Moodie was a telemarketer, selling car insurance, he said. Then he had a revelation after speaking electronically over the phone to a deaf customer. There was so much more he could do with his life. He became a motivational speaker, one who teaches young people that anything is possible, that they can become entrepreneurs.

Moodie was speaking on behalf of the Extreme Entrepreneurship Tour, an 18 city blitz of California sponsored by the state’s community college system and small business development center. There are eleven dates left through November 18.

For the hundred or so wanna-be Donald Trumps that turned out on Oct. 22, the tour was an evening of high-fives, hugs, even a dance contest. And prizes like business plan development software.

Moodie pitched a Web site called startabusinespledge.com, which encourages young people to sign up to pledge that they’ll start a new business 2009. It also provides inspiration and tips for entrepreneurs.

Other young entrepreneurs, such as Prashanth Mysoor, founder of environmentally friend e-tail site generationorange.com, spoke.

Why take this tour on the road during the Great Recession? “I want to be my own stimulus package,” Moodie, 25, said while nibbling a tuna sandwich during a break. “When everyone’s seeing no hope, I see opportunity. You have a better chance of making a million in a downturn. You can plant roots, while everyone else is running.” Then it was time for him to run back on stage.

Employee-benefits experts say this trend is likely to continue. "It's an area of focus among national medical players," says Dean Hatfield, senior v.p. at Sibson Consulting, the human-resources consulting unit of the Segal Company.

The Diabetes Health Plan waives co-pays for diabetes drugs and other treatments--provided participants adhere to treatment guidelines and they agree to be tracked to ensure they are compliant. United says patients are tracked quarterly based on their claims data. Those who don't follow the plan's requirements are kicked out and put back into their employer's regular plan.

Discounts, especially on drugs, can be a powerful incentive to stay healthy, Hatfield says. "The number-one reason for not refilling a prescription is that you feel better," he says. "Why pay $25 if you feel fantastic? If your health plan gives you the drug for free, you have no reason not to take it."

Programs such as the Diabetes Health Plan could make up for the shortcomings in standard "disease management" plans. Earlier this decade, disease management was all the rage, with several companies offering health coaches, and incentives such as coupons for drugs and discounts on gym memberships. But it wasn't clear those programs were really helping employers hold down the costs of covering chronically ill workers. A 2005 study published in the journal Health Care Financing Review examined disease management programs for diabetes, depression, chronic heart failure (CHF) and asthma. The only programs that produced a reliable return on investment were those aimed at CHF.

Part of the problem with cookie-cutter disease management is that there are no ramifications for patients who don't comply. Employees may be given guidelines to follow, but they're voluntary, and no one is watching them to make sure they stick with it. The United plan adds that element.

The health insurer and the companies that are pioneering the plan will be collecting data over the next couple of years to determine how well it's working. But Dr. Robert S. Galvin, GE's chief medical officer, can already envision implementing similar plans for other chronic conditions. "What do you have in the workforce? Lots of asthma. Even back pain," he says. "Our intention is to expand this. We need to incentivize employees to get healthy."

Amgen applied for approval for Prolia in treating and preventing post-menopausal osteoporosis (PMO), as well as bone loss in some cancer patients. In August, an advisory panel to the FDA expressed some concerns about side effects seen in the trials, such as serious infections or cancers. The agency has not yet responded to Amgen's application for Prolia to be approved for cancer-related bone loss, but it did tell the company that it would need to do more studies to justify marketing the drug to prevent PMO. In terms of using it in patients who already have PMO, the agency merely requires more information, including some clarification on how Amgen plans to monitor patients after the drug is approved.

Amgen executives aren't providing details about how they plan to respond, except to say that they'll be able to provide the information on Prolia for PMO treatment quickly. "Amgen is fully committed to working with the FDA to make Prolia available to patients in the near future," said Roger M. Perlmutter, executive v.p. of R&D in a statement. The prospects for the other indications are up in the air, though Amgen is prepared to launch the drug as soon as it has a green light.

One reason Amgen's news is being treated more as a disappointment than a disaster may be that complete response letters have become somewhat routine in pharma. The FDA has stepped up its focus on safety, and its efforts to better understand side effects often cause it to miss its own deadlines for approving drugs.

