Facebook reality tops out near bottom of IPO range 8 May 2012 The social network is aiming for an IPO at $28-$35 a share, for a value up to $96 bln. Though the final price could go higher, that’s a ratcheting down of expectations. But an update of Breakingviews’ DCF calculator shows that sanity is still at the low end of the valuation scale.
Resumé lies have longer shelf lives than degrees 3 May 2012 Yahoo’s CEO embellished his accounting sheepskin with a computer science major. It’s easy to see the temptation in Silicon Valley’s engineering culture, even if tech degrees are quickly outdated. But the lesson to learn here isn’t a new one: dishonesty has a stubborn longevity.
Dependence on Facebook spreads beyond its users 3 May 2012 It’s not just social networking junkies that have grown reliant on Mark Zuckerberg’s firm. Businesses such as Zynga have been created on its back. Bankers are pegging their careers on floating the firm. And California needs the impending IPO to help close its yawning budget gap.
Amazon’s investment habit looks less healthy 27 Apr 2012 The Internet retailer’s quarterly sales grew 34 pct and income was better than expected as sales of the Kindle Fire soared. That sent the stock spiking. But Amazon’s returns on its heavy investment are turning more and more anemic. Investors should be wary.
People’s Daily website shows profit in propaganda 27 Apr 2012 The flotation of People.cn, the online version of China’s People’s Daily, gives it a value larger than the New York Times. It gets government subsidies and advertisers love that it reaches so many officials. Western media companies can hardly ape its ways. But they are enviable.
Facebook infected by Google’s antitrust limbo 23 Apr 2012 The social network isn’t even public, yet acquisition targets may already be concerned. Instagram commanded a 20 pct break fee if its $1 bln sale isn’t consummated by December. That’s a wise safety measure given the life cycle of apps and Facebook’s lurking antitrust risks.
Google rejoins tech’s governance race to bottom 12 Apr 2012 Zynga and Facebook show little regard for common shareholders. Google is copying its rivals’ shenanigans by adding a third class of non-voting shares eight years after leading the dual-stock charge. That’ll entrench insiders and enable the future abuse of minority shareholders.
Facebook’s defensive Instagram M&A raises red flag 9 Apr 2012 Online photos are supposed to be a core Facebook competence. Paying $1 bln for the picture-sharing app may boost the social network in mobile. But paying over the odds for revenue-free rivals is usually what anxious, mature firms do - not growth companies seeking to go public.
Microsoft opens pricey new front in patent wars 9 Apr 2012 The software giant is spending $1.1 bln to buy some 800 patents from AOL. At over $1 mln apiece, the rate tops even the huge ones paid last year for intellectual property for mobile phones. This first salvo in the Internet space throws down the gauntlet at Google and Facebook.
What’s Facebook really worth? 22 Mar 2012 A look at Google’s revenue and profit history suggests that even $75 bln is a stretch for the social network’s IPO valuation - at least on a rational discounted cash flow basis. But in Facebook’s hyped offering, anything is possible. A new Breakingviews calculator does the math.
Amazon hedges against the rise of the machines 20 Mar 2012 That’s one way to explain the kooky $775 mln purchase of Kiva. Either that or Jeff Bezos has a robot fetish. It’s not clear what the deal offers shareholders. Automating Amazon’s warehouses makes sense. Buying Kiva droids, rather than their maker, seems the more rational approach.
Cisco’s John Chambers falls off the M&A wagon 15 Mar 2012 Less than a year ago, the networking giant’s boss, in an unusual mea culpa, forswore big deals and promised discipline. Now, he’s shelling out $5 bln for NDS, a pay TV software firm. But this acquisition might deliver justifiable returns and fit nicely with Cisco’s strategy.
Youku-Tudou price pop not only about synergies 14 Mar 2012 The Chinese video portals’ combined market value swelled by $1.5 billion after they unveiled a merger. Cost savings of $50 million a year only partly explain it. Other factors may include a squeeze on short sellers, and hopes that an enlarged Youku could itself be a bid target.
Silicon Valley’s undeserved moral exceptionalism 12 Mar 2012 The ruthless overlords of technology and the Internet at Google, Facebook and elsewhere paint themselves as saints of American capitalism. But like other big business, they’re really the successors to the robber baron magnates of the Gilded Age, Rob Cox argues.
Facebook’s underwriter friends are cheap insurance 12 Mar 2012 The social network’s IPO now has 31 banks working on it. There’s no evidence having more underwriters affects early stock performance either way, and some may be friends of convenience rather than necessity. But for Facebook it’s extra reassurance at little, if any, cost.
Merger of China’s YouTubes shows web maturity 12 Mar 2012 The $3 bln tie-up of China’s two pure-play online video groups looks like a defensive move in the country’s fiercely competitive Internet market. Diversified players like Baidu and Sina are investing in their own video portals. Profits are coming – but only for those with scale.
Zynga has less to fear from mobile than Facebook 2 Mar 2012 The online gaming company is diversifying away from the social network. But one trend affecting its giant symbiotic partner shouldn’t much worry Zynga - the shift to mobile devices. Ad-dependent firms like Facebook and Yelp could lose out, but Zynga’s revenue model is different.
Yelp IPO: four reviews, 2 stars out of 5 29 Feb 2012 Categories - user review websites, stock sales, unprofitable enterprises, Google rivals. Location - Silicon Valley and New York Stock Exchange; Attire - casual; Price range - $ to $$ per share; Good for bankers and backers - yes; Good for investors - no.
Yahoo activist hasn’t yet earned four board seats 27 Feb 2012 Dan Loeb’s Third Point hedge fund correctly diagnosed the board as the problem. But investors should demand he provide a sound prescription to cure ailing Yahoo before voting for his full slate of directors. Until then, Loeb merits just one spot - to keep the pressure on.
Alibaba.com minorities should hold out for more 27 Feb 2012 The Chinese e-commerce provider wants to buy out public shareholders at a third of the valuation at which it sold shares in 2007. Yet Alibaba.com’s potential has arguably grown since then. The China opportunity remains barely tapped. Founder Jack Ma is getting too big a bargain.