Jeff Clavier's Software Only

Vonage's IPO quickest to be hit by a class action lawsuit ?

What a disaster: float on May 24th, lose over 30% in market capitalization, and get hit by a shareholder lawsuit less than 2 weeks after the IPO. CNET has the details:

The suit filed on Friday in the United States District Court for the District of New Jersey by the Atlanta-based law firm Motley Rice asserts that the Internet telephony provider, its officers and the IPO's underwriters misled investors.

Vonage's stock, which debuted on the New York Stock Exchange on May 24 at $17 per share, has lost about 30 percent of its value in its first seven days of trading. The complaint filed against Vonage claims that the company's investors were motivated to push for an IPO because the company had been losing money, and the investors were desperate for an exit strategy. Vonage raised about $531 million from the offering.

As a Vonage customer, I felt that the whole “special allocation” felt bizarre. I am glad I did not get tempted.

Update: this roundup from Matt Marshall pointed to this piece from The Motley Fool, explaining why the Vonage IPO had been one of the most successful in years - a in twisted way:

In my mind, this makes Vonage the most successful IPO in many years, at least since such former luminaries like Internet Capital Group (Nasdaq: ICGE), Autobytel.com (Nasdaq: ABTL), and Delta Three (Nasdaq: DDDC) came screaming out of the box in the late 1990s at many times their actual value.

In every other form of commerce, “success” is determined by someone's ability to generate profits, or to sell something for more than it is worth. Vonage's management and underwriters convinced a bunch of people and institutions that a company worth roughly the price of a Happy Meal should be valued on the market at $2.6 billion!

Tags: Vonage

Tags: vonage

Sarbanes Oxley's collateral damage: US public markets ?

I mentioned two days ago the continued decrease of the volume IPOs of VC-backed companies. Discussing it with a VC friend, we sort of joked about the efficiency of the Sarbanes Oxley regulation that is essentially scaring away from the public markets a generation of companies – hence reducing in a round about way the potential for fraud and abuse from these new companies.

This morning, Benchmark Capital’s Bill Gurley is pointing to a Wall Street Journal piece (that I could not read b/c you need to be a subscriber) from the CEO of the Nasdaq market warning of the potential demise of US Markets due to Sarbanes Oxley:

He is properly concerned that the overly bureaucratic Sarbanes-Oxley (SOX) processes could lead to the end of global domination by the U.S. capital markets. Ironically, the two gentlemen that created SOX did it with the intention of “preserving” U.S. capital market leadership. Their fear was that people viewed our markets as too risky, and so they created SOX to ensure that investors would “trust” our markets.

It turns out that SOX is doing the opposite – it is ensuring the demise of the leadership of U.S. capital markets. New up and coming companies outside the U.S. are now shunning the U.S. markets in mass. Let us not forget that the Nasdaq has and as always had “weaker” listing requirements that the NYSE. And eventually, the then new and up and coming companies like Microsoft, Cisco, and Intel eventually came to dominate the Fortune 500 – and they all started as emerging companies that preferred the Nasdaq. Now companies are going to “prefer” other markets with requirements that are less stringent than the SOX laden U.S. markets.

The liquidity and efficiency of US public markets has alwasy been pointed out as a key advantage the US VC industry has over Europe and Asia. This advantage is fading away with the relative lack of IPOs, and as I mentioned, there might be opportunities for European exchanges to build/become the next Nasdaq.

Another twisted thought: is this actually shielding us from Bubble 2.0 – since it is limiting potential excess to VCs and other professional investors ?

Update: note that I am not suggesting that the fundamental reasonning behind Sarbox - transparency and accountability - is bad, quite the contrary. It just so happens that the current implementation of the regulation is  a tax to US businesses because of its heaviness.

Additional thoughts/links on eBay and Skype

There is obviously a ton of coverage of the acquisition of Skype by eBay, and I decided to create a new thread to list  further analysis. Here you go:

• Michael Bazeley has great tidbits that did not make it in his Merc piece. A couple of points are worth noting, like the fact that Skype was reportedly in the black, and the deal was still fought between potential suitors:

Many of the reports characterized Skype as "unprofitable,' perhaps because eBay's CFO said that Skype would not be profitable until late 2006. But a couple of Skype investors we talked to said they believed Skype was already profitable (relatively low costs and revenue of ~$60 million this year). Perhaps eBay is planning to take them back into the red with a heavy marketing campaign or something.

 There was apparently competition for Skype up to the last minute, we were told yesterday. In other words, eBay appears to have won a bidding war, or at the least made itself more attractive than other suitors.

• Manageability.org has a great compilation of interviews and quotes, and an interesting thought:

Ultimately to properly value the acquistion one should consider the strategic position eBay has captured. Trying to gleem any sense of synergy between its current business and Skype's business is a waste. Enhancing eBay's auctions with the convenience of voice interactivity isn't worth the billions eBay shelled out. Techdirt may be right on the money that eBay indeed has too much money. However, where can one alternatively spend a billion dollars and gain a real competitive edge against the likes of Google? What's Google going to do with the $4 billion it recently raised if there's nothing worth buying?
[…]
 Interestingly enough, it is eBay that has the enviable position of providing digital identities with true value. eBay's reputation system is without competition. A seller's ability to command a premium bid is affected by his reputation. Buyer's without established reputations are sometimes barred from bidding. Paypal's verified attaches a real bank account to an identity. When one attaches a credit card to an identity, the address becomes verified and adds additional reputation for a buyer.

