Intel CEO Paul Otellini to retire in surprise move

SAN FRANCISCO (AP) — Intel CEO Paul Otellini dropped a bombshell on the company’s board of directors last week, telling them in private that he plans to retire from the world’s largest maker of microprocessors in May. Otellini‘s move comes at a time when Intel faces a shaky economy and a mobile gadget craze that is eating away at demand for its PC chips —and it gives the company just six months to find a new leader.

Intel‘s board expected the 62-year-old Otellini to remain chief executive until the company’s customary retirement age of 65. The company announced his impending departure on Monday.

“The decision was entirely Paul’s,” said Intel spokesman Paul Bergevin. “The board accepted his decision with regret.”

Otellini will be ending a nearly 40-year career with Intel, including an eight-year stint as CEO by the time he leaves. He joined the Santa Clara, Calif. company after graduating from the nearby University of California at Berkeley and worked his way up the ranks before succeeding Craig Barrett as CEO in May 2005.

“It’s time to move on and transfer Intel‘s helm to a new generation of leadership,” Otellini said in a statement.

In another statement, Intel Chairman Andy Bryant praised Otellini for leading the company through “challenging times and market transitions.”

Intel‘s board plans to consider candidates inside and outside the company as it searches for Otellini’s successor. Otellini will be involved in the search.

Otellini and the four other men who have been Intel‘s CEO during the company’s 45-year history have all been promoted from within. The company’s board is believed to be leaning in that direction again.

Intel identified the leading internal candidates Monday by anointing three of Otellini’s current lieutenants as executive vice presidents. They are: Renee James, head of Intel‘s software business; Brian Krzanich, chief operating officer and head of worldwide manufacturing; and Stacy Smith, chief financial officer and director of corporate strategy.

If recent history is any indication, Krzanich has the inside track to become Intel‘s CEO. Both Barrett and Otellini served as chief operating officer before becoming CEO.

Although Otellini is generally well regarded, he has faced criticism for initially underestimating the impact that smartphones and tablet computers would have on the personal computer market. It was a pivotal change that also confounded Microsoft Corp. CEO Steve Ballmer, whose software company makes the Windows operating system that runs most of the PCs relying on Intel‘s chips.

“The shift came more quickly than they expected, and when they did finally see what was happening, they were a little late to react,” said technology analyst Patrick Moorhead of Moor Insights & Strategy.

Indeed, in 2008, nearly 300 million PCs were sold and most of them were powered by Microsoft‘s Windows and Intel‘s microchips, according to Forrester Research. Some 142 million smartphones sold that year, at a time when the tablet market hadn’t really taken off. That wouldn’t happen until Apple‘s 2010 release of the iPad.

By contrast, this year, Forrester estimates 330 million PCs will be sold worldwide compared with 665 million smartphones and just over 100 million tablets. By 2016, Forrester predicts annual sales of PCs will rise only slightly to 370 million machines while more than 1.6 billion smartphones and tablets will be purchased.

The fates of Intel and Microsoft have been so tightly wound for the past 30 years that computers using a combination of their chips and software are famously known as “Wintel” machines.

Now, much of the technology industry is questioning whether Intel and Microsoft can catch up in the mobile market to ensure their products remain as essential — and profitable — in the future as they have been in the past three decades.

It’s a challenge that Ballmer, 56, is confident he can tackle. He signaled his intent to remain Microsoft‘s CEO earlier this month when he ushered out the head of the company’s Windows division because of philosophical differences over the company’s future direction. For whatever reasons, Otellini concluded it was time for new leadership at Intel — an opinion that many investors share, according to RBC Capital Markets analyst Doug Freedman.

“A shift in leadership could be welcome news to investors as Intel could be in greater position to broaden its portfolio into higher growth markets,” Freedman wrote in a Monday research note.

Intel‘s stock was unchanged at $ 20.19 shortly before the market closed Monday. The stock has fallen more than 20 percent during Otellini’s reign. Most of the decline occurred this year amid concerns about the company’s ability to adjust to mobile computing and weakening demand for its core products in countries with troubled economies, particularly in Europe and China. The company blamed the poor economy for a 14 percent drop in its earnings during its most recent quarter.

