Archive for April, 2008
Filed under: Investments
 White-label digital music store operator PassAlong Networks Inc. is raising a new $30 million equity round that’ll include strategic investors and private equity firms, according to chief executive Dave Jaworski.
The five-year-old company announced this week that it had set up its 200th digital store at a radio station in Merced, Calif., and also maintains online retail sites for organizations as diverse as Trans World Entertainment’s F.Y.E. entertainment chain, Procter & Gamble Co., mobile-phone operators and music festivals.
PassAlong previously raised $39 million in four rounds, even though it hasn’t identified any of its equity investors or indicated how much debt is included in that total amount. It also hasn’t formally announced a recent $4 million equity round, which followed a $10 million funding in April 2007. Jaworski says the upcoming round will replace all of the existing debt with equity, and he added that PassAlong has received enough verbal commitments that the round is already oversubscribed. He expects the deal to be complete by this summer and states PassAlong will be Ebitda-positive by the end of 2008.
Continue reading at TechConfidential.com.
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March U.S. housing starts drop to 17-year low
Filed under: Bad news, Economic data, Housing, Recession
 U.S. housing starts plunged in March as builders continued to cut back construction in the face of the nation’s worst housing slump in more than a decade.
Housing starts totaled a 947,000 annual rate, the U.S. Commerce Department announced Wednesday (pdf) - - the lowest annualized rate since March 1991. The February housing start statistic was revised to a 1.075-million-unit annual rate.
Economists surveyed by Bloomberg News had expected housing starts to total a 1.02 million annualized rate.
Meanwhile, building permits, a measure of future construction, fell to a 927,000 annualized rate in March from 984,000 in February.
Single-family home permits dropped 5.7% to a 680,000 pace. Construction of multifamily homes, which includes townhouses and apartment buildings, plummeted 25% to an annual rate of 247,000 in March 2008.
Economist Glen Langan told BloggingStocks Wednesday many potential homebuyers are doing what you’d anticipate them to do in a sluggish housing sector, and builders are responding accordingly. “Potential home buyers are simply delaying their home buy, if they aren’t putting it off entirely, until the market stabilizes,” Langan said. “And builders are following that signal. They’re slicing back construction in the face of these massive home inventories.”
Langan added that he anticipates the nation’s supply of unsold homes, currently about a 9.5- to 10-month supply at present sales rates, to increase to about an 11-month supply by the summer 2008, before inventories start to work-off. A healthy home sale market typically has a 3-4 month supply of homes on the market.
Economist Glen Langan told BloggingStocks Wednesday many potential homebuyers are doing what you’d expect them to do in a sluggish housing sector, and builders are responding accordingly. “Potential home buyers are simply delaying their home buy, if they aren’t putting it off entirely, until the market stabilizes,” Langan stated. “And builders are following that signal. They’re cutting back construction in the face of these massive home inventories.”
Langan added that he anticipates the nation’s supply of unsold homes, currently about a 9.5- to 10-month supply at present sales rates, to increase to about an 11-month supply by the summer 2008, before inventories start to work-off. A healthy home sale market typically has a 3-4 month supply of homes on the market.
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Filed under: Raising money, Warburg Pincus, Private equity industry, Investments
Warburg Pincus has recently announced the closing of a $15 billion global private equity fund, Warburg Pincus Private Equity X. Many existing investors increased funds to WP X and includes various investors such as public and private pension funds, endowments, and global financial institutions such as Washington State Investment Board and GE Asset Management.
Warburg Pincus currently manages over $35 billion in assets globally. The global fund will focus on businesses in any growth stage in core industries in North America, Europe, and Asia. The company invests across geographies, industries, and business growth stages from a single global fund, always with a focus on growing businesses and growing regions.
They have significant experience in consumer and retail, energy, financial services, healthcare, life sciences, industrial, technology, media and telecommunications. Typically, Warburg provides funding for the creation of business or to expand them where long run growth and sustainability is a central factor.
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Cramer on BloggingStocks: Pools of capital keep retelling the credit story
Filed under: Market matters, Schlumberger Limited (SLB), Citigroup Inc. (C), Boeing Co (BA), Merrill Lynch (MER), Federal Natl Mtge (FNM), Lockheed Martin (LMT), Honeywell Intl (HON), Lehman Br Holdings (LEH), Stocks to Buy, Housing, Cramer on BloggingStocks, MBIA Inc (MBI)
 TheStreet.com’s Jim Cramer says we know how it’ll play out. Besides, there’s money to be made elsewhere.