And the FDA isn't just picking on Amgen. In the last few months, the FDA has fired off a slew of complete response letters to Johnson & Johnson--most of them asking for more information about side effects. CEO William Weldon says the industry needs to be prepared for more such scrutiny. "I do think more and more we’re going to see complete response letters rather than a decision made at the [expected] dates," Weldon said in a September interview with BusinessWeek. "There’s a need for industry to understand what is required by the FDA, and then make sure we’re doing the scientific work, the clinical trials, and everything else that’s going to answer the questions. As we all understand more and more what’s needed, the scientific rigor will get even better. So hopefully we’ll be able to meet the dates and get the approvals."

As for Amgen, analysts expect the delay to have a modest dampening effect on revenues next year. Christopher Raymond, an analyst for Robert W. Baird & Co., lowered his 2010 sales estimate for Prolia from $375 million to $295 million. He didn't change his "outperform" rating, nor did he lower his price target of $70 a share. In an October 19th report, he wrote, "we think PMO treatment issues are primarily procedural," and "we still anticipate a YE09 approval." Now the onus is on Amgen to prove he's right.

The real truth seems to be somewhere in between, but one thing is clear: Dell the company will face increasing pressure to transform itself even as sales in the pc industry improve. The latest quarterly figures from researchers IDC and Gartner show that Dell continues to lose ground to rival Hewlett-Packard. And Taiwanese maker Acer for the first time surpassed Dell to take the No. 2 position in global pc sales.

To be sure, part of the reason is that Dell has been trying to boost profits, and in doing so is much more willing to cede market share to rivals. The numbers show why: Back in 2000, when the average selling price of PCs was $1,469, Dell made $338 more than competitors on every one sold, according to researcher IDC. In 2008, when the average selling price was $849, Dell made $20 less than the industry average.

But in the cutthroat commodity pc business, scale is crucial to maintaining profits over the long term. The more pcs and servers you sell, the more you can squeeze suppliers to offer your company the best costs.

Coming out of the downturn, Dell is faced with maintaining that legacy business while trying to move upstream to more profitable businesses such as managing other companies' computers and datacenters, offering tech consulting and delivering cloud computing services. That means Dell will have to step up research and development, and acquire more companies that will help it achieve its goals.

Can they do it? Michael Dell thinks so. But it looks like he'll have his hands full over the next two or three years remaking the Austin (Texas)-based company.

But despite the flush appearance, CROs including Quintiles have not been completely immune to the economic downdraft or to the many problems large pharma companies, their major clients, are enduring. As weak product pipelines, expensive infrastructure and more challenging regulation, force drug giants to consolidate, their suppliers have been squeezed too. Barath Shankar, senior industry analyst with Mountain View, Calif –based market research firm Frost & Sullivan, expects the industry will continue growing between 12 and 14% a year, but that the US market, which had been tracking at 14% a year, he predicts will grow 11% a year through 2016.

To compensate for the industry slow down and continue to build on its own growth, Quintiles management is trying to move from a contract-based sub contracting role, toward partnerships with drug and biotech companies. In these deals, Quintiles invests money or labor, or both, into the final stages of an individual drug’s development. The payoff: a share of its long term profits.

Quintiles' move is not entirely unique, says Frost & Sullivan’s Shankar. Rivals Covance and PPD have made similar moves, he says. For one thing, it opens a far larger potential market. While Shankar estimates the worldwide CRO market is between $20 and $23 billion a year, global pharmaceutical sales are expected to hit $825 million next year. That's according to IMS Health, another consulting firm.

Quintiles Executive Vice President Ron Wooten has been incubating this strategy within the company for several years. His division, called NovaQuest, will have closed $3 billion worth of these deals by the end of this quarter and his pipeline of potential deals has never been so full as it is right now, he says. A few years ago, he was doing deals valued at $30 million. Now the average size is closer to $250 million. His annualized return on investment: over 25%. The business has grown so large and integral to Quintiles’ strategy that the company is going to phase out the NovaQuest name, using Quintiles instead.

In a world where a blockbuster drug can cost $1 billion to get to market, pharma companies are looking to slim down their costs. Getting Quintiles to pony up a share spreads the risk, says Wooten. “It’s simply hedging their bets,” he says. For Quintiles it can leverage expertise they already have, and increase their own efficiency. When Quintiles paired with Eli Lilly on Alzheimer’s research, for example, it was Lily’s first foray into that category, while Quintiles had done CRO work on 40 phase 3 drugs aimed at the ailment.

Part of the payoff of the strategy has been a halo effect on Quintiles’ traditional CRO businesses, Wooten says. When NovaQuest launched, Quintiles had only 1 customer with billings of $100 million a year. Now that’s grown to six, many NovaQuest partners. But the CRO business has also helped NovaQuest. When Wooten was weighing a partnership with Eli Lilly on its anti-depression drug Cymbalta, the numbers looked tough. To justify the large financial commitment the company would have to make, the drug would have to be a block buster. But Wall Street analysts were predicting $800 million in sales of the drug, not enough to justify the deal.