Intel‘s chips have become even more dominant in the PC computer market during Otellini’s tenure, helping to boost the company’s annual revenue from $ 39 billion in 2005 to $ 54 billion last year. Besides supplying Windows-powered PCs, Otellini also scored a coup in 2006 when he convinced Apple to start using Intel chips in Mac computers instead of IBM Corp.’s microprocessors.

But Apple‘s pioneering work in smartphones and tablet computers also muddled Intel‘s future. Both the iPhone and iPad inspired a wave of sophisticated handheld devices that are undercutting demand for desktop and laptop machines that house Intel processors.

Most tablets rely on a technology licensed from British chip designer ARM Holdings Plc. Even Microsoft has tweaked the latest version of the Windows operating system so it works on ARM chips.

Other chip makers such as Qualcomm Inc. have developed less expensive microprocessors that have eclipsed Intel in the smartphone market. Qualcomm‘s inroads in the mobile market are a key reason why its stock has soared by more than 70 percent while Otellini was running Intel.

The contrasting performances of the two companies’ stocks enabled Qualcomm to surpass Intel as the world’s most valuable chip maker. Qualcomm‘s market value now stands at about $ 106 billion versus $ 100 billion for Intel.

Even though its stock under Otellini has lagged the rest of the market, Intel‘s ongoing prosperity has enabled the company to reward shareholders in other ways. Intel has paid stock dividends totaling $ 23.5 billion under Otellini as its quarterly payments rose 8 cents per share in 2005 to 22.5 cents per share currently.

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Mitt Romney a Twihard? Candidate and Wife Take in “Twilight” Finale

LOS ANGELES (TheWrap.com) – He may have missed out on becoming leader of the free world when he lost the election to President Obama, but Mitt Romney is keeping busy – with the romantic vampires and werewolves of “Twilight.”

Saturday night, he was spotted with his wife Ann heading into a showing of “Twilight Saga: Breaking Dawn – Part 2″ at a cineplex in Del Mar, Calif., by TMZ. After the movie, they and two young men went to a nearby pizza place, where they reportedly spoke and posed for pictures with patrons.

The Saturday night out for the Romneys was in contrast to the recent movie-viewing by the man who beat him in the election. President Obama last week viewed Oscar hopeful “Lincoln” in a special White House screening with several of the cast members and filmmakers.

There was no word on whether Romney or his wife aligned with Team Edward or Team Jacob.

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Global Update: Meningitis Vaccine Gets Longer Window Without Refrigeration

In what may prove to be a major advance for Africa’s “meningitis belt,” regulatory authorities have decided that a new meningitis vaccine could be stored without refrigeration for up to four days.

The announcement was made last week at a conference in Atlanta of the American Society of Tropical Medicine and Hygiene. While a few days may seem trivial, the hardest part of protecting poor countries is often keeping a vaccine cold while moving it from electrified cities to villages with no power. In antipolio drives, for example, the freezers, generators and fuel needed to make ice for the shoulder bags of vaccinators can cost more than the vaccine.

The new vaccine, MenAfriVac, made in India for 50 cents a dose, was introduced in 2010. In bad years, epidemics during the hot harmattan winds have killed as many as 25,000 Africans and disabled 50,000 more. In Chad this year, vaccination drove down cases to near zero in districts where it was used, while others nearby had serious outbreaks.

Experts decided that the vaccine is safe for four days as long as it stays below 104 degrees.

While temperatures get higher than that in Africa, said Dr. Godwin Enwere, medical director for the Meningitis Vaccine Project, teams normally get the vaccine out of coolers at dawn, drive to villages and finish before the day heats up. Other experts said it should be kept in the shade and monitored with colored paper “dots” that darken after hours in the heat.

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Hostess, unions agree to mediation

Hostess Brands Inc agreed in court on Monday to enter private mediation with its lenders and leaders of a striking union to try to avert the liquidation of the maker of Twinkies snack cakes and Wonder Bread.

Hostess, its lenders and the Bakery, Confectionery, Tobacco Workers and Grain Millers International Union agreed to mediation at the urging of Bankruptcy Judge Robert Drain of the Southern District of New York, who advised against a more expensive, public hearing regarding the company's liquidation.

