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Posts Tagged ‘JPMorgan chase’

Data torrent may spur biggest M&A frenzy since ’07

Posted in Board Of Intellectual Capital, tagged , , , , , , , , , , , , , , , , , , , , , on February 6, 2012| Leave a Comment »

Article from SFGate.

“Three years from now, the data equivalent of every movie ever made will cross Internet networks every five minutes, according to Cisco Systems predictions. How to manage all that information is what will be driving technology mergers and acquisitions in 2012.

In a bid to transform that torrent into profits, a cash-rich industry is poised to surpass 2011’s almost $200 billion volume of announced mergers and acquisitions. Companies such as Cisco and IBM are searching for deals that will boost their capacity to provide new storage, analytics and security services to enterprise customers.

Big data, mobile and cloud technologies will lead to “bold investments and fateful decisions,” market research firm IDC said in a recent report. The volume of digital information may balloon from 2.7 zettabytes this year – the equivalent of filling 2.7 billion of Apple’s priciest iMacs to capacity – to 8 zettabytes by 2015, according to IDC.

“The speed at which technology innovation moves is such that you can’t miss a step,” said Jon Woodruff, the San Francisco co-head of technology investment banking at Goldman Sachs, the industry’s top adviser on deals last year. “Every tool has to be used for speed and nimbleness sake, and M&A is one of those significant tools.”

Abundant cash and investor pressure to jump-start sales growth will also propel deal-making. Cash levels have expanded 21 percent in the past year to $513 billion, based on holdings of the 35 companies that comprise the Morgan Stanley Technology Index.

Large companies will be leading the charge. Hewlett-Packard, Google and Microsoft led a 36 percent gain in technology deals last year, outpacing a 4.1 percent advance for all M&A worldwide.

In one of the biggest deals last year, HP agreed to buy Autonomy Corp. for $10.3 billion in a bid to build its software business and scale back on its PC manufacturing. Though viewed negatively by some investors, the move will enable Hewlett-Packard to offer database search services and other cloud-related services for business. CEO Meg Whitman said in November that the company doesn’t plan “large M&A” this year, though it may seek small software deals.

Cisco, which has made about 150 acquisitions in its history and has $44.4 billion in cash on the balance sheet, said in November that it will “continue to be aggressive in acquiring technologies.”

Bigger volume

“This year’s technology deal volume could be bigger than last year’s and 2007’s,” said Chet Bozdog, global head of technology investment banking at Bank of America.

Industry takeovers in 2007 reached $264.4 billion, the biggest year since 2000’s record high of $585.2 billion.

“Convergence between hardware, software and services will continue to add products to the same sales chains,” said Bozdog, who is based in Palo Alto.

Cloud computing, which allows companies to access information over the Internet from external data centers, and the shift from desktops to mobile devices, will continue to be “huge multiyear trends,” said Drago Rajkovic, head of technology mergers and acquisitions at JPMorgan Chase.

As part of this trend, SAP, the largest maker of business-management software, agreed to buy SuccessFactors for $3.4 billion in December to create a “cloud powerhouse,” co-CEO Bill McDermott said at the time.

Gaining patents

Google announced in August it would buy Motorola Mobility Holdings for $12.5 billion in its largest acquisition, gaining mobile patents and expanding in hardware. Microsoft purchased Skype Technologies for $8.5 billion in October, the biggest Internet takeover in more than a decade, in an effort to catch Google in online advertising and Apple in mobile software.

While Google and Microsoft paid in cash for their deals, the purchases didn’t put a dent in their funds. Microsoft’s cash and equivalents jumped 41 percent from a year earlier to $51.7 billion, based on its latest filing, while Google increased cash by 28 percent to $45.4 billion.

Apple, which has no debt and the most cash among technology companies at $97.6 billion, said Jan. 24 that it is discussing ways to spend its funds and would consider acquisitions.

“There’s more cash in technology than in any other sector and the low level of debt makes it very easy for companies in the industry to buy growth,” said JPMorgan’s Rajkovic, who is based in San Francisco.

