Archive for August, 2008

Consumer prices shot up in July at twice the expected rate, pushed higher by surging energy and food costs. The latest surge left inflation running at the fastest pace in 17 years.

The Labor Department reported Thursday that consumer prices rose by 0.8 percent last month, twice the 0.4 percent gain that economists had been expecting.

It marked the third straight month of oversized inflation increases following jumps of 0.6 percent in May and 1.1 percent in June. And it leaves inflation rising by 5.6 percent over the past year, the biggest 12-month gain since January 1991.


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Widespread complaints about the iPhone 3G’s reception have spread across the Internet in the month since Apple and AT&T released the successor to the original iPhone. The companies insist that nothing is wrong, but the complaints have been mounting through e-mails, water-cooler discussions, and message boards on Apple’s own Web site: iPhone 3G users are having trouble connecting, and staying connected, to the 3G networks in their areas.

Read more here.

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Gerbsman Partners has been retained by Hercules Technology Growth Capital , the senior secured lender to Teleflip Inc. , to solicit interest for the acquisition of substantially all of Teleflip’ assets, including its Intellectual Property , Patents, processes and other intangibles in whole or in part (collectively, the “Teleflip Assets”).

As of August 11, 2008 Teleflip shut down its operations. Hercules, the senior lender, is presently working with the Teleflip on a “Friendly Foreclosure of Assets”, and Teleflip will selling the Assets of Teleflip.

TeleFlip has two award-winning, nationally recognized mobile messaging services that uniquely bridge the internet & cell phone networks to deliver push emails to mobile phones via the SMS data channel, leveraging the existing text messaging inbox found on every mobile phone throughout the world.

• “FlipMail” enables mobile phone users to receive their current personal and business emails from virtually every POP, webmail, and Microsoft Exchange email accounts, without any new or special software downloads or a mobile internet connections to use the service. Users signup for FlipMail by simply providing their email address, email password, and mobile phone number. Emails are then converted to text messages and parsed, sequenced, and concatenated to be easily displayed and read on the phone.

• “Flipout” allows people to send emails from their existing email accounts, either client-based or webmail-based emails, directly to a mobile phone user with the email converted delivered to the mobile phone as a text message. No software is needed by the PC-sender of an email, nor by mobile phone-receiver. Senders simply send an email to the mobile phone user by addressing the email to “their cell phone number @teleflip.com”, eg, 3105551212@teleflip.com <mailto:3105551212@teleflip.com> , and the email then shows up as text message on mobile phone without having to know the recepient’s mobile phone operator.

• “Mobile Ad Platform” is a proprietary advertising insertion technology that easily allows for any length of advertisement to be placed within a Flipmail or Flipout text message delivered to the cell phone.

FlipMail and Flipout are operated as hosted, ASP-based services. Teleflip’s technology infrastructure consists of a Unique Network Unification™ Process which maps and routes and converts messages from the email messaging network and pushes them to the mobile handset through the SMS data channel.

The company has co-lo facilities and server networks which are carrier grade, redundant, and load balanced on the East and West Coasts, and was designed for easy scalability.

For more information, please contact Steven R. Gerbsman at steve@gerbsmanpartners.com

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The most painful and frustrating economic policy blunder of the past 50 years was the Great Inflation of the 1970s. Painful, because it was the catalyst for three damaging recessions (1973-75, 1980, 1981-82), all the while eroding living standards and seriously undermining confidence in America.

It was also deeply frustrating. Despite the teaching of Milton Friedman — which clearly explained that inflation was caused by too much money chasing too few goods — a combination of bad economic models, denial and political expediency allowed it to happen.

To read the full article, click here

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Resolution Interactive, a Swedish game developer studio, last week released a sneek preview movie clip of an upcoming game iPhone action game. Gerbsman Partners is focusing on distribution strategies for iPhone applications and games and has a strategic relationship with Resolution Interactive.