"My desire to do this is prompted primarily by the potential loss of over 18,000 jobs as well as my belief that there is a possibility to resolve this matter," Drain said.

The 82-year-old Hostess was seeking permission to liquidate its business, claiming that its operations have been crippled by a bakers strike and that winding down is the best way to preserve its dwindling cash. Hostess suspended operations at all of its 33 plants across the United States last week as it moved to start selling assets.

Heather Lennox, a lawyer for Hostess, said it would be hard for Hostess to recover from the damage it sustained due to the strike even if an agreement was forthcoming. Yet following the hearing, Hostess Chief Executive Officer Gregory Rayburn told reporters that there was always a chance Hostess could be saved.

"I think we have to see what unfolds," Rayburn said. "My impression is that the judge wants to understand the parties' positions and some of their logic, but it doesn't change our financial position.

"I'm happy to have the help," he added, referring to Drain's mediation following a breakdown of communication between Hostess and the union. "Maybe the judge will help. But can I handicap how it's going to go? No way."

A lawyer for Hostess' creditors' committee declined to comment.

The court-sanctioned mediation could make both sides more willing to give, said Nick Kalm, a communications consultant specializing in labor relations.

"It makes it much more likely that the company will put forward something that is less draconian... and the union will take it. The union realizes they are out of options," said Kalm.

BEHIND CLOSED DOORS

The BCTGM called the strike on November 9 after Hostess sought and won court approval to impose wage and benefit cuts.

Unlike other unions representing workers at Hostess, the BCTGM did not contest Hostess's action -- which allowed it to reject a collective bargaining agreement and impose its offer.

Given the fact that the union did not fight Hostess's motion in court, Judge Drain said it was "somewhat unusual to say the least, and perhaps illogical" that the union would then strike against it.

"Its an odd approach," Drain said. "Before thousands of people are put out of work it would seem to me worthwhile for both the union and the debtors to explore why that happened."

Drain also questioned whether the union had held discussions with competitors or potential suitors about a shiftover of jobs, saying the union's response to Monday's motion implied that it sees "meaningful sales available out there beyond the piecemeal sales that this motion contemplates."

A lawyer for the union did not immediately return a phone call seeking comment on whether such discussions had taken place.

BUYERS MAY EMERGE

Analysts have said Hostess' brands, which also include Nature's Pride, Dolly Madison and Drakes, are expected to draw interest from rivals including Flowers Foods, Pepperidge Farm owner Campbell Soup Co and Mexico's Grupo Bimbo.

Brian Boyle, a food industry investment banker at D.A. Davidson & Co, said it was hard to gauge the value of the Hostess assets, given that there are a lot of plants that are old and inefficient.

"The other wild card is whether you're going to see different buyers emerge for different segments of the business. So Flowers Foods, for instance, might want the cake segment and Bimbo could want the bread piece. So it comes down to 'are the parts greater than the whole?'," Boyle said. "In either case, significant labor and benefits concessions will be required."

Private equity firm Metropolous & Co said on Friday it was interested in pursuing the company, and on Monday, Fortune reported that Sun Capital Partners was interested. Sun Capital did not return a call seeking comment.

The company did have a potential white knight at one point, according to Hostess. Last spring, an outside equity investor had made a viable proposal that would help the company reorganize, it said, but the Teamsters union refused to agree to changes to the pension program and the outside investor walked away.

The company spent the summer and fall negotiating with all of the 12 unions trying to find a common path to reorganization, and did gain certain agreements with the Teamsters and many of the other unions, though not the BCTGM. At the same time the company started putting together a liquidation plan.

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Quinn's pension marketing push derided as 'juvenile'

After months of promising a major grass-roots effort to win public support for reforming the state's government worker pension system, Gov. Pat Quinn on Sunday unveiled a plan that featured an incomplete online strategy, children wearing red plastic megaphones and an animated "Squeezy the Pension Python" mascot.

There were, however, no solutions offered on how to fix the nation's most underfunded retirement system.

The Democratic governor, known for a style that sometimes veers into the corny, attempted to jump-start the pension overhaul push by lauding the power of "the people of Illinois, good and true" through what he called the "electronic democracy" of Twitter and Facebook. Quinn went so far as to encourage families gathering at the Thanksgiving dinner table to "speak to each other" about the pension crisis.