• Nivi got my attention (to say the least) with his post titled eBay Buys Six Apart, in which he makes the case that blogs are a complementary channel to interactive communication to promote items that are sold on the marketplace. But as Nivi states himself, there is no need to buy a platform per se to benefit from blogging.

Siebel ecosystem being put out of its misery by Oracle for $3.6B net

Lots of buzz around the second mega acquisition of the day ($5.8B), seeing Oracle eating up Siebel Systems for dessert. Given that the company has about $2.2B cash on hand, Oracle is paying $3.6B, i.e about 2.7X Siebel’s trailing revenues.

The best quote about the deal comes from… SalesForce.com’s Marc Benioff (who worked at Oracle, and made $25M or so as an early stage investor in Siebel if memory serves me right) in his note to employees:

Oracle put Siebel investors out of their misery today.  We have been doing that for Siebel customers for years.  Our announcement today at Dreamforce will accelerate that. It’s the end of software.  Client/Server software is being consolidated by Oracle just as mainframe software was consolidated by Computer Associates. Oracle’s strategy is simple, instead of innovating, buy as much installed software as possible, call it all Oracle Fusion, and make sure it all uses Oracle’s database.

Now, the same thing that happened to Peoplesoft will happen to Siebel, it will die.  Customers will look for new solutions and new providers.  Employees will look for new employers. Siebel on Demand, a joint venture between Siebel and IBM, will be the first to be buried. Siebel on Demand is written exclusively on DB2 and Websphere and runs in IBM data centers.  Oracle will kill it.  Oracle does not sell DB2.

Now, the opportunity to be the global leader in the CRM market has opened for salesforce.com.  Our dream is becoming a reality as the world will move to new on demand solutions. Already the fastest growing public CRM company in the world, with over 50% market share in On Demand CRM, salesforce.com is well poised to become the world’s new global CRM leader.

It is auspicious that this is the very day that we are announcing our new strategy at Dreamforce with AppExchange (www.appexchange.com) and our Winter ’06 release.

Aloha, Marc

At this pace, exiting enterprise software companies in a couple of years will mean flipping a coin: SAP on one side, Oracle on the other. Dana Gardner says the same thing (albeit much more eloquently) in his piece “Consolidation shifts power on infrastructure choices”.

Now that Amdocs is the only one left in the enterprise suite CRM market, what’s next ? CRM Analytics ? SFA ? Mid-market CRM ? Another way of looking at it: which other key companies are led by ex-Oracle executives ?

PS: check the comment below, and you'll see what Jurvie is laying out as "the next billion dollar acquisition for DFJ".

Skype + eBay = Deal! $1.3B cash + $1.3 stock + $1.5 earn-out = $4.1B!

Reuters’ Eric Auchard has just reported that eBay has made a run after Skype after all, and has put a consideration that would total $4.1B if earn-out conditions are met.

This is a massive deal: eBay is spending about half of its cash reserve to acquire the VoIP company, at a stratospheric multiple (based on Skype’s rumored revenue levels).

The story is obviously going to develop during the day, but dam’n, I just did not see it happening – especially at that price. According to Rob Hof, eBay will host an analyst call in a couple of hours.

This is an awesome payday for Skype’s investors: Draper Fisher Jurvetson, Mandrove, Index Ventures, Bessemer and others. We know that the company raised a maximum of $21M (?) but what is yet to be disclosed – and that we should know because this is not a non material acquisition – is Skype’s cap table and who is going to make big $$$$$$.

Congratulations to Tim Draper, Danny Rimer and other VCs involved. That is a hell of a deal, and I suppose, a monstrous IRR. And remember that DFJ already had a great exit a few weeks ago on Baidu.

And even bigger congratulations to Skype employees, who in 2.5 years have disrupted an established market, and are getting an handsome payout. Scoble’s former boss, Lenn Pryor, must be happy to have relocated to Tallinn.

Update: here is the official press release. A few notable data points regarding the terms and the rationale of the acquisition:

• Improved communication: “Online shopping depends on a number of factors to function well. Communications, like payments and shipping, is a critical part of this process. Skype will streamline and improve communications between buyers and sellers as it is integrated into the eBay marketplace. Buyers will gain an easy way to talk to sellers quickly and get the information they need to buy, and sellers can more easily build relationships with customers and close sales. As a result, Skype can increase the velocity of trade on eBay, especially in categories that require more involved communications such as used cars, business and industrial equipment, and high-end collectibles.“
• New seller capabilities like Pay per Call: “The acquisition also enables eBay and Skype to pursue entirely new lines of business. For example, in addition to eBay’s current transaction-based fees, ecommerce communications could be monetized on a pay-per-call basis through Skype. Pay-per-call communications opens up new categories of ecommerce, especially for those sectors that depend on a lead-generation model such as personal and business services, travel, new cars, and real estate. eBay’s other shopping websites — Shopping.com, Rent.com, Marktplaats.nl and Kijiji – can also benefit from the integration of Skype.”

