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Archive for March, 2010

Here is a very thought provoking article in regards to Yahoo and its future. Very readworthy.

“A source close to Yahoo’s strategic planning recently complained to us that Yahoo has “a fundamental innovator’s dilemma.”

What he meant is that while Yahoo has flat traffic, flat revenues, and increasingly limited growth opportunities, it can’t innovate it’s way out of the problem with bold new products because it has to fund, protect, and iterate on “a big existing business that is, let’s face it, very profitable” — display advertising on Yahoo.com and the company’s other media sites.

So while there is, at Yahoo, “a core group of people who still want [and] believe that Yahoo can change things,” these product directors and line engineers increasingly find themselves working not for a tech company, but for a media company content to serve ad impressions against an already huge Web audience.

Right now, this “innovator’s dilemma” is mostly a mild inconvenience that makes Yahoo a less fun place for Silicon Valley engineers and executives to work (which is why so many are quitting). But someday soon, it could kill the company.

That’s because Yahoo’s entire big, existing, profitable business is dependent on consumers continuing to use the Internet and the “Web” the way they are right now for the foreseeable future. That may be a bad bet.

Just ask Google, which is cranking out $25 billion a year on desktop search, but is scrambling to develop a mobile business anyway. Ask Apple, which used to just make Macs, but now calls itself a mobile devices maker. Or ask our source close to Yahoo who believes “the Web is on a verge of a tectonic shift” and that “the [Web] page as a dominate paradigm is going away.”

Our source believes this upcoming “tectonic shift” presents an opportunity for Yahoo to “leverage and benefit from the next disruption.” We agree. But first Yahoo has to solve its “innovator’s dilemma.”

Here are four possible solutions Yahoo CEO Carol Bartz and Yahoo’s historically inept board of directors could pursue:

Seek a leveraged buyout lead by a large private equity firm such as KKR or Blackstone. In theory, this would allow Yahoo to ignore the quarter-by-quarter scrutiny that forces it to protect its display business above all else and re-invest in innovation. To do it it, a PE firm would have to borrow about $30 billion. The problem is PE firms typically buy a company because they believe they can “strip mine” it down to a single, healthy business and then sell it back to the public as a more efficient machine. That doesn’t sound a like a recipe for innovation to us. Finally, remember when Terra Firma acquired record label EMI in hopes of figuring out the Internet? That was a big nasty old bust.

Sell 20% or more of the company to a mid-stage private equity firm, such as Digital Sky Technologies, Elevation Partners, or whomever else Quincy Smith and CODE Advisers could con into the gig. The new part-owners could kick Carol upstairs into the chairmanship and bring in a product-oriented chief executive, who, unlike the last one (cofounder Jerry Yang) is also able to make decisions. The problem with this option is that it requires co-operation from Carol and the board. Also, it assumes shareholders will provide Yahoo some leash after the deal. The other problem is that the model to follow here is Palm, which brought on a ton of Apple execs after Elevation Partners invested. That experiment failed.

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Here is an Cleantech story from BusinessGreen.

“Global investment in clean technology will rise 35 per cent this year, despite ongoing uncertainty over climate change policy in the US and EU, according to a report published today by research firm Datamonitor.

The report, entitled Challenges and opportunities for energy utility companies post-Copenhagen, predicts clean tech investment will bounce back strongly this year, led by the wind energy sector, which has received a major boost from government-backed economic stimulus packages.

Alex Desbarres, senior renewables analyst at Datamonitor, said that despite the failure to deliver an international climate change deal and ongoing uncertainty about the future of the carbon markets in the US and Europe, growing numbers of businesses are increasing their investment in clean technologies.

“Copenhagen did not deliver the low-carbon vision, clear policy landscape and regulatory frameworks that the energy clean tech investment community had hoped for,” he said. “For all its flaws, however, the Copenhagen Accord gave the clean tech community the sense that private investors will drive the transition to a low-carbon economy.”

The report said there was little evidence that an overarching global regulatory framework would be developed within the next few years, but argued that with new national and sub-national legislation and initiatives emerging all the time, investors will continue to flock to the clean tech sector.

“Datamonitor expects that progress on new global and US climate regimes will be slow and unconvincing this year, but that the race to dominate the emerging clean economy will accelerate regardless, fuelled by unprecedented quantities of green and clean stimulus funding,” the report states.