“Clusterball® 2 for iPhone will aim to make a mark on the iPhone market by offering the highest quality of graphics and maneuverability through the gyro controls. With a fast-paced gameplay and obstacle rich environment, Clusterball® 2 for iPhone will be an adrenaline filled experience for young and old alike.

Aiming to explore the online features of the iPhone, as well as Resolution Interactive´s skills in online gaming – Clusterball® 2 for iPhone will offer online features including profile, highscores and challenger features.”

The video received 10.000 hits in 3 days.

Please visit their website for more info, www.resolutioninteractive.com

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Earlier this week, California’s Supreme Court reaffirmed the state’s position on noncompete clauses: they’re almost never valid, except for in a few specific circumstances. While this has been the state’s policy since 1872, the law recently came into question in the case of Edwards II v. Arthur Andersen LLP, in which the accounting firm tried to uphold a noncompete contract Edwards signed in 1997.

The point in question was a “narrow restraint exception”, which effectively punished employees for joining a competitor, but didn’t prohibit them for doing so. If the ruling had gone the other way, companies would be allowed to restrict employees’ pensions and stock value in retaliation for their departure. The Court’s ruling has stricken this exception, affirming that any such punishment is illegal.

However, this ruling has no bearing on confidentiality agreements – companies are still allowed to defend their intellectual property and trade secrets. But this is much harder to enforce, as evidence is usually always indirect and there’s rarely a smoking gun. The ruling also has no impact on another one of the law’s exceptions, which allows for non-compete agreements during the sale of shares in a company. For example, Google could lawfully require the owner of a company it acquired to sign a noncompete agreement as a means to protect its investment.

For more on this article, go to Techcrunch here.

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Dow Jones VentureSource Reports Fewest Deals Since 2005, Investment at 18-Month Low; IT & Health Care See Sharp Drops; Bright Spots Include Info Services, Energy

SAN FRANCISCO and NEW YORK (July 19, 2008)

In the second quarter of 2008, quarterly venture capital investment in U.S. companies slipped below the $7 billion mark for the first time in 18 months. According to the Quarterly U.S. Venture Capital Report released today by Dow Jones VentureSource, investment fell 12% in the second quarter compared to the same period last year with $6.64 billion put into 602 deals, the lowest quarterly deal count since 2005. The $7.58 billion invested in second quarter of 2007 was the second-highest quarterly totals recorded since the end of the dot-com boom in 2001.

“While the U.S. investment total is down compared to last year’s impressive second quarter, we still saw steady deal activity and investment in the first half of the year, which is encouraging,” said Jessica Canning, Director of Global Research for Dow Jones VentureSource. “Venture capitalists commonly take the long-view when it comes to investing. While IPOs and acquisitions may be rare now, VCs aren’t consumed about that. They’re focusing on what’s next – and that’s reflected in the healthy early stage investment we’re seeing in areas like renewable energy, information services and business support services.”

Both IT & Health Care Decline

According to the report, the information technology (IT) industry saw deal flow drop 27% from 390 deals in the second quarter last year to 286 in the most recent quarter-the lowest deal count since the first quarter of 1997. Similarly, investments were down 26% from nearly $3.50 billion to $2.60 billion, the lowest quarterly investment total since 2003. The information services sector, which includes the majority of today’s “Web 2.0” companies, was the only area within IT to see positive gains with $688 million invested in 80 deals, a 20% increase over the $572 million invested in 94 deals during the same period last year.

Health care companies also fared poorly in the second quarter with the industry only seeing 149 deals completed and $1.98 billion invested. That is 22% less than the $2.53 billion that was invested in 181 health care deals in the second quarter of 2007.

“The health care industry is the most concerning at the moment, as investment is down 31% compared to the first six months of last year and deal flow is at its lowest level in three years,” said Ms. Canning. “Considering the amount of time and capital it takes VCs to build a successful life science company, there may be a hesitation to continue investing in these companies given our current IPO market conditions.”