Affordable targets

“As cash piles have increased, some potential targets have become more affordable. Shares of F5 Networks, whose software helps companies manage Internet traffic, lost 18 percent of their value in 2011 even as sales grew 31 percent. Riverbed Technology, a provider of equipment to boost networks’ speed, lost 33 percent while its revenue increased 32 percent. Shares of Acme Packet, a maker of devices that help networks transmit phone calls and video, dropped 42 percent last year while sales jumped 33 percent.

“You will see more M&A than last year, with some very strategic technology companies involved as valuations have become more reasonable,” said Larry Sonsini, who co-founded Wilson, Sonsini, Goodrich & Rosati, the law firm that brought Apple public in 1980.”

Read more here.

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Small Group Rode LinkedIn to Big Payday

Posted in Board Of Intellectual Capital, boic, Business models, Economy, Gerbsman Partners, Investments, IPO news, LinkedIn, tagged , , , , , , , , , , , , , on June 20, 2011| Leave a Comment »

Article from NYTimes.

“For Reid Hoffman, the chairman of LinkedIn, it took less than 30 minutes to earn himself an extra $200 million.

With the hours ticking down to his company’s stock market debut, Mr. Hoffman dialed into a conference call from San Francisco’s Ritz-Carlton hotel as his chief executive, Jeff Weiner, and a team of bankers raced up from Silicon Valley in a black S.U.V. to meet with potential investors.

Demand for shares was intense, and they decided to raise the offering price by $10, to around $45.

When trading began on May 19, LinkedIn did not open at $45. Or $55. Or $65. Instead, the first shares were snapped up for $83 each and soon soared past $100, showering a string of players with riches and signaling a gold rush that has not been seen since the giddy days of the tech frenzy a decade ago.

Now there are signs that a new technology bubble is inflating, this time centered on the narrow niche of social networking. Other tech offerings, like that of the Internet radio service Pandora last week, have struggled, and analysts have warned that overly optimistic investors could once again suffer huge losses.

That enthusiasm was on full display in the blockbuster debut of LinkedIn, which provides a window into how a small group — bankers and lawyers, employees who get in on the ground floor, early investors — is taking a hefty cut at each twist in the road from Silicon Valley start-up to Wall Street success story.

“The LinkedIn I.P.O. will be used very powerfully over the next year as these companies go public and bankers deal with Silicon Valley,” said Peter Thiel, the president of Clarium Capital in San Francisco and an early investor in PayPal, LinkedIn and Facebook. “It sets things up for the other big deals.”

The sharp run-up after the initial public offering set off a fierce debate among observers about whether the bankers had mispriced it and left billions on the table for their clients to pocket. But the pent-up demand for what was perceived as a hot technology stock set the stage for easy money to be made almost regardless of the offering price.

Naturally, Wall Street is enjoying a windfall. Technology I.P.O.’s have generated nearly $330 million this year in fees for the biggest banks and brokerages, nearly 10 times the haul for the same period last year, and the most since 2000.

Besides the $28.4 million in fees for LinkedIn’s underwriting team, which was led by Morgan Stanley, Bank of America and JPMorgan Chase, there were also a few slices reserved for specialists like lawyers and accountants. Wilson Sonsini, the most powerful law firm in Silicon Valley, collected $1.5 million, while the accounting firm Deloitte & Touche earned $1.35 million.

Mr. Hoffman founded LinkedIn in March 2003 after making a fortune as an executive at PayPal, the online payments service, but even as LinkedIn grew and other employees and private backers got stakes, Mr. Hoffman retained 21.2 percent, giving him more than 19 million shares when it went public. He has kept nearly of all them, so for now his $858 million fortune — it was $667 million before the last-minute price hike — remains mostly on paper.

Mr. Weiner arrived more recently, in late 2008, after working at Yahoo and as an adviser to venture capital firms, but his welcome package included the right to buy 3.5 million shares at just $2.32. And they are not the only big winners who secured shares at levels far below the I.P.O. price.

For example, when LinkedIn raised cash in mid-2008, venture capital firms including Bessemer Venture Partners and Sequoia Capital, scooped up 6.6 million shares at $11.47 each in return for early financing. They have held on to the stock, but Goldman Sachs, which got 871,840 shares at $11.47, sold all of it for a one-day gain of nearly $30 million.

Scores of fortunate individuals also managed to profit.