The study is the latest in a series of reports to suggest that the clean tech sector is recovering well after venture capital investment levels collapsed following the onset of recession in 2008.”

Read the full story here.

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Here is an interresting article from SF gate´s tech section.

“As companies such as Google, Facebook and Twitter push their technologies around the world, recent events show that they’re not just exporting the latest in online tools, but a basic tenet of the American way of life – freedom of speech.

That has led to Google defying the government of China over censorship issues, to Facebook and Twitter playing a role in fueling opposition protests in Iran and to a Nigerian court banning a civil rights group from using social media to debate amputations for convicted thieves.

“It highlights the fact that technology has political impacts beyond its business model,” said Eddan Katz, international affairs director for San Francisco’s Electronic Frontier Foundation. “It’s not just a form of communication, but a political opportunity in terms of freedom of expression.”

The United States has in the past used media such as movies and radio broadcasts to help spread a view of American life and values around the world.

Avoiding state control

But new technologies such as social networks, text messaging, YouTube, Wikipedia and search engines can now be delivered at lightening speed directly into the hands of ordinary people, providing an end-run around government-controlled media or corporations.

It’s ingrained into Silicon Valley culture, where “there’s still kind of a romanticized view of information technologies being by nature open and free and equalizing,” said Steven Weber, a professor of political science at UC Berkeley. “But to be perfectly honest, there’s an enormous amount of evidence to say that most of that is wishful thinking.”

Nevertheless, the U.S. government has recognized that those tools are to the age of digital technology what sledgehammers were when the Iron Curtain divided Europe.

Last year, the State Department asked San Francisco’s Twitter Inc. to delay scheduled maintenance to let people in Iran continue to use the microblogging network to coordinate protests after the re-election of President Mahmoud Ahmadinejad. At the time, a State Department spokesman said the request was “about giving their voices a chance to be heard.”

Earlier this month, the Treasury Department’s Office of Foreign Assets Control relaxed sanctions against Iran, Sudan and Cuba to allow the export of some software, freely available elsewhere, for Web browsing, blogging, e-mail, instant messaging, chat, social networking, and sharing photos and movies.

Those applications make it easier for citizens of those countries to “exercise their most basic human rights” and “communicate with each other and the outside world,” Deputy Treasury Secretary Neal Wolin said in a statement.”

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Hear from Leading Distressed & Turnaround Deal-Makers including
Private Equity, Hedge Fund, and Other Investors from firms like these…
• Amherst Partners, LLC
• Apex Fundamental Partners LLC
• BGC Partners
• BlackEagle Partners, LLC
• Brody Berman Associates
• Candlewood Partners
• Cappello Partners LLC
• Chilmark Partners LLC
• Cohanzick Capital Management LLC
• Commerce Street Capital, LLC
• Consor Intellectual Asset Management
• Corporate Resolutions, Inc.
• CRG Partners
• Crystal Capital
• Cushman & Wakefield, Inc.
• EM Capital Global Advisors, LLC
• Enron Creditors Recovery Corp.
• Fidelity National Special Operations, Inc.
• Further Lane Securities, L.P.
• Gerbsman Partners
• Greenberg Traurig LLP

and many more…

March 25 – 26, 2010
DOUBLETREE GUEST SUITES SANTA MONICA,
SANTA MONICA, CA

For more information, click here.

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Gerbsman Partners has been involved with numerous national and international equity sponsors, senior/junior lenders, investment banks and equipment lessors in the restructuring or termination of various Balance Sheet issues for their technology, life science, medical device and cleantech portfolio companies. These companies were not necessarily in Crisis, had CASH (in some cases significant CASH) and/or investor groups that were about to provide additional funding. In order stabilize their go forward plan and maximize CASH resources for future growth, there was a specific need to address the Balance Sheet and Contingent Liability issues as soon as possible.

