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WIKI ANALYSIS
Introduction
United Capital Corp. operates in three industry segments: real estate investment and management, hotel operations, and engineered products. The real estate investment and management segment is engaged in the business of investing in and managing real estate properties. In 2010, 98.7% of the company’s real estate properties were leased. The hotel operations segment consists of four hotels located in the United States. The engineered products segment manufactures knitted wire products and components. In 2010, United Capital Corp reported $12.7 million in profit of revenues of $80.7 million. [1]
Business Growth
For its manufacturing business, United Capital Corp is looking to cut costs. In 2010, they moved to Mexico and opened a new 69,000 square foot manufacturing facility so that 50% of the manufacturing production will take place there. This move boosted their sales by 39%. For its real estate and hotel divisions, United Capital Corp. is looking to use its $124 million in cash on hand to acquire new assets to grow its business.
Trends & Forces
Declining United States Automotive Industry
The US automotive industry was drastically affected in 2008 and 2009, which followed a general decline starting in 2006. In 2009, with the lowest domestic selling rate seen in decades, each of the “Big Three” U.S. automakers requested emergency loans. GM and Chrysler went bankrupt. Although they have come out of bankruptcy and auto sales are picking up, consumer demand could be weakened by rising fuel and energy costs. Weakness in the economic recovery may also cause another drop in demand.
With United Capital Corp.’s engineered products supplying the automotive industry, a drop in the automotive industry could adversely affected United Capital Corp. Engineered products accounts for 40% of the company’s total revenues in 2010. Autoliv and General Motors are the segment’s largest customers, accounting for 13.9% and 10.4% of the segments sales.
The company is controlled by A.F. Perocelli
The Chairman, Present and Chief Executive Officer, Mr. Atillio.F. Petrocelli Chairman, owns, approximately 70.0% of the Company’s outstanding common stock. This amount includes the shares held by his wife but not those of his children or grandchildren. With such a large concentration of shares, Mr. Petrocelli basically decides on all matters requiring stockholder approval. As the highest manager and largest shareholder, the checks and balances usually placed on a public company is not present.
Competition
- Thomas Properties Group has 2.2 million of rentable square feet located in Southern California and Sacramento, California; Philadelphia, Pennsylvania; Northern Virginia; Houston, Texas and Austin, Texas.
- InterGroup Corporation has operations in multi-family and commercial real estate and an interest in the hospitality industry through its investment in the Hilton San Francisco Financial District. It also has a significant investment in Comstock Mining.
- American Realty Investors owns income-producing residential, hotel and commercial real estate properties. ARL also acquires land for development in suburban markets.
- American Spectrum Realty owns, manages and operates income-producing 30 properties. 23 are office buildings, five industrial properties, one retail property and a parcel of land.
References
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