Stephen Beitzel, a software engineer, worked at LinkedIn from its founding until March 2004, but kept his stock when he left. His shares are now worth $17 million, and he sold $1.3 million worth in the offering.”

Read the complete article here.

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Sign o´times – Cisco leads tech M&A charge out of downturn

Posted in Board Of Intellectual Capital, Gerbsman Partners, Intellectual capital, Investments, Market research, Strategy, Technology, Venture Capital, tagged , , , , , , , , , on October 14, 2009| Leave a Comment »

Here is some news from Reuters.

“NEW YORK (Reuters) – When it comes to Cisco Systems Inc (CSCO.O) and dealmaking, the prevailing sentiment in Silicon Valley is: You can’t predict what Cisco will buy next, but you can see why it fits.

The world’s largest maker of corporate networking gear is known for its voracious dealmaking appetite, buying dozens of companies every year and digesting them quickly and efficiently to broaden its already wide-ranging business.

Cisco has led the tech industry’s charge out of the recession-induced lull in mergers and acquisitions, announcing two big deals in two weeks: wireless equipment maker Starent Networks (STAR.O) for $2.9 billion and Norwegian video conferencing maker Tandberg for $3 billion.

Analysts expect the San Jose, California-based company, which ended the last quarter with a cash balance of $34 billion, to keep up the dealmaking pace, especially now that some stability has returned to financial markets.

“The ability to expand in markets where we have been strong clearly has been a big part of what we’ve done in the past,” Hilton Romanski, Cisco’s vice president of corporate development, said in an interview on Tuesday.

“But the other major element is new market entry,” said Romanski, a former JPMorgan (JPM.N) banker who joined Cisco in 2000 and runs its global acquisition and venture investment strategy.

Cisco, which was founded in 1984, has spent about $56 billion on 174 deals so far, according to Thomson Reuters data. Along with its in-house team, Cisco occasionally uses a range of outside financial advisers, from Barclays PLC (BARC.L) to Lazard Ltd (LAZ.N).

Many of the acquisitions were start-ups or private companies with assets that bolster Cisco’s core business of making switches and routers that direct computer traffic.

But as the networking business has matured, Cisco has forayed into several new interconnected markets, such as Web-based video conferencing and online video.”

Read the full article here.

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“Bailout” in need of more bailout!

Posted in Board Of Intellectual Capital, boic, Economy, Investments, Market research, Strategy, tagged , , , , , , , , , , , , , , , , , , , , , , , , , , on May 7, 2009| Leave a Comment »

Putting cash into unhealthy business has long been understood as a bad deal. With the Bailout programs and the TARP initiative, some might have thought that the problem was solved – think again. Poor business remain poor business.

Here are some good quotes taken from NY Times.

“The results of the bank stress tests have been trickling out for days, from Washington and from Wall Street, and the leaks seem to confirm what many bankers feel in their bones: despite all those bailouts, some of the nation’s largest banks still need more money.

But that does not necessarily mean the banks will get that money from the government. The findings, to be released Thursday by the Obama administration, suggest that the rescue money that Congress has already approved will be enough to fill the gaps. If so, the big bailouts for the banks may be over.But hopes that the tests will be a turning point in this financial crisis electrified Wall Street on Wednesday and some overseas markets the next day. Financial shares soared, lifting the broader American stock market to its highest level in four months. The Dow Jones industrial average rose 101.63, or 1.2 percent, to close at 8,512.28 Wednesday, while Japan’s Nikkei index rose more than 4 percent by midday Thursday.”

Good news indeed, but…

“After news this week that Bank of America and Citigroup would be required to bolster their finances again, word came Wednesday that regulators had determined that Wells Fargo and GMAC, the deeply troubled financial arm of General Motors, would need to do so as well. But regulators decided that American Express, Capital One, Bank of New York Mellon, Goldman Sachs, JPMorgan Chase and MetLife would not need to take action. The official word is due at 5 p.m. Thursday.

The results so far seem to suggest that the 19 institutions that underwent these exams will need less than $100 billion in additional equity to cope with a deep recession, far less than some investors had feared. The question now is, where will banks get that capital?”

Read the full article here.

Other helpful sources on this issue can be found here: Huffington Post, Barrons Blogs, Wall Street Journal, Seeking Alpha, 24/7 WallStreet

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