Some of the areas in which Gerbsman Partners has assisted these companies have been in the termination, restructuring and/or reduction of:

  • Prohibitive executory real estate leases, computer and hardware related leases and senior/sub-debt obligations – Gerbsman Partners was the “Innovator” in creating strategies to terminate or restructure prohibitive real estate leases, computer and hardware related leases and senior and sub-debt obligations. To date, Gerbsman Partners has terminated or restructured over $790 million of such obligations. These were a mixture of both public and private companies, and allowed the restructured company to return to a path of financial viability.
  • Accounts/Trade payable obligations – Companies in a crisis, turnaround or restructuring situation typically have accounts and trade payable obligations that become prohibitive for the viability of the company on a go forward basis. Gerbsman Partners has successfully negotiated mutually beneficial restructurings that allowed all parties to maximize enterprise value based on the reality and practicality of the situation.
  • Software and technology related licenses – As per the above, software and technology related licenses need to be restructured/terminated in order for additional capital to be invested in restructured companies. Gerbsman Partners has a significant track record in this area.

Date Certain M&A Process

Gerbsman Partners developed its proprietary “Date Certain M&A Process” in 2002. Since that time, the process has evolved into a 6-8 week time frame vehicle for maximizing enterprise and asset value for under-performing venture capital and senior lender backed medical device, life science and technology Intellectual Property based companies. To date, Gerbsman Partners has maximized enterprise and asset value for over 60 of these companies. A description of this proven process can be reviewed on the Gerbsman Partners website.

About Gerbsman Partners

Gerbsman Partners focuses on maximizing enterprise value for stakeholders and shareholders in under-performing, under-capitalized and under-valued companies and their Intellectual Property. Since 2001, Gerbsman Partners has been involved in maximizing value for 60 Technology, Life Science and Medical Device companies and their Intellectual Property, through its proprietary “Date Certain M&A Process” and has restructured/terminated over $790 million of real estate executory contracts and equipment lease/sub-debt obligations. Since inception, Gerbsman Partners has been involved in over $2.3 billion of financings, restructurings and M&A transactions.

Gerbsman Partners has offices and strategic alliances in Boston, New York, Washington, DC, Alexandria, VA, San Francisco, Europe and Israel.

For additional information please visit www.gerbsmanpartners.com

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Here is an article from Venture Capital Dispatch.

“The latest sign of a shakeout in the clean-technology sector is news that battery company Firefly Energy Inc. is shutting down after failing to raise a $20 million round of fresh capital. VentureWire has the story. The company, whose backers include cleantech powerhouse Khosla Ventures, developed a technology for replacing conventional lead plates in batteries with carbon-based foam. Expect more such stories as companies that raised capital when VC enthusiasm for cleantech was boundless find that the bar is now much higher.

Venture capitalists can keep breathing easy on the regulatory front as the latest effort to rein in the financial industry largely exempts them. Revised legislation submitted by Senate Banking Committee Chairman Chris Dodd, a Connecticut Democrat, requires hedge funds with more than $100 million of assets under management to register with regulators, but still exempts private equity and venture funds, VentureWire reports. Of course the game isn’t over yet, but Dodd’s bill is easier on private equity than the House and Obama administration versions and, as anyone following the health-care debate knows, crafting a bill that can pass muster in the Senate is the hardest battle.

Across the Atlantic, similar regulatory matters continue to provoke controversy, as European finance ministers delay plans to vote on a directive regulating hedge funds, private equity and venture capital investment. The proposal has the potential to decimate the venture capital industry in the European Union, critics say.”

Read the full article here.

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Here is an article from The Big Money.

“That’s not the frame of this insightful Wall Street Journal story, but it could be. Journal reporter Ben Worthen flags the widening gap between cash-rich tech companies—Cisco (CSCO), Microsoft (MSFT), Apple (AAPL), Google (GOOG), and Oracle (ORCL)—and everybody else. By keeping tens of billions of cash on their balance sheets, Worthen writes, “these companies can afford to take risks that smaller companies can’t at a time when the economy remains fragile.”

This notion is so far outside of conventional wisdom that it can’t even get in the same room. For decades we’ve been told that the nimble startup would run circles around the corporate dinosaur. But Worthen’s piece is a great reminder that a crucial way for companies to obtain and maintain their advantage in rapidly developing fields is through acquisition. And in order to make the right acquisitions, you need currency (cash is best, but stock is also a valid currency under the right conditions).

This issue is too often ignored in discussions of a Facebook IPO, which the company’s investors have publicly ruled out for 2010. There is a line of thinking that says that Facebook is already flush with cash, and since it is now cash-flow positive, it ought to be able to stay that way. Other tech startups, too, argue that open-source technology and cloud computing keep their costs substantially lower than those of their ‘90s counterparts and therefore they don’t need to go public.”

Read the complete article here.

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