Joltid, a company owned by Skype founders Janus Friis and Niklas Zenstrom, filed a copyright infringement suit in federal court in California today against eBay (EBAY) and the members of an investment group who have agreed to acquire a majority stake in Skype. The suit seeks an injunction against Skype and statutory damages for copyright infringement, the Wall Street Journal reports. The suit claims damages in the case “are amassing at a rate of more than $75 million daily.”
As the Journal notes, Joltid owns a peer-to-peer technology used in Skype’s software; in March, Joltid terminated Skype’s license to the software, a move which triggered litigation between the two sides in the U.K.
Joltid said in a statement that it will “vigorously enforce its copyrights and other intellectual property rights in all of the technologies it has innovated.” An eBay spokesman said they had not seen the complaint yet.
Earlier this month, eBay agreed to sell a 65% stake in Skype to a group of private investors, including Silver Lake, Andreesen Horowitz and the Canada Pension Plan Investment Board, for $1.9 billion in cash plus a $125 million note.
The challenges that private equity firms and their investors face these days are enough to make even the sagest of investors wish for superhuman powers. We asked a handful of panelists at the Dow Jones Private Equity Analyst Conference today which super power they would like to have in this environment. Here are a few of their answers:
Brad Woolworth, Investment Officer, Private Markets, City of Philadelphia Board of Pensions & Retirement: “To be able to read people’s minds, so I can really find out what general partners think of me.”
Jay Park, Managing Director, Blackrock Private Equity Partners: “Flying, so I could pass over all of the [airport] security.”
Gregory Oberholtzer, Managing Director, WP Global Partners: “Time travel. It would compress my [Internal rates of return.]”
Jack Troy, Partner Troy Investment Associates: “Super hearing.”
David Turner, Head of Private Equity, Guardian Life Insurance Company of America Inc.: “I’d like to clone myself, so I could be [even] more productive.”
TechCrunch reports that Twitter CEO Ev Williams spilled the beans about the funding during an all-hands meeting at the San Francisco HQ of Twitter.
What surprises me most, apart from the large valuation, is that I thought the company already had raised plenty of cash and had gobs more stashed away in its nest.
If you’ll recall, in February, Twitter raised $35 million in a Series D funding round from Benchmark Capital (which provided $21 million) and Institutional Venture Partners ($14 million). In addition, Twitter raised a still undisclosed amount of capital from previous investors Spark Capital and Union Square Ventures, at a valuation of about $230 million. At the time, colleague Dan Primack reported that Twitter was expected to have more than $50 million in cash on hand, which included some old VC money that has not yet been spent.
Stay tuned. I’m certain peHUB will have more on this later.
(Reuters) - The Massachusetts Institute of Technology said on Wednesday that its endowment shrank 20.7 percent in its last fiscal year as its investments were badly battered by the financial crisis.
The elite school, known for its strength in the sciences, said its endowment is now worth $8 billion, down from $10.1 billion a year ago. The school’s investments lost 17.1 percent during the fiscal year that ended on June 30.
MIT said its endowment paid out $518 million for operations and received $143 million in new endowment gifts and transfers.
The school’s investment losses, while heavy, were far smaller than the 27.3 percent drop suffered by neighboring Harvard University.
Harvard, the wealthiest U.S. university, reported last week that its endowment contracted by $10.9 billion to $26 billion, losing more than the entire MIT endowment.
MIT, like Columbia University and the University of Pennsylvania, said it was able to insulate its endowment from more severe losses by selecting more traditional investments like bonds. Harvard and Yale, whose endowment lost 30 percent, were more aggressive investors, putting more money into alternative asset classes like hedge funds and private equity. (Reporting by Svea Herbst-Bayliss, editing by Matthew Lewis)
Eastman Kodak (EK) this afternoon unveiled plans to raise up to $700 million in a major financial restructuring under which Kohlberg Kravis Roberts will take up to a 16.5% fully diluted stake in the company.
KKR agreed to invest up to $400 million in senior secured noted due 2017; Kodak also will receive warrants to buy up to 53 million shares. Kodak will have the right to reduce the note position sold to KKR to as low as 300 million, which would bring the number of warrants to be issued down to 40 million.