The approach left some lawmakers questioning whether the governor demeaned the severity of one of the most pressing unresolved problems facing state government in Illinois. State Rep. Jack Franks, D-Marengo, called Quinn's strategy "juvenile."

"If he wants to do a grass-roots campaign, he should talk to the people directly about his proposal. But he doesn't even have one, which is why we can't get anything done. You can't follow someone who doesn't lead," Franks said.

"This has to be comprehensive reform. It can't be done in a vacuum and it can't be done with slogans and it certainly can't be done with cartoon characters," Franks said. "It's going to take some hard work."

Rep. Elaine Nekritz, of Northbrook, the lead pension reform negotiator for House Democrats, was more diplomatic.

"This is one way we can help build support for a solution," she said, "but we need to continue making sure that the right people are at the table and that we are focused on getting votes on legislation."

Quinn made reforming the state's pension systems a priority in the spring, but lawmakers left the Capitol without acting. In August, the governor summoned lawmakers into a fruitless special session on pensions when he had no reform plan on the table. After that failure, Quinn promised a grass-roots marketing plan, the one he delivered three months later on Sunday.

The pension system's unfunded liability now is estimated to be at least $96 billion. The governor has warned that without changes, future funding for public employee retirement will put the squeeze on state funding for education and social services. That led to the introduction of "Squeezy" about midway through a 3-minute, 44-second video produced in-house by the governor's office.

The strategy includes a website featuring a video on the history of pensions since ancient Rome and a chorus of children shouting "Thanks in advance" for fixing the retirement system. Quinn appeared at a Thompson Center news conference with about 15 children who wore red plastic megaphones with "Thanks in advance" stickers.

"This is not going to be solved just by the (politicians) in Springfield," Quinn said. "The people of Illinois are the heart and soul of our government ... and many times, citizens are ahead of legislators when it comes to demanding reform. We need to make sure those citizens get the facts they need about an important issue. I have fundamental faith in the common sense of the everyday people of Illinois."

The website offers no solutions on how the state's pension systems should be reformed. House Republican leader Tom Cross, of Oswego, who recently has adopted a conciliatory attitude toward the Democratic governor, said that while "the ideas may not be in (Quinn's marketing plan), I still think the fact that he is taking a step like this, I am going to view it as positive."

"I am still not sure that the public has accepted the facts and understands the ramifications of not doing pension reform," Cross said. "And what I mean by that is, if we do not do pension reform soon, not only may we not have a pension system, we may not have enough money to fund education or build roads and fix schools."

Lawmakers have considered but failed to enact plans that include giving current state employees the option of keeping a compounded cost-of-living increase for their pensions at the expense of adding future salary increases to their benefit base and forcing them to find their own retiree health insurance. Those that forgo the compounded increases would see future salary hikes included in their pension benefits and would have access to state health insurance at retirement.

Even before Quinn launched his marketing plan, the We Are Illinois coalition of labor unions contended the proposal was a "coercive diminishment" of modest retirement benefits and not a "real solution." The union group also warned it was a violation of the Illinois Constitution's guarantee of pension benefits and would "lead to costly litigation while the pension debt grows."

The governor's effort represents a back-to-the-future approach, attempting to merge his decades-long populist roots with modern social media tools. He invoked his history of petition drives stretching back more than 30 years that curbed the size of the legislature and altered lawmaker pay. Quinn even reverted to one of his political hallmarks, the Sunday news conference, to gain publicity on a traditionally slow news day.

Still, as he took questions from reporters, Quinn stopped short of his previous demand that any comprehensive pension plan should gradually shift the cost of pensions for teachers outside Chicago from the state onto local school districts — and local property taxpayers. Suburban Republicans and Democrats have adamantly opposed the cost shift.

While lawmakers are prepared to begin their postelection lame duck veto session during the final week of November, Quinn said he expected any action on pensions would not occur until January. The new year brings a lower voting requirement in the legislature to enact legislation.

The new website, thisismyillinois.com, remains a work in progress. It urges followers to "think web cam" to post pictures or videos on a related Facebook page that Quinn promised will be "shared with the legislators in Springfield."

