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Posts Tagged ‘Date Certain M&A’

IT Services In Sweet Spot As M&A Gathers Steam

Posted in Board Of Intellectual Capital, Business models, Distressed IP, Gerbsman Partners, Intellectual capital, Investments, Market research, Strategy, Venture Capital, tagged , , , , , , , on October 30, 2009| Leave a Comment »

Here is some possitive news from VC Circle.

“The ongoing recovery in the economy and credit markets has made tech companies look for ways to come out on top.

The U.S. information technology services sector is likely to be a focus of merger and acquisition activity as its companies are among the most attractive in the technology space.

A rebound in tech spending has increased the appeal of IT services companies and put them in the crosshairs as deal momentum picks up in the industry.

The ongoing recovery in the economy and credit markets has made tech companies look for ways to come out on top, and they have shown a willingness to pay hefty premiums in a sector that has historically commanded high prices.

IT services firms have a recurring revenue stream, high margins, a strong growth outlook and impressive returns on investment, making tempting targets for buyers. They offer consulting, software services, business process outsourcing, systems integration and interactive marketing.

Cash-rich technology giants plan to strengthen their portfolios, and smaller firms want to stay in the game through acquisitions as their larger rivals become even more formidable.

Attractive acquisition candidates include Sapient, Computer Sciences, WNS, Amdocs, Cognizant Technology and ExlService, analysts said.

Consolidation is under way. In September, Xerox Corp said it would buy Affiliated Computer Services Inc in a deal valued at about $5.5 billion, and Dell Inc said it planned to buy Perot Systems Corp for about $3.9 billion.

“The pattern here is that you have commoditizing tech product companies looking for a strategy that’s better than doing nothing,” Sanford C. Bernstein analyst Rod Bourgeois said.

“They’re looking at the IT services industry to juice up their struggling tech product business.”

Possible acquirers could be tech giants such as IBM, Hewlett-Packard or Cisco, European players like BT or Deutsche Telekom and Asian companies like Hitachi, Fujitsu or NEC, analysts said.

“There’s definitely going to be some strategic acquisitions — there’s no doubt about that,” Goldman Sachs analyst Julio Quinteros said. “It’s just, how much are you willing to pay? And would you rather wait for the market to come back a little bit?”

The recurring revenue stream that IT services firms have gives them more visibility and stability.

“What’s driving a lot of this is the evolution of hardware companies looking for more stability and recurring revenues that are typically associated with services models and by the same token software companies potentially looking for the same thing,” Quinteros said.

Hardware and software companies want to diversify their portfolios by adding services, to help them survive and even prosper through tough times.

“What’s alluring about services for tech product companies is first the precedent of IBM and HP coupling products with services to be able weather the downturn well,” Bourgeois said.

In 2008, Hewlett-Packard acquired EDS for $13 billion in what is considered the biggest acquisition in the space ever. In 2002, IBM bought PwC Consulting from PricewaterhouseCoopers for about $3.5 billion.

“Vendors are trying, to some extent, to emulate the integrated model that IBM really pioneered when they got into the services business years ago,” UBS analyst Jason Kupferberg said. “HP followed suit buying EDS. Now you’re seeing a continuation of that theme.”

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Worsening job picture fuels slide in confidence

Posted in Board Of Intellectual Capital, Economy, tagged , , , , on October 29, 2009| Leave a Comment »

Here is some job news from Yahoo Finance.

CHICAGO (AP) — Consumers’ confidence about the U.S. economy fell unexpectedly in October as job prospects remained bleak, a private research group said Tuesday, fueling speculation that an already gloomy holiday shopping forecast could worsen.

The Consumer Confidence Index, released by The Conference Board, sank unexpectedly to 47.7 in October — its second-lowest reading since May.

Forecasters predicted a higher reading of 53.1.

A reading above 90 means the economy is on solid footing. Above 100 signals strong growth.

The index has seesawed since reaching a historic low of 25.3 in February and climbed to 53.4 in September.

Economists watch consumer confidence because spending on goods and services by Americans accounts for about 70 percent of U.S. economic activity by federal measures. While the reading doesn’t always predict short-term spending, it’s a helpful barometer of spending levels over time, especially for expensive, big-ticket items.

Recent economic data, from housing to manufacturing, has offered mixed signals but some evidence that an economic recovery might be slow.

But on Tuesday, the figures showed that shoppers have a grim outlook for the future, The Conference Board said, expecting a worsening business climate, fewer jobs and lower salaries. That’s particularly bad news for retailers who depend on the holiday shopping season for a hefty share of their annual revenue.

“Consumers also remain quite pessimistic about their future earnings, a sentiment that will likely constrain spending during the holidays,” said Lynn Franco, director of The Conference Board’s Consumer Research Center.

