Question: What kind of bond issue supplies the other $220 million needed to build the project, if the investment bank is only ponying up $30 million?

Other notes

• If one of the financing options lines up today, CentrePointe would begin construction in the fall.  15 months after the initial demolition began.
• The developer claimed that 65 of the 91 condominiums at the top of CentrePointe had been committed to by many people, including horse farms in Ireland and Dubai.  (He didn't mention Napa Valley wineries this time.)
• He took pains to correct Herald-Leader writer Beverly Fortune for reporting that the 91 units had an average price of $1.2 million.  "That's just the average... The units will start at $600,000 and go up from there."
• "Hard Rock Café was one of the first to call us" when they heard about the project, strongly implying that they were lined up.  (Since the meeting, I have learned that the developer really talked with 'House of Blues' - not Hard Rock - and that they are anything but 'lined up'.)

The plethora of mystery investors and backup plans might have been intended to reassure his audience.  But they actually raise troubling questions about the future of the project, the developers' ability to obtain financing, and the financial viability of the development's business model.