Nobody’s dissing the credit crisis. We all see it. We know when it is back. We know that the write-offs for the banks and brokers and Fannie (NYSE: FNM) (Cramer’s Take) and Freddie (NYSE: FRE) (Cramer’s Take) will be gigantic if and when the Gang of Four (Ambac (NYSE: ABK) (Cramer’s Take), MGIC (NYSE: MTG) (Cramer’s Take), MBIA (NYSE: MBI) (Cramer’s Take), PMI (NYSE: PMI) (Cramer’s Take)) finally chokes to death. But we also know that Boeing (NYSE: BA) (Cramer’s Take) and Honeywell (NYSE: HON) (Cramer’s Take) and Schlumberger (NYSE: SLB) (Cramer’s Take) and Lockheed (NYSE: LMT) (Cramer’s Take) and all of the other stocks that are on the move, not to mention anything oil and gas, just aren’t that levered to the crisis. I know that’s heresy for many of you. How could the crisis not bring everything to its knees?
Because these companies are basically foreign companies. They’re just not that important to the credit crumble.
More important, we have all figured out the game. There are endless pools of really stupid/long-term capital that keeps coming in and bailing these clowns out. They either will never admit defeat — some of the mutual fund holders, like “legendary” Bill Miller — or they view everything as a bargain — Corsair — or they’re easily talked into sovereign funds that think they have discovered Citigroup (NYSE: C) (Cramer’s Take) at $5, a la 1990. Who knows? Maybe they’ve. Merrill Lynch (NYSE: MER) (Cramer’s Take)? I’ll buy 10 million shares!! Lehman (NYSE: LEH) (Cramer’s Take)? $2 billion in preferred, please. And on and on.
What matters to me is that there seems to be no end to the amount of capital that’ll go to this sector. No end. Value!
Next thing you will hear there will be someone coming in, a Wilbur Ross, or some other grave dancer, and he will pants the current shareholders and “make out like a bandit” with the monolines. Blah blah blah.
It’s not that the crisis is irrelevant. It’s that there’s so much money around that it has gotten to the “who cares?” status unless you hold common stock of the targets.
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Jim Cramer is a director and co-founder of TheStreet.com. He contributes daily market commentary for TheStreet.com’s sites and serves as an adviser to the company’s CEO. At the time of publication, Cramer had no positions in the stocks mentioned.
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Filed under: Earnings reports, Microsoft (MSFT), Yahoo! (YHOO), Intel (INTC), International Business Machines (IBM)
 Shares of Microsoft (NASDAQ: MSFT) fell in after-hours trading after the world’s largest software maker failed to wow investors.
Net income at the Redmond, Wash., company fell to $4.39 billion, or 47 cents a share, on flat revenue of $14.5 billion. Analysts had expected profit of 44 cents on revenue of $14.5 billion. Revenue at Microsoft’s Business Division, Client and Server and Tools businesses, the company’s largest, fell during the quarter. The others, including the Entertainment and Devices unit, rose.
Pacific Crest analyst Brendan Barnicle told Bloomberg News that “people were anticipating more of a blowout. It’s a decent quarter. It’s not a great quarter by any means, and people were anticipating a great quarter.”
The earnings are puzzling because, as Bloomberg notes, “A report from researcher IDC showed personal-computer buys exceeded forecasts in the quarter.” Moreover, both IBM (NYSE: IBM) and Intel (NASDAQ: INTC) reported better-than-expected results.
No wonder Chief Executive Steve Ballmer is pushing so hard to purchase Yahoo (NASDAQ: YHOO) to bolster Microsoft’s growth prospects.
Microsoft expects profit in the quarter ending June 30 to be 45 cents to 48 cents per share on revenue of $15.5 billion to $15.8 billion. Analysts expected profit of 46 cents on revenue of $15.56 billion, according to Thomson Financial. Profit for the 2009 fiscal year will be $2.13 to $2.19 per share on revenue of $66.9 billion to $68 billion. That’s greater than the average forecast of Wall Street analysts of profit of $2.10 and revenue of $66.5 billion, according to Reuters.
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Filed under: Launches, Industry, Consumer experience, Competitive strategy, Microsoft (MSFT), Sony Corp ADR (SNE)
 Sony (NYSE: SNE) is building a virtual community for video-game players who purchase its PS3 video-game console. It has been delayed again, which might state something about why the Microsoft (NASDAQ: MSFT) Xbox 360 and Nintendo Wii tend to thrash it in the sales department.
According to The Wall Street Journal, “The service will let users create avatar characters, decorate homes and interact with other users in a virtual world.” It was supposed to come out in 2007, and now it might be out late this year. Microsoft has had an interactive aspect to the Xbox for more than two years. It allows game-players to compete against each other over broadband connections. The Microsoft product also facilitates on the web chat and downloads of video games and movies.