Quintiles’s researchers, however, had conducted five of the seven trials of the drug to that date, and its project managers and physicians were very bullish on its prospects. Their enthusiasm was what convinced Wooten and the board. And it proved right. Cymbalta’s one of only four drugs to ring up $1 billion in sales in its second year on the market.

Rosy numbers, for sure. But let’s not get too giddy. None of the execs said their organizations were ready to hire thousands of workers in the coming days. In fact, the execs surveyed agreed that employment remains an overweight caboose holding back the train of recovery. Still, a close look at the data shows promising signs of optimism, particularly in the healthcare and technology industries. On the one hand that’s no surprise. Everybody knows healthcare is benefiting from an aging population that will require plenty of meds and nursing. And the tech field is poised to benefit from a surge in demand for wireless and broadband innovation. But it’s no accident that lots of the companies in these fields are as well positioned for the economic rebound as any across the business landscape.

In a conversation with Tatum partner Janice DiPietro it became clear that, generally speaking, companies in the healthcare and tech fields understand two key things that every business should master if it wants to excel in the new economy. First, companies that are poised to grow are absolutely fanatical about competitive analysis. Really grasping how your strengths and weaknesses stack up in the marketplace vs. competitors’ is more essential than ever.

DiPietro says the unpredictable fluctuations in the current economy demand unprecedented rigor and flexibility in competitive assessments. Historically, companies might have done an analysis at a moment in time and then executed for months based on that analysis. Today, everything is a moving target. “It’s almost like a chess game,” DiPietro says, because of the volatility and fragility of the economy. The most optimistic companies tend to have competitive analysis that comes from a team that is extremely agile because buying patterns shift on a dime. “That is not something you will ascertain by sitting in the office, but rather by communicating with the sales team and with customers,” she says.

The best positioned companies are also nurturing relationships with the debt financing community. Sounds obvious, especially when you consider that more than a third of the survey respondents said improving credit flow fueled their optimism. But it’s important to keep in mind that today’s credit markets are no longer like those in the days of Andy Grove and Jack Welch. Even if you think you have a good relationship with a lender, don’t take that relationship for granted. Whereas one or two strong relationships were plenty in the past, it’s best to have multiple lenders on your side today.

Also, when it comes to winning a line of credit, know that the rules have forever changed. Before the recession it wasn’t unusual for a CFO to seal a deal with a handshake over lunch after some smooth talk about why his business needed that line of credit. Now, DiPietro warns, it requires what looks like “a small private placement memorandum” to secure capital. Lenders demand pages of background info on the company, its executive team, the competitive landscape, historical financials and an extensive forecast. “I’ve never seen it at this level,” she says.

Peter A. Darbee used to dock his three children 50¢ when they left a room without turning out the lights. Now, as CEO of PG&E (PCG), the former investment banker and high school wrestling champion is trying to save energy on a grander scale. Paradoxically, he is helping his customers buy less of his product. “When I tell big customers we would be happy if we sold them less electricity, they look at me like I’ve burned out a few brain cells,” says Darbee. But the logic is inescapable. “You are not making a lot of money anymore building large power plants,” says Jon Wellinghoff, chairman of the Federal Energy Regulatory Commission. “You have to figure out what business you are in, big time.”

How can utilities make more by selling less? Instead of spending $2 billion on a new 1,000-megawatt power plant, it can use the money to insulate homes, pay customers to install more efficient equipment, and make the grid smarter. Those steps would slash power consumption, eliminating the need for the power plant. The CEO would then ask the state public utility commission to raise electricity rates enough to pay for the $2 billion investment—plus a negotiated profit—just as he would for a new power plant. If the commission agrees, the utility gets revenue from its investment.

At the same time, customers’ bills may go down. The reason: Even though the price of electricity will be higher, customers who comply will be using much less power—and those who don’t will effectively subsidize those who do. “Energy-efficiency programs cost electricity customers less than half what they pay to help fund a new power project,” explains Darbee. Boosting efficiency also reduces greenhouse gas emissions, which will provide another monetary gain for utilities if the nation puts a price on such emissions (page 55).