• On the earn-out: “The maximum amount potentially payable under the performance-based earn-out is approximately €1.2 billion, or approximately $1.5 billion, and would be payable in cash or eBay stock, at eBay’s discretion, with an expected payment date in 2008 or 2009. Skype shareholders were offered the choice between several consideration options for their shares. Shareholders representing approximately 40% of the Skype shares chose to receive a single payment in cash and eBay stock at the close of the transaction. Shareholders representing the remaining 60% of the Skype shares chose to receive a reduced up-front payment in cash and eBay stock at the close plus potential future earn-out payments which are based on performance-based goals for active users, gross profit and revenue. “

• On revenues and multiples: “ Skype generated approximately $7 million in revenues in 2004, and the company anticipates that it will generate an estimated $60 million in revenues in 2005 and more than $200 million in 2006. For Q4-05, eBay expects the acquisition to be dilutive to pro forma and GAAP earnings per share by $0.01 and $0.04 respectively. For the full year 2006, eBayexpects the transaction to be dilutive to pro forma and GAAP earnings per share by $0.04 and $0.12 respectively, with breakeven on a pro forma basis expected in the fourth quarter of 2006. On a long-term basis, eBay expects Skype operating margins could be in the range of 20% to 25%.” So the forward revenue multiple is 40X (!!!), and the price paid per client is $45 (against $20 per MySpace users paid by NewsCorp).

I am sure that we’ll learn more in the coming days, but I don’t (yet) see why eBay needed to buy Skype at such a price to get the product/distribution leverage that is mentioned in the release. Skype is a great service, but it is not the only one available offering a VoIP conduit or a potential Pay per Call solution. And I thought that previous attempts to get buyers and sellers to communicate “in realtime” had failed because sellers don’t want to get stuck being a buyer “support desk”. I welcome contrarian views, especially as I have seen my eBay stocks losing 30% over the past few months.

The information about the earn-out is interesting as well: some investors have decided to cash-out and run, others to hang in there, and potentially profit from Skype’s  future performance. Can’t wait to see the SEC disclosure.

A key learning: after this one, no deal is impossible or unthinkable.

More:

• Pierre Chappaz, the Founder of Kelkoo (sold to Yahoo! for over $500M), writes (in French) that Yahoo on the case but was not ready to pay the price that eBay agreed to ultimately. He sees the reasons I mentioned: adding a communication mechanism to eBay’s marketplace, expansion of Paypal beyond eBay to be used as “the” payment infrastructure for Skype, and maybe – leveraging eBay’s resources to become a much bigger player in telecommunications.
  Sort of bringing together markets AND conversations.
• Rich Therani comments on his VoIP blog:

Right now, Skype gets just over a dollar per active user. I am sure eBay thinks – and they are likely right , that Skype will grow its active user base and also grow its revenue per user. So in another 18 months or less we can expect Skype to have 100 million active users and perhaps each will pay an average of $3. This gets us to $300 million.
Of course Skype has its potential problems to deal with. Port blocking in some countries and the declaration that Skype is illegal and a fining offense are obviously not too good for your business model. Still, this is exactly what happened last week in China. Will China become a model for the rest of the world or an isolated incident?”

• Rob Hof posted a long analysis of the deal and its business fundamentals. Interviews of small merchants has led to what I hinted regarding their relative lack of interest on interactive communication feautures.  I’ll also point to his conclusion:

The big question remains whether eBay has overpaid for a business that’s unprofitable, beset by lots of competition, and unrelated to its core business. Whitman noted in the conference call that “our overarching goal is to grow faster than e-commerce” overall. Investors will have to decide in coming months and years whether she overreached in the pursuit of growth.

• Paul Kedrosky is “seeing the glass half-full”, i.e he is midly positive on the deal. I would actually have expected Paul on the “half-empty” side as I am still for the moment. See Skype Dices! It Minces! It Chops!.
• Staci from PaidContent does a thorough job summarizing the investor pitch (here is the presentation and the press pack) and some key numbers and providing PC’s analysis on the deal.
• David Cowan discloses (in the comments) that Bessemer made about 150X on their Series A investment. Not too shaby (far from it), though the actual amount is not mentioned ($1–2M ?).
• Steve Jurvetson, in his usual self, just posted a picture and a “congrats” comment. DFJ is going to make several hundred millions on this deal (if not in the $B if Draper Luxembourg is an affiliate of DFJ as opposed to a private investment vehicle of Tim Draper), so we could have understood a bit more exhuberance.
• Ross Mayfield reports from Skype Estonia that it is business as usual. Yeah right, they’ll keep on wearing T-Shirts in the office – from now on, they’ll just be Lacoste originals.
• Chris Carfi sees 3 fundamentals in the acquisition: an opportunity to extend eBay communities to the desktop, a highly strategic move into emerging markets, and an integration of PayPