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Trawling for best deals

Posted in Uncategorized, tagged , , on March 1, 2010| Leave a Comment »

Here is a good commentary from Seattle Times.

“Don’t be surprised if you see a few limos driving slowly down Elliott Avenue, doing a little window shopping.

Big tech companies are expected to be on the prowl again for acquisitions this year, and the Elliott corridor along Seattle’s waterfront is lined with prime targets.

Actually, companies around the region could be acquired in the coming year as bigger tech companies feel comfortable that the recovery has taken hold and begin spending the cash they’ve been accumulating.

“Now that the equity market is back up they’re jumping in and catching up,” said Nat Burgess, president of Corum Group, a Bothell firm that advises companies on mergers and acquisitions. “If you look out for the next six to nine months, it’s going to be fantastic in terms of deal volumes, in terms of valuations.”

Venture capitalist Matt McIlwain at Madrona Venture Group is expecting deals to roll over the next year or two.

The biggest tech companies, such as Microsoft, Cisco Systems and Google, did a remarkable job managing costs through the downturn and may now be realizing that they “underinvested in innovation,” he said.

“To get growth and innovation, next-generation products, they’re going to have to make some acquisitions,” he said.

Interest rates are still low and the seven biggest tech companies together have $200 billion in cash and could generate $75 billion more this year, he said.

“That sets the stage for at least a 12-to-18-month cycle of acquisitions,” McIlwain said.

Deals may be good for investors, but there’s also a chance the acquiring companies will cut employees or even relocate the businesses.

Buyouts would also continue the Seattle syndrome that leaves the region with an uneven mix of tech companies — a few giants and lots of smaller ones, but not much in between. Companies with promising technologies tend to be sold before they get too big, creating a void in the middle.

But that won’t stop the pinstriped buyers from cruising Elliott with trunks full of cash.

The unusual cluster of tempting opportunities begins with F5, the crown jewel with a market valuation of $4.4 billion as of Friday.

F5 dominates the market for application delivery systems, creating what it calls “strategic points of control” in corporate networks. It’s expecting sales of about $200 million this quarter.

Rumors about F5 being sold have come and gone for years. Some analysts said the big opportunity passed in November when likely buyer Hewlett-Packard bought 3Com instead.

One of those analysts is Jeff Evenson, a Bremerton native at Bernstein Research in New York.

Evenson said F5 would be a strategic fit with a number of companies, but he thinks it could be a challenge to get a deal done.

“The most obvious buyers have an issue that I think is almost insurmountable for them,” he said.

Cisco would be a natural, he said, but it might have trouble getting antitrust approval for a deal if regulators focused on the niche F5 serves.

Within that segment of the network-switching market, the combination of F5 and Cisco would control 80 percent of the market.”

Read the full article here.

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Alliance to boost startups, hire more grads

Posted in Board Of Intellectual Capital, Business models, Economy, Investments, Market research, Strategy, Technology, Venture Capital, tagged , , , , , , , , on February 25, 2010| Leave a Comment »

Here is an article from SF Chronicle´s tech section worth reading.

“Intel Corp. and 24 venture capital firms will invest $3.5 billion in U.S. technology startups over the next two years, as part of a broad initiative to boost the nation’s competitiveness and create jobs.

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Harvard’s Rogoff Sees Sovereign Defaults, ‘Painful’ Austerity

Posted in Board Of Intellectual Capital, tagged , , on February 24, 2010| Leave a Comment »

Here is an article from Bloomberg.

“Ballooning debt is likely to force several countries to default and the U.S. to cut spending, according to Harvard University Professor Kenneth Rogoff, who in 2008 predicted the failure of big American banks.

Following banking crises, “we usually see a bunch of sovereign defaults, say in a few years,” Rogoff, a former chief economist at the International Monetary Fund, said at a forum in Tokyo yesterday. “I predict we will again.”

The U.S. is likely to tighten monetary policy before cutting government spending, sending “shockwaves” through financial markets, Rogoff said in an interview after the speech. Fiscal policy won’t be curbed until soaring bond yields trigger “very painful” tax increases and spending cuts, he said.

Global scrutiny of sovereign debt has risen after budget shortfalls of countries including Greece swelled in the wake of the worst global financial meltdown since the 1930s. The U.S. is facing an unprecedented $1.6 trillion budget deficit in the year ending Sept. 30, the government has forecast.

“Most countries have reached a point where it would be much wiser to phase out fiscal stimulus,” said Rogoff, who co- wrote a history of financial crises published in 2009. It would be better “to keep monetary policy soft and start gradually tightening fiscal policy even if it meant some inflation.”

Failed Marriage

Rogoff, 56, said he expects Greece will eventually be bailed out by the IMF rather than the European Union. Greece will probably announce an austerity program “in a few weeks” that will prompt the EU to provide a bridge loan which won’t be enough to save the country in the long run, he said.