PG&E has spent hundreds of millions handing out energy-efficient light bulbs and performing energy audits for companies to identify potential savings. In return, the California public utility commission has granted PG&E an extra payment representing a share of the energy savings. On Sept. 24, California approved $3.1 billion in additional spending on energy-efficiency efforts by the state’s utilities. Other states are taking similar steps. “This is where we will make our money in the future,” says James E. Rogers, CEO of Duke Energy (DUK). “The business model fundamentally changes in the 21st century.”

Success isn’t a sure bet. “Some regulators have not yet understood and embraced this,” says Darbee. “It really entails stepping through the looking glass.” What’s more, the same innovations that produce efficiency gains also bring competition. A number of companies have sprung up to work directly with customers to save energy, snaring the profits that come from efficiencies. And utilities will face rivals on the power generation side as entrepreneurs develop solar, wind, or other sources for homes and businesses that may be as common as refrigerators. “I’ve got to believe that energy production and storage [systems] become commodities,” says Ralph Izzo, CEO of Public Service Enterprise Group (PEG), a New Jersey utility. “It would completely eliminate the utility as a monopoly.”

As a result of these pressures, many companies will suffer the fate of the dinosaurs, says industry consultant Roger W. Gale. David Crane, CEO of NRG Energy (NRG) in Princeton, N.J., acknowledges the threat: “If we are not doing things completely differently by 2030, we will be in a world of hurt,” he says.

This article was published in the Oct. 12, 2009 issue of BusinessWeek magazine

Take Crucell, for example. The Leiden, Netherlands based company is working on a universal monoclonal antibody against flu—a biotech vaccine that could potentially protect patients against all strains of influenza A, including swine flu. But this partnership wasn’t just about one product: Paul Stoffels, J&J’s global head of research and development, says Crucell offers the complete package of what J&J needs to take a leadership position in vaccine development. In addition to the promising experimental flu vaccine, it offers technology for making the booster shots that are required in many vaccination programs, as well as a widely applicable production platform. Crucell engineered a cell line that can pump out antibodies at very high yields, possibly providing an alternative to the stodgy method of making vaccines in eggs. “Moving from egg-based to cell-based production is a critical shift,” Stoffels says. And J&J has expertise to offer Crucell, as well. “Crucell does basic research, we do global development. We can be complimentary.”

This may be exactly the right time for J&J to be taking some big risks. With the recession pushing sales down in all three of its major divisions—prescription drugs, medical devices, and consumer products—the company needs to find new opportunities for growth.

Crucell and Cougar are part of a string of recent deals that started with J&J’s December purchase of medical-device maker Mentor. Now some analysts are wondering if the company is warming up to make a really big buy. In a Sept. 17 report, Credit Suisse analyst Catherine J. Arnold suggested that J&J is among the drugmakers that should consider a major acquisition, because companies with “more diversification could benefit from augmentation of revenue growth,” she wrote. She pointed out that J&J could easily pick up a company like Vertex, with which it is co-developing a promising Hepatitis C drug. Vertex has a market valuation of $6.6 billion, making it rather big bite for a company that tends to shy away from earthshaking deals. (J&J’s biggest acquisition ever was its 2006 purchase of Pfizer’s consumer health division, for $16.6 billion.)

During lunch at J&J’s headquarters a few weeks before the Crucell deal was announced, J&J CEO William Weldon reflected on the challenges of dealmaking during a recession. “I don’t think we look at things any differently than we ever have,” he says. “The question is can we create shareholder value, does the deal accelerate growth in the short and long term, does it put us into good therapeutic areas?” When it comes to really big mergers, akin to Pfizer’s plan to buy Wyeth for $68 billion, the answer is usually no, Weldon says. “Mega-deals have just not been the way we’ve chosen to do acquisitions.”

Weldon says that J&J will continue to be conservative when it comes to thinking about all deals, even though valuations had dropped considerably during the recession. He fears that acquiring companies that are down-and-out might actually be more risky than buying healthy assets. “There are a lot of companies that cannot raise capital to get products further along on their own, so they may be for sale earlier,” he explains. “That means there’s more risk associated with the acquisition, and more costs after you acquire it.”

Many industry experts agree with Weldon's assessment, and they expect he'll continue to look for small but valuable assets to add to its stable of well-known products. “J&J is like the mutual fund of health care,” says Eric Gordon, professor at the University of Michigan Ross School of Business. “They’ve got hip replacement, stents, Neutrogena. Buying Cougar is not like Pfizer buying Wyeth. It’s not about combining salesforces,” or making other consolidation-like moves to save money, Gordon sayss. “J&J is purely buying oncology and biotech capabilities. It’s totally consistent with their approach.”