The data showed that the majority of the health care industry’s investment decline in the second quarter was contained in the medical devices sector, which saw just 60 deals completed and $798 million invested, a 25% drop-off from the $1.06 billion invested in 72 deals during the same time last year.

Energy & Utilities Shine as Focus Shifts to Cleantech

One bright spot highlighted by the data was the energy and utilities industry, which posted a record quarter with $817 million invested in 32 deals, up 160% over the $314 million put into 23 deals in the second quarter of 2007. Most notably, there was a big surge in renewable energy investments as the sector saw $650 million put into 26 deals, records on both accounts.

“The movement of venture dollars from the traditional areas of information technology and health care toward burgeoning sectors like renewable energy, power management, and agriculture-or “clean technology” areas-proves that venture capitalists are making good on their promise to tap opportunities in the massive energy market,” said Ms. Canning.

According to the report, the top three venture capital deals in the second quarter all belonged to solar energy companies. Taking the top spot was SunEdison of Beltsville, Maryland, which raised $131 million (as well as an additional $30 million in separate debt financing) in its second round. eSolar of Pasedena, Calif., garnered $130 million and BrightSource Energy of Oakland raised $115 million.

Compared to the second quarter of 2007, the smaller business and financial services (up 6% to $771 million) and industrial goods and materials industries (up 14% to $150 million) both posted modest gains while the consumer goods industry saw investment drop 24% to $121 million.

Later, Larger Deals Dominate But Early Stage Investment Continues

The quarterly report also confirmed that later-stage deals continue to attract the lion’s share of venture capital with $3.48 billion, or roughly 54% of the quarter’s investment total, put into 225 rounds. This pushed the median deal size of a later-stage round to a record $12 million in the first six months of 2008.

Early stage deal-making did not take a back seat, however. In fact, the number of first rounds actually ticked up from 200 rounds completed in the first quarter of the year to 207 in the most recent quarter while the later-stage deal count saw a corresponding dip.

“The most encouraging part of this quarter’s report is that early stage investing is holding relatively steady thus far in 2008,” added Ms. Canning. “It may be harder for entrepreneurial companies to raise venture capital these days but it’s by no means impossible. Continued early stage deal flow is a good sign that the venture industry is prepared to weather the economic downturn and will continue to back the next wave of disruptive technologies.”

According to the data, the median deal size of a first round was $5 million in the first half of 2008, an annual figure that has remained unchanged since 2004.

The overall median size of a venture capital deal in the U.S.-including all stages of development-climbed to $7.5 million in the first half of 2008, the highest total on record.

Regional Perspectives

California once again dominated the venture capital activity in the second quarter, representing 45% of the nation’s deal flow with 273 deals completed and nearly 51% of the capital invested with $3.36 billion. By major region, the report showed:

  • The San Francisco Bay Area saw a 9% decline in overall venture investment with $2.17 billion invested in 193 deals as IT investment was off nearly 21%.
  • Despite seeing investment slip 2% to $868 million in 67 deals, Southern California remained the second most popualr region for venture investment, beating out New England, which saw investment drop nearly 23% to $714 million in 76 deals.
  • The New York Metro region attracted $350 million in 42 completed deals, 16% less than the $415 million invested in the second quarter last year.
  • The Potomac region was one of the two major regions to see a capital increase as investment ticked up 11% to $268 million in 19 deals.
  • Investment in the Washington State climbed 4% to $275 million invested in 25 deals.
  • Capital investment in the Research Triangle region dropped 4% to $118 million with 10 deals closed in the quarter.
  • Texas saw investment drop 65% to a paltry $90 million invested in 13 deals, the region’s lowest quarterly investment total in at least six years.
    For more information or to arrange a personal demonstration of Dow Jones VentureSource, visitwww://venturecapital.dowjones.com or call (866) 291-1800
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