There also are perils when it comes to social media. A Facebook search of "Governor Pat Quinn" turned up results that led with pages that called for the Democratic governor's removal from office. The same search on Twitter linked directly to Quinn's official account.

mcgarcia@tribune.com

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Twitter @moniquegarcia

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Soccer-Liverpool’s Sterling apologises to Watson over collision

Nov 18 (Reuters) – Liverpool winger Raheem Sterling has wished Wigan Athletic‘s Ben Watson a speedy recovery after a freak collision between the pair on Saturday left Watson with a suspected shin fracture.

Sterling, who made his England debut midweek, used his Twitter account to offer an apology to Watson following the Reds’ 3-0 win at Anfield.

Midfielder Watson was taken from the pitch in the first half when he was struck just above the shin by Sterling‘s knee as both competed in the air for the ball.

“To Ben Watson I didn’t realise it was serious as that ill (sic) be praying for a speedy recovery mate ill (sic) have you in my prayers every day. #sorry,” posted the 17-year-old.

Following the defeat, Wigan manager Roberto Martinez expressed concern for Watson as well as Gary Caldwell who has a problem with his hamstring.

“The injury to Ben Watson is a really nasty blow and what we believe to be a broken leg,” Martinez told Wigan’s official website (www.wiganlatics.com).

“We will have to assess the injury and the treatment that Ben will need before we can judge how long he is going to be missing.

“Ben was starting to have a very strong season and was putting in some commanding performances and it is a real shame to lose him to an injury like that.”

Martinez also accused Liverpool scorer Luis Suarez of stamping on David Jones. (Reporting By Mark Pangallo; Editing by Mark Meadows; mark.meadows@thomsonreuters.com; +44 20 7542 7933; Reuters Messaging:; mark.meadows.reuters.com@reuters.net)

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Movie industry has shed 16,000-plus jobs in L.A. since 2004, study says

LOS ANGELES (TheWrap.com) – The motion-picture industry has lost more than 16,000 jobs in Los Angeles County since the peak year of 2004, according to a new study by the Los Angeles County Economic Development Corp.

And according to the study, “runaway productions” that have moved out of the county due to tax incentives in other areas could be to blame.

The study noted that the motion-picture and video production sector of the entertainment industry – the largest segment of the industry in Los Angeles County – was responsible for 118,200 jobs in the county in 2004, a peak year for the sector. In 2011, by contrast, that number dropped to 102,100 – a 13.6 percent decrease that accounts for 16,100 jobs.

“Arguably, runaway production has had a deleterious effect on industry employment,” the report notes. “New York State alone added 14,100 jobs in this sector over that period, while Georgia added nearly 800 jobs. Meanwhile, Louisiana added over 2,200 jobs since implementing its own tax-credit program in 2002. Other states added jobs in the sector as well.”

The study also points out other factors that could account for the job drain, such as piracy and international competition in such farflung areas as Canada, India and Nigeria, which surpassed Hollywood in 2009 as the second-largest film producer in the world, following India’s Bollywood, according to a report from UNESCO’s Institute for Statistics.

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Novelties: Single-Incision Surgery, Via New Robotic Systems

SURGEONS once made incisions large enough to get to a gallbladder or other organs by using conventional tools they held in their own hands. Today, many sit at a computer console instead, guiding robotic arms that enter the patient’s body through small openings not much larger than keyholes.

But even this minimally invasive surgery usually requires multiple incisions: one for the camera system showing the way to the surgeon at the console, and others for each of the robotic arms that do the cutting and stitching.

Now there are robotic systems — one on the market, others in development — that are even less intrusive. They require only a single, small incision through which the robotic arms and camera enter.

This could lead to faster recovery, said Dr. Michael Hsieh, a Stanford professor and a urologist at Lucile Packard Children’s Hospital and Stanford Hospital. “There’s only one wound to heal with this procedure, rather than three,” he said.

Dr. Hsieh, who performs abdominal surgery on small children, uses minimally invasive techniques that typically now require three incisions. His patients generally go home a day or two after surgery, he said, “but I think they would recover more quickly if I could reduce my multiple incisions to just one,” he said. “And there will be less scarring, or even no scarring, if you enter through the navel.”