What’s more, Gordon points out, J&J isn’t hoarding cash like a company considering a big purchase might: J&J increased its dividend last year and again this year, and it has been buying back its own shares over the last three years. So while J&J could very well continue its buying spree, it’s likely to nibble at small targets, rather than gobbling up giant assets.

And Keller believes entrepreneurs who think they can build a dynamic new automaker by outsourcing major component systems and abandoning traditional dealers are unrealistic: They’ll never be able to get big enough to truly compete with the stronger, large auto companies.

Keller’s provocative arguments have sparked a heated debate on our site. Let us know what you think by adding your perspective to Keller's piece.

Audi is already seeing the rewards. The company has gained market share in the U.S. premium segment, and surpassed rivals BMW and Mercedes-Benz in Europe. Its brand has also gained value, as this story details. With its strength in China, which is recovering faster than the U.S. or Europe, Audi will probably see sales pick up faster than its competitors.

Audi has a cost advantage over the others because of its access to Volkswagen R&D as well as components (though the company is careful not to use VW parts anywhere that customers can see them). The R&D is particularly important as the auto industry moves toward electrification of the drive train, initially via hybrids but eventually via battery or hydrogen-driven cars. The cost of that transition will be tough for smaller manufacturers to bear.

Audi still has a lot of work to do in the U.S., where it sells less than half as many cars as either BMW or Mercedes. Audi's decision to bank on fuel-efficient diesels, in a country where environmentally conscious drivers seem to favor hybrids, is risky. But Audi is looking like one company that has leveraged the downturn to vault ahead.

So what changed? Glaxo is no longer giving handouts to marketing and communications firms that profit from designing CME courses funded by the pharmaceutical industry. Critics have long contended that drug companies hire such firms as intermediaries to help them influence doctors' prescriptions and procedures.

Industry funding for CME has quadrupled in the last decade to $1.2 billion a year, with about half of that going to marketing and communications firms. The risk, critics say, is that the money could create a bias among doctors towards particular companies' products. A test given during a CME course might have a multiple choice question about the best treatment for a particular disease, for example, with the correct answer being the drug made by the company that funded the class.

Glaxo's move is the latest effort by the pharmaceutical industry to improve its image. Glaxo recently started disclosing payments it gives to medical organizations. Pfizer and Merck have made similar efforts to be more forthcoming about how they interact with the medical community.

There's plenty of concern on the other side, as well. Some hospitals, including Stanford University's medical school and Memorial Sloan-Kettering in New York, have stopped accepting industry money for CME programs.

Glaxo will invite about 20 education providers to apply for grants to fund CME programs. Each application must document the need for the program, the learning objectives, and a plan for assessing what impact the CME has on improving patient health. "This is one more step in our efforts to be more transparent in the way we operate our business and interact with healthcare providers," says Deirdre Connelly, Glaxo's president of North America pharmaceuticals.

One auto company that is skillfully turning the downturn to its advantage is South Korea’s Hyundai Motor. Currently No. 6 in the world in terms of unit sales, Hyundai is pushing to leap into the top five by 2011. How? For the last five years, the company has invested $6.5 billion to improve the quality and design of its vehicles, which were long viewed as shoddy and dull. Now the company is taking advantage of its windfall from the weakness of the Korean currency to boost spending on advertising and promotion—and to increase market share not only in the U .S. but around the world.

My colleagues, Moon Ihlwan and David Kiley, recently wrote about Hyundai’s marketing blitz. As they pointed out, the campaign is delivering results. Marketing outlays by Hyundai Motor headquarters in Seoul rose 58% to $693 million for the first six months of this year. Global market share is now a record 5%, up from 4.3% last year.

Over the last year or so, Hyundai has spent big for television ads in the U.S. during such events as the Beijing Summer Olympics and the Academy Awards, and the company plans to be a big presence in televised National Football Leagues games in the U.S. this season. To read about Hyundai’s strategy in more detail, take a look at the full story.

When Japan’s Nomura Holdings bought the European, Middle Eastern, and Asian operations of Lehman Brothers a year ago, the move seemed both inspired and reckless. Adding 8,000 Lehman employees tripled Nomura’s size outside Japan, giving it the scale to reset its business model and boost its presence in key regions where it had been keen to expand.

Yet investors balked, sending Nomura’s shares down by 70%. Their fears seemed to be confirmed this spring when Nomura said it was $7.5 billion in the red for the fiscal year ended in March. “This represents a record loss for Nomura and is something we are not proud of,” CEO Kenichi Watanabe told investors.