Economists expect holiday sales to be at best flat from a year ago, which saw the biggest declines since at least 1967 when the Commerce Department started collecting the data.”

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State’s auto industry plugs in to the future

Posted in Board Of Intellectual Capital, Technology, tagged , , , on October 28, 2009| Leave a Comment »

Here is a cleantech story by way of Delaware Online.

Working-class Delaware came out in force Tuesday to celebrate Fisker Automotive’s plans to buy the vacant Boxwood Road plant near Newport and return the state to the business of building cars, potentially creating thousands of jobs in the process.

In front of hundreds of auto workers — past and future — and seemingly every elected official in Delaware, state and national leaders and the startup automaker’s CEO touted the company’s plans to build plug-in hybrid electric cars at a factory that refuses to stay closed.

The Boxwood plant looked doomed in 1993 when General Motors said it planned to close it. The company later changed its mind.

Complete coverage: Fisker’s plans for Boxwood

The factory was again left for dead in July, when GM followed through on ending production there in the wake of its historic bankruptcy filing, costing about 550 Boxwood Road workers their jobs.

Tuesday’s event celebrated an eventual resurrection of the 62-year-old plant, this time as a catalyst for what supporters hope is a seismic shift in the auto industry, the transition from gasoline to electricity as the fuel for cars.

“Since we moved from the horse to the gasoline engine, there has never been such a big change as is happening right now,” Henrik Fisker, co-founder and CEO of his namesake company, told the crowd.

United Auto Workers union members mixed with state government officials and corporate leaders on the Boxwood plant floor Tuesday, everyone savoring an economic development victory for tiny Delaware over larger states that would have loved to lure Fisker.”

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S&P 500 Overvalued by 40%, Set to Fall, Smithers Says

Posted in Board Of Intellectual Capital, Economy, Market research, Uncategorized, tagged , , , , , , , on October 27, 2009| Leave a Comment »

Here is some market observations from Bloomberg.

“Oct. 26 (Bloomberg) — The U.S. Standard & Poor’s 500 Index is about 40 percent overvalued and headed for a drop as central banks pull back on securities purchases that pushed up asset prices, according to economist Andrew Smithers.

Declines are likely because banks will need to sell more shares to raise capital, the economist and president of research firm Smithers & Co. said in an Oct. 23 interview at Bloomberg’s Tokyo office. The closing price on Oct. 23 of 1,079.6 was 40 percent above 771.14, a level last seen in March, according to data compiled by Bloomberg.

“Markets are very vulnerable to an end of quantitative easing,” said Smithers, 72, who recommended avoiding stocks in 2000 just as the U.S. benchmark entered a two-year bear market. “Central banks, they’ve got to stop some time and if that happens everything will come down.”

Central banks from the Federal Reserve to the Bank of England last year embarked on unprecedented measures to flood credit markets with cash in order to rescue the global financial system from the worst crisis since the Great Depression.

Those purchases may be nearing an end, said Smithers, who worked for 27 years at S.G. Warburg & Co. where he ran the investment management business. The Fed’s emergency liquidity programs including the Term Auction Facility and commercial paper purchases have shrunk as the central bank completes the scheduled purchases of housing debt and Treasuries. Bank of England policy makers voted unanimously at their latest meeting to leave the asset purchase program unchanged, minutes showed.”

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DoJ, FTC Will Review Merger Guidelines, Seek Public Input

Posted in Board Of Intellectual Capital, boic, Business models, Investments, Venture Capital, tagged , , , , , , , , on October 21, 2009| Leave a Comment »

Here is an interesting piece on mergerlaw from IT Business Edge.

“More frequently than not these days, when two companies operating in the same market space agree to merge or to engage in a strategic partnership, the U.S. Department of Justice or the Federal Trade Commission, or even both agencies, are going to want a closer look. Take Oracle’s acquisition of Sun Microsystems, and the Microsoft-Yahoo agreement in the search arena, for instance. The agencies want to make sure the merger, acquisition or partnership is not going to have an anti-competitive effect on the market such that consumers will be adversely affected.

The number of these inquiries has risen, and will continue to rise in the next few years, I’d imagine, because the Obama Administration has pledged to get serious about antitrust violations. That pledge has garnered mixed reviews, especially in the tech industry, as you can see in this post by our Rob Enderle. I don’t have Rob’s years of experience watching these things unfold, but I don’t know that I would go to such extremes. Yes, the new administration appears to be taking a more hands-on approach in enforcing the law, but at least the agencies responsible are also evaluating whether the guidelines they use to do so are still up to par.

Last week, Compliance Week’s Melissa Klein Aguilar reported that the DoJ and the FTC are considering whether the guidance they use in evaluating the anti-competitive effects of proposed horizontal mergers and acquisitions need updating. To that end, they are asking the public to respond to a 20-question survey on the matter.”

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