He will soon have a chance to try out the new method on his patients. Stanford Hospital is buying a system from Intuitive Surgical called Single-Site that requires only a single incision of about one inch. The system, approved by the Food and Drug Administration only for gallbladder removal, is used as an add-on to a basic robotic system from Intuitive, known as the da Vinci Si.

The Si costs $1.3 million to $2.2 million, said Angela Wonson, a spokeswoman for Intuitive, based in Sunnyvale, Calif. The Single-Site can add $60,000 or more to the bill, or far less, depending in part on the equipment that hospitals might already have.

The East Jefferson General Hospital in Metairie, La., has bought a Single-Site system. Seated at a computer there, Dr. Joseph Uddo Jr. can control the instruments, which can enter the body by way of one incision in the navel. Surgical instruments like scissors are at the ends of the robotic arms. “To change a tool, you take out one instrument and load in another,” he said.

ANOTHER surgical robotic system, now in development, enters the body through a remarkably small incision — six-tenths of an inch, or 15 millimeters. The robot was designed by Drs. Dennis Fowler and Peter Allen of Columbia University and Dr. Nabil Simaan of Vanderbilt University. Once inside the body, it unfolds to reveal a camera system and two snakelike arms that perform the surgery. The system has been licensed to Titan Medical in Toronto.

Minimally invasive surgery through a single incision can also be performed with long, thin laparoscopic tools that surgeons wield as they watch a video monitor. But single-incision laparoscopic surgery with hand-held instruments can have problems, said Dr. Adrian Park, chairman of the department of surgery at the Anne Arundel Medical Center in Annapolis, Md., who specializes in minimally invasive gastrointestinal surgery. One difficulty is its ergonomic challenge to doctors, while another is the pressure that the tools place on tissue during single-incision operations.

Robotic systems, by contrast, are likely to ease single-incision surgery, said Jeffrey J. Tomaszewski, a fellow in urologic oncology at the Fox Chase Cancer Center in Philadelphia.

“Robots are an extension and multiplier of our own surgical hands,” Dr. Tomaszewski said. He has done traditional laparoscopic surgery with hand-held instruments, including operations through a single incision. “But you can be working at constrained angles,” he said. “A robot can improve the angle of workability.”

Robotic systems, though, have yet to show that they are always worth the extra money they cost. Such proof will take time, said Allison Okamura, an associate professor of mechanical engineering at Stanford who directs the Collaborative Haptics and Robotics in Medicine Lab. “The jury is still out because of the longevity of the studies that are required,” she said.

Dr. Tomaszewski agreed. “We surgeons love using the robot,” he said. “But the question is, and what we all have to fight hard to do, is to determine for what procedure the robotic approach provides the best benefit.”

Dr. Hsieh says he hopes that single-site robotic systems will someday bring a benefit he’s long dreamed about.

“We may get to the point where we do outpatient, scarless robotic surgery,” he said. “That’s what I’m shooting for.”

E-mail: novelties@nytimes.com.

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Investors rush in to rent out foreclosures

The foreclosed home on Kenmore Street in Aurora was an outdated, unkempt eyesore until crews arrived this fall, performing thousands of dollars of work to make it attractive and modern, inside and out.

But it wasn't until workers walked across the street to ask for some water that neighbors Mario Cervantes and Oralia Balderas-Cervantes learned that a corporation, not a consumer, had bought the house, intending to turn it into a rental property. Despite being landlords themselves, the couple aren't sure they like the idea.

"If it's going to be a company that is watching out for the community, yes," Cervantes said. "If it's going to be a company that is watching out for themselves, no."

Added Balderas-Cervantes: "I'd rather see a homeowner. A lot of renters don't care. It's like renting a car versus buying a car. It's different."

Similar scenarios and concerns are unfolding across Chicago and in other markets hard-hit by the housing crisis. Well-capitalized, out-of-town private equity funds are scouring neighborhoods, paying cash for distressed single-family homes and renting them out. The opportunities are plentiful, enabling investment groups to profit from low home prices, rising rents and an increase in the number of potential renters.

The transactions are returning vacant properties to active use. But they also are stoking fears among neighbors and municipalities about the long-term effect of large, private investors — including many that are operating under the radar — in their communities.

"This scares the hell out of me," said Ed Jacob, executive director of Neighborhood Housing Services of Chicago Inc. "In this rush to say this is a new asset class, are we creating the next community development problem?