The notes will bear interest at 10%-10.5%, plus payment-in-kind interest of between 0.5% and 1.5%. The warrants will be exercisable for eight years after the close of the transaction, and will have an exercise price no greater than $5.50 a share. KKR will be required to hold the warrants, or shares issued as a result of the warrants for at least two years. KKR will get two Kodak board seats.
Before the transaction, Kodak had 268.2 million shares outstanding. (Add 53 million shares to that for the new warrants, then divide 53 million by that number, and you get 16.5%.)
Kodak will also launch a private placement of another $300 million of convertible senior notes due 2017, with up to $45 million of additional notes available to cover over-allotments. Terms of the convertible notes are still to be determined.
Kodak also repeated its previous forward guidance: the company sees 2009 digital revenue down 6%-12%, with revenue from the traditional business down 25%-30%, for an overall revenue drop of 12%-18%.
Proceeds from the new offerings will be used to repurchae the company’s 3.375% convertible senior notes due 2033; the company announced plans to tender for up to $575 million of the notes, at a price still to be determined.
In late trading, EK is down 19 cents, or 2.8%, to $6.49.
(Reuters) - Photography company Eastman Kodak Co (EK.N) plans to raise up to $700 million, including a commitment from private equity firm Kohlberg Kravis Roberts & Co [KKR.UL], to bolster its balance sheet and free up capital for investments, the company said on Wednesday.
Kodak, which makes cameras, picture frames and consumer printers, about a year ago completed an expensive four-year restructuring that transformed it into a maker of digital photography products and printers. During that restructuring, Kodak halved its workforce.
The company has since been hit by the global recession, which has limited consumer spending on travel — an activity that spurs the use of cameras. It posted disappointing second-quarter results in July as weak demand hurt its film and digital photography businesses.
Kodak said on Wednesday its 2009 GAAP loss would fall toward the lower end of a previously forecast range of $200 million to $400 million, reflecting its latest assessments of restructuring charges, interest expense, and interest income.
Shares of Kodak slipped 2.7 percent after-hours to $6.50 from a regular-session close of $6.68. The stock had risen 4.5 percent during regular trading.
KKR, which is to buy up to $400 million of Kodak’s senior secured notes due 2017, said that its investment reflected its belief in Kodak’s strategy. Kodak also said it is to issue to KKR warrants to purchase up to 53 million shares of Kodak common stock.
The private equity giant is also designating two individuals to be appointed to Kodak’s board, which will be announced upon the deal’s close at the end of September.
Separately, Kodak is launching a private placement of $300 million of convertible senior notes, due 2017.
Depending on the amount of capital raised and the number of warrants that convert, KKR could end up owning somewhere between 13 percent and 17 percent of the company, a source close to the deal said. (Reporting by Laura Isensee in Los Angeles and Megan Davies in New York; Editing Bernard Orr)
Freeport McMoRan (NYSE: FCX). The global recovery appears to be underway, and with it demand for key commodities, such as copper, will increase. And Freeport, the world's second largest producer of copper, is poised to capitalize. Sell/Stop Loss if you were to buy shares in FCX: $32.Permalink | Email this | Comments
Speaking on a post-earnings conference call, Oracle (ORCL) President Safra Catz said the company expects non-GAAP profits for the fiscal second quarter ending November of 35-36 cents a share, up from 34 cents a year ago. The Street consensus was for 36 cents.
The company sees GAAP EPS of 26-27 cents a share, up from 25 cents last year.
Catz said the company sees non-GAAP revenue in the quarter ranging between positive 2% and negative 1%, or -2% to -5% on a constant currency basis. GAAP revenue is expected to range from flat to up 3%, or between -1% and -4% on a constant currency basis. New software license revenue is expected to range from -10% to flat, or between -5% and -15% at constant currency rates.
Note that Catz said currency this quarter becomes a positive factor, lifting license revenue by 5% and overall revenue by 4%, and boosting net income by about 2 cents a share.
Catz said the guidance does not include the pending acquisition of Sun Microsystems (JAVA); she said the company has no additional information on when the deal will close. It still awaits approval from the EU. Catz said the company is “still quite confident” that the deal will be accretive to operating income by $1.5 billion in the first full year.
One fun, typically Oracle-like note: the company said the modest Q1 top-line shortfall was in part due to weaker database sales at certain resellers - in particular singling out SAP, noting that the company saw a 40% drop in apps revenue in the latest quarter. In other words: Oracle’s shortfall? Blame it on SAP.