Investors would think that Sony would put a higher priority on its PS3 platform. The PS2 was the flagship of Sony’s consumer electronics operations and was a tremendous driver of operating income for the Japanese company. The losses from the company’s game division have been a drag on earnings for over a year because the PS3 has not been a large winner.
Sony still has not gotten the PS3 right. First, it was late to market. Then, it didn’t have enough new games. Finally, it was too expensive and Sony dropped the price. Now, it is missing something that consumers anticipate.
Saying ‘oops’ isn’t enough for shareholders.
Douglas A. McIntyre is an editor at 247wallst.com.
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Filed under: Analyst reports, Forecasts, Bad news, Industry, Competitive strategy, Motorola (MOT), Nokia Corp. (NOK)
 No matter how badly Motorola (NYSE:MOT) has done in the handset business, it has managed to keep its spot as the market share leader in its home base of the US but that may change. According to The Wall Street Journai, “Motorola’s U.S. cellphone sales are dropping so sharply — and Samsung is catching up so quickly — that the South Korean company may soon knock Motorola from the perch it has held in the U.S. since it invented the cellphone in 1983.”
What can be said? Motorola has been losing market share for the last two years and there is no reason to believe that it can reverse that trend. When its RAZR was selling well, it had 22% of the global market. Now that number is closer to 14%. Nokia (NYSE:NOK), the leader, has 39% of the global market.
The market share figure is not just a number on a piece of paper. It may result in making the spin-off of the handset unit to shareholders more difficult. After pressure from Carl Icahn and other investors, Motorola will split the company into two pieces. One will have the handset assets and the other the home products, enterprise, and government sales operations.
There has been some speculation that the handset part of the company is worth nothing. Motorola tried to sell the operation last year. As far as anyone knows, there were no buyers. The company’s shares now trade for $9.55, down from $26 in October 2006. Almost all of that loss in value comes from problems in the handset operations.
When shareholders get their handset division stock in the spin-out, they will be lucky if they are worth $1.
Douglas A. McIntyre is an editor at 247wallst.com.
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Filed under: Microsoft (MSFT), Verizon Communications (VZ), Oracle Corp (ORCL)
 It seems like an inevitable trend - that is, large companies finding ways to cut costs by offloading non-core functions. And one of the leading outsourcers is EDS (NYSE: EDS).
However, the space is highly competitive - and unpredictable. For example, EDS had to deal with the termination of a major customer, Verizon (NYSE: VZ).
But, as seen with the latest Q1 report, EDS is getting traction. Profits came to $62 million, or 12 cents per share as revenues increased from $5.22 billion to $5.37 billion. There was also a 66% increase in signed contracts to $5.6 billion.
After all, EDS was able to snag mega contracts with Royal Dutch Shell and the Infocomm Development Authority of Singapore. In fact, there were 12 contracts in excess of $100 million.
EDS is also getting some growth with its integration services for SAP (NYSE: SAP) applications. Actually, the company is going to do the same with Oracle (NASDAQ: ORCL) software. Oh, and EDS is a key partner for Microsoft’s (NASDAQ: MSFT) CRM offering.
Interestingly enough, the slowing US economy is actually helping. That’s, companies - as well as governments — need to find a way to cut costs. So, why not go offshore?
Tom Taulli is the author of various books, including The Complete M&A Handbook and The Edgar On the internet Guide to Decoding Financial Statements . He also operates MergerBook.com.
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Filed under: Products and services, Law, Consumer experience, Competitive strategy, Marketing and advertising, Verizon Communications (VZ), Time Warner Cable (TWC)
 Verizon (NYSE:VZ) says that Time Warner Cable (NYSE:TWC) is lying in its advertising. According to The Wall Street Journal, “Verizon says that Time Warner Cable’s ad implies FiOS requires a satellite dish for TV service and that it isn’t able to bundle together high-speed Internet, video and phone calls.”
The problem, of course, is much deeper than one ad. Verizon has spent $23 billion to put fiber in front of its 18 million customer homes. In the process it hopes it can take TV and high-speed Internet customers away from cable companies and satellite TV firms. If the product does not do well, there will be hell to pay in the Verizon executive suite.
Cable company stocks have fallen over the last three quarters, to a large extent due to the fear that they now have real competition for packages for voice, TV, and broadband, known fondly as the “triple play”. Verizon does not have to get a huge number of cable customers to switch to do some real P&L damage. Early indications are that consumers like the fiber service. Because it can deliver more bandwidth it can offer larger numbers of HD channels.
The court fight over the ad makes for nice newspaper copy, but the real fight ends up being one for shareholder value. Time Warner Cable’s stock is down 30% in the last year.
Douglas A. McIntyre is an editor at 247wallst.com.
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