"You talk to them and it's all about neighborhood recovery. They all have the narrative down."

In April, housing research firm CoreLogic named the Chicago area one of the better housing markets for institutional investor funds. It cited the area's large number of foreclosures, which will increase the number of vacant homes, and the estimated rental income relative to the low cost of acquisition.

The general strategy of the companies is the same: buy low, make the necessary upgrades, fill them with tenants and then sell the homes in three to seven years. With companies and analysts anticipating projected returns of at least 8 percent, there also is talk of creating publicly traded real estate investment trusts.

"What this reminds me of is the dot-com boom," said Rick Sharga, executive vice president of Carrington Mortgage Holdings LLC, a California firm whose asset management arm is actively looking in the Chicago market. "That's what this feels like. Every investor in America wants to buy foreclosures and turn them into rentals."

Two statistics increasing that appetite are the homeownership rate and rental rates. Foreclosures, tight lending conditions and wary consumers have pushed down the nation's homeownership rate to 65.5 percent at the end of September, according to census data. Meanwhile, the percentage of vacant rental units has been on a steady decline since 2010 as more people opt for leases rather than mortgages.

Tighter inventories are pushing up rents. As of October, annualized rents in Chicago were up 7.7 percent, more than the national increase of 5.1 percent, online real estate site Trulia found.

But investors aren't flocking to all neighborhoods equally. Most want homes in desirable neighborhoods with strong area employment. They also look at the strength of local rules protecting landlords in disputes with tenants.

After vetting the tenant and securing a lease, property managers say they routinely drive by the homes and sometimes schedule inside inspections to protect their investment.

Weighing risks, rewards

It remains to be seen whether their expectations will be met. One problem with the business model is there's no performance track record to speak of. And as housing prices slowly recover, acquisition costs also will increase and cut into returns.

There also isn't any history on property management firms tasked with overseeing so many scattered-site rental properties. Any well-publicized mistakes involving poorly maintained properties or wronged tenants could taint investors' reputations.

That's one reason why big-name players are likely to avoid buying in neighborhoods where they fear a greater chance of eviction proceedings occurring.

"You make one mistake in those properties and you'll be toast," Sharga said.

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1 wounded in stabbing outside North Michigan Avenue hotel

A man was wounded in a stabbing in front of a North Michigan Avenue hotel this evening, authorities said, and witnesses reported a person was taken into custody nearby.

As of about 8:30 p.m. crime scene tape surrounded the entrance to the Westin Hotel on Delaware Street and Michigan Avenue with patches of blood visible on the pavement, and two police cars blocked the street.

Olivia Morrow, 18, said she and her friend were returning to the hotel around 8 p.m. to meet their parents when they saw police on the scene.

Morrow said shortly after that she saw about five hotel officials running out of the building toward the stairs leading to the Hancock Tower and neighboring The Cheesecake Factory Restaurant.

"They had radios and phones in their hands, saying that (the attacker) was last seen running down the stairs," Morrow said.

Genevieve Waldron of Michigan City, Ind., was among the crowd waiting for a table outside when she and her mother saw dozens of officers sprinting toward the restaurant from every direction.

"They were obviously looking for somebody and we were trying to stay out of the way," Waldron said.

Meanwhile, Morrow said she saw a male victim lying on the ground surrounded by a half dozen people. He was taken away in an ambulance, Morrow said.

A few minutes later, two officers came back up the stairs, flanking a young man who was handcuffed, and loaded him into the back of a marked car.

A Chicago Fire Department ambulance responded to a call of a person stabbed at 909 North Michigan Avenue about 8 p.m. and took one person in serious condition to Northwestern Memorial Hospital, said Chicago Fire Department spokesman Kevin MacGregor.

Police were called to the scene because of report a man was stabbed in the head about that time, said Chicago Police News Affairs Officer Veejay Zala.

Neither The Cheesecake Factory nor the hotel were evacuated, as guests on the south-facing side of the building peered out of the windows to get a view of the scene. There appeared to be little commotion at the restaurant, where diners poured out into the hallways waiting for a table. 

Tribune reporter Liam Ford contributed.

cdrhodes@tribune.com

Twitter: @ChicagoBreaking

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