“It’s like two people getting married and saying therefore they’re living happily ever after,” said Rogoff. “I don’t think Europe’s going to succeed.”

Investors will eventually demand higher interest rates to lend to countries around the world that have accumulated debt, including the U.S., he said. The IMF forecast in November that gross U.S. borrowings will amount to the equivalent of 99.5 percent of annual economic output in 2011. The U.K.’s will reach 94.1 percent and Japan’s will spiral to 204.3 percent.

“In rich countries — Germany, the United States and maybe Japan — we are going to see slow growth. They will tighten their belts when the problem hits with interest rates,” Rogoff said at the forum, which was hosted by CLSA Asia-Pacific Markets, a unit of Credit Agricole SA, France’s largest retail bank. Japanese fiscal policy is “out of control,” he said.”

Read the whole article here.

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Cooley Report Highlights Full Year and Q4 2009 Venture Capital Financing Trends

Posted in Board Of Intellectual Capital, tagged , , on February 23, 2010| Leave a Comment »

Outlined below is an article from Cooley Godward Kronish LLP on Venture Capital  market indicators.

“Palo Alto, Calif. – Feb. 18, 2010 – Cooley Godward Kronish LLP today released its most recent report on venture capital financing market terms.  The report analyzes Cooley’s venture capital transactions nationwide that closed during the fourth quarter of 2009, with comparisons to the first three quarters of 2009 and prior years. The analysis is based on 376 completed deals across the United States totaling approximately $3.82 billion during 2009, including 98 completed deals totaling approximately $1.1 billion during the fourth quarter.

Highlights from the fourth quarter of 2009 include:

• The percentage of up rounds in the fourth quarter (45 percent) saw a considerable increase compared to the first three quarters (26 percent)
• The percentage of down or flat rounds continues to outpace the number of up rounds
• While still below recent historical annual averages, fourth quarter median pre-money valuations increased for all series as compared to the prior three quarters of 2009

“The increases in the number of deals, average pre-money valuations and aggregate dollars raised in the fourth quarter point to a potentially improving landscape for venture financing deals,” said Craig Jacoby, head of Cooley’s Emerging Companies practice.

Cooley’s Private Company Financings Report is published quarterly and is based on private company transactions in which Cooley served as counsel to either the issuing company or the investors. A complete version of the report is available here.”

Read the full article here.

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Goodbye PC, hello smartphone

Posted in Board Of Intellectual Capital, tagged , , , , , , , on February 22, 2010| Leave a Comment »

Here is a good commentary from San Jose Mercury News around Microsoft´s new mobile launch.

“The era of the PC’s dominance is officially over. We have crossed over into the age of mobile computing.

This transition has been building momentum for a while. Some might argue that the iPhone was the dawn of this era. Others might say it was really the rise of the BlackBerry. Or maybe even Android, Google’s mobile operating system. Good cases could be made that any one of these marked the start of the mobile era.

But Microsoft’s announcement of its new mobile-phone platform this week signals a clear end to the old PC era and an epic shift in computing.

But why Microsoft? The reason has little to do with the details of Windows Phone Series 7 that the company unveiled at the Mobile World Congress in Barcelona, Spain, on Monday.

I haven’t touched it, and it won’t be available to consumers for months.

This isn’t about specific features or its design, or whether it will help Microsoft regain lost momentum in the mobile market. Rather, what struck me is how Microsoft did this.

For years, the company took its Windows operating system and created a miniature version for smartphones. While initially good enough for many users, this was the approach of a titan aimed at protecting its turf, rather than a nimble tech firm trying to innovate. It was safe, which is often the enemy of creativity.

Along the way, Windows Mobile was surpassed by the iPhone, Android and Palm’s webOS in terms of elegance and features.

Rapidly losing market share in this critical space to those competitors, Microsoft eventually decided it was time to reboot. For the new version, Microsoft scrapped the Windows-based version completely. The need to think mobile first was so critical, the company was willing to risk undermining its biggest franchise, Windows, which brings in billions of dollars a year.

Rather than let that fear of change paralyze it, Microsoft built the new operating system for smartphones from the ground up. And it did it for the right reason:

“The phone is not a PC,” said Joe Belfiore, Microsoft’s corporate vice president of Windows phone program management as he demonstrated the new platform.

“Well, duh,” you say. That sounds obvious. It’s not.

The success of the Windows operating system bred complacency. The temptation is to make sure everything you do reinforces the cash cow.

To cast that aside, to start over, is a fearless move.

I chatted Tuesday with Karen Wong-Duncan, a manager in Microsoft’s mobile communications systems, who said the rapid change and adoption in the smartphone market required more than just incremental changes. This time around, Microsoft was trying to think big.”

Read the full article here.

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