In late trading, ORCL is off 97 cents, or 4.4%, to $21.16.
GreenBytes, a unique data storage appliance company, has just received an $8 million Series A round of investment financing. Battery Ventures completed the deal, which provides fresh resources for the Rhode Island-based energy-efficient technology company.
Founded in 2007, GreenBytes offers network attached storage (NAS) and storage area network (SAN) solutions that reduce energy consumption, providing a cost savings opportunity while also addressing corporate social responsibility considerations.Permalink | Email this | Comments
Revenue for the quarter was $5.1 billion, down 5% year over year, and below the Street at $5.25 billion. Non-GAAP EPS of 30 cents a share was in line with expectations; the company said results would have been two cents higher in constant currency exchange rates.
GAAP new software license revenues were down 17%; software license updates and product support was up 6%.
The company’s guidance had been for revenue to be down 3%-5%; non-GAAP profits were in line with the forecast range of 29-31 cents.
In late trading, ORCL is down 95 cents, or 4.3%, to $21.18.
I am in the 2nd half of the interview:
Over the past year, bankers have been blamed for much of the financial crisis. But how does it look from the perspective of those working in the banks? The BBC’s Matt Wells reports from Wall Street.
Aftershock: how well has the financial crisis been handled?
14 september, 2009 – 13:50 GMT
Dow 9,790.35 +106.94 (1.10%)
S&P 500 1,068.76 +16.13 (1.53%)
Nasdaq 2,133.15 +30.51 (1.45%)
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Most distressed investors at the Private Equity Analyst Conference waxed eloquent about the opportunities that lie ahead for their industry. But not everyone was so optimistic.
The general viewpoint was that this cycle is going to be bigger and badder than all that have come before.
“This is going to be much bigger and last a lot longer” than recent cycles in the early 90s and the early 2000s, said Ramsey Frank, managing director at JLL Partners. Michael Psaros, co-founder of KPS Capital Partners, said this will come to be thought of as “the golden age of turnaround investing.” He said “we’ve never been more excited in our two-decade history.” “This is bigger than 1991,” said Victor Khosla of Strategic Value Partners.
But changes in debt investing make this cycle a little more different and harder to predict. No-covenant loans, for example, will extend it out. “It’s a trainwreck…but it’s a slow-moving trainwreck,” Khosla said.
There were some dissenting voices on whether this is truly an epoch-shattering slowdown. Glenn August, president of Oak Hill Advisors, pointed out that with debt trading spreads narrowing and equity markets showing strong recovery, this downturn may not be as deep as people expected.
“What has been remarkable to me is how hard and how fast everything has come back,” he said, remarking that DIP financing was impossible to come by six months ago, but is now trading at above par.
He added that if Federal Reserve Chairman Benjamin Bernanke is right that the recession has ended, “that’s going to mean this cycle is going to end more quickly than thought.”
-With Joseph Checkler
Scott Sperling Isn’t Worried: In addressing the issue of about $430 billion of leveraged loans coming due between 2012 and 2014, Sperling says that a rebound in bond and equity markets and M&A should help borrowers refinance much of that debt. (The Deal)
Congrats: Felix Salmon has played a party in Dick Fuld’s “smouldering resentment.” (Reuters)
Good News for Startups: Tech M&A is back. (GigaOm)
Cause & Effect: American Capital gets another exit, and another stock bump (WSJ)
Park within a Park: Blackstone Group’s Universal Studios will include a Harry Potter set of rides in its newest park. (Reuters)
It was a year ago that Lehman Brothers Holdings’ roughly 30,000 employees were sure they would lose their jobs, their salaries and their holdings in the Wall Street firm.
But many employees got something of a reprieve in the days after Lehman filed for bankruptcy. Barclays and Nomura Holdings split up Lehman’s North American, European and Asian investment banking businesses between them.
Still, many Lehmanites found themselves in the employ of other firms.
Here is a look at where some of Lehman’s executives, traders and rainmakers ended up:
Lowe's has posted two consecutive less-worse-than-expected quarters, and the calculation here argues home improvement revenue will improve in the next year, and more broadly, the U.S. housing sector has bottomed, providing another modest tailwind. Lowe's also reported stabilizing customer traffic in Q2.Permalink | Email this | Comments