Now, though, Watanabe’s decision to plunk down $200 million-plus for Lehman’s assets seems to be paying off. For the quarter ended in June, Nomura eked out earnings of $125 million, and brokerage NikkoCitigroup is now predicting a full-year profit, up from a previous estimate of a $560 million loss. Nomura’s shares, meanwhile, have risen 79% from their March low.

There are signs that Lehmanites are bolstering Nomura’s investment banking unit. In Europe, mining company Anglo American—which in June rejected a hostile bid—hired Nomura for advice on fending off takeover attempts. And Lehman recruits have teamed up with Nomura’s Tokyo staff to advise Japanese drinkmaker Kirin on a $1.2 billion purchase of breweries from Philippines beer kingpin San Miguel—one of 19 Asian deals the firm has worked on outside Japan since January. Last year it did two.

Meanwhile, Nomura’s bond and equities businesses have benefited from Lehman expertise. In July and August, Nomura traded more stocks on the London Stock Exchange than any other firm. Prior to the Lehman deal, Nomura ranked 82nd. Next up is a push into the U.S., where since January Nomura has boosted its head count by 40%, to 855. “Without the financial crisis, it would have been very difficult to visualize ourselves as a top-tier player,” says Akira Maruyama, CEO of Nomura’s global markets division.

Some Tokyo watchers think Nomura is well positioned to prosper even as rivals recover. “They got a very good price and they bought at a very good time,” says Satish ­Betadpur, an analyst at Independent International Investment Research. The key will be hanging on to star bankers, though fears that ex-Lehman people could decamp this fall—when many are eligible for big bonuses—may be overblown. The Lehmanites are “great people who know the employment alternatives right now are not very good, so they’ll stick around,” says C.J. Wilson, founder of Global Alliance, a Tokyo investment firm.

Still, many wonder whether Nomura can emerge as a true rival to the likes of Goldman Sachs, Morgan Stanley, and UBS. One issue is merging a hard-charging New York investment bank with the more buttoned-down corporate culture of Tokyo. And some fret that even after a good start, Nomura could repeat past mistakes such as retaining too much control in Tokyo.

Insiders insist the Lehman deal put Nomura on the right track. The new hires, they say, will reinvigorate the bank’s Japanese operation. One example: Nomura is now offering its Japanese staffers higher pay and bonuses in exchange for less job security. “We have a lot of work to do,” Maru­yama says, “but the new Nomura has been established.”

This article was published in the Sept. 28, 2009 issue of BusinessWeek magazine

With an operating loss of $35 million in 2008 on sales of $343 million, the Emeryville (Calif.)company closed 50 stores and was “almost out of cash,” says CEO James D. White, who joined Jamba in December.

Now White is pursuing an aggressive strategy to return the 735-unit business to health. White, who has worked in branding at Safeway, Gillette, and Coca-Cola, is slashing labor costs and other expenses by $25 million this year. He’s also looking to sell up to 150 of Jamba’s 499 company-owned stores, which are less lucrative than franchised stores that pay a fee to use the Jamba name. He’s betting that small franchises inside airports and supermarkets will be the centerpiece of future expansion.

In June he also expanded Jamba’s limited food offering to include salads and sandwiches, which are now in nearly 300 locations in California, Chicago, and New York. “Food is a hobby for Starbucks,” says White. “It won’t be for us.”

But White may find it tough to realize his aspirations for Jamba right now. Even its loyal customers are buying less often these days, says Darren Tristano of restaurant consultancy Technomic. Jamba's same-store sales plummeted 13.7% in the second quarter.

And just as Jamba is moving into food, bigger chains such as McDonald’s, Starbucks, and Dunkin’ Donuts are getting into smoothies. “Everyone is going after this market,” says Jefferies & Co. analyst Jeff Farmer, who also worries that the sale of Jamba’s stores in a depresssed market “could turn out to be an organized fire sale.”

White concedes that any turnaround “will take some time.” The sale of $35 million of convertible preferred stock on June 1 to New York private equity firm Mistral Equity Partners and some Canadian entrepreneurs will help.

But Jamba has had a bumpy ride since its founding in 1990. The company raised $225 million in 2006 but squandered much of it, paying sky-high rents for stores that were too close to existing units. Profit margins slumped from 18% in 2006 to 10.7% last year.

As others get into the game, how many people will stick with Jamba? “Coffee is something you need,” Farmer says. “You can’t say the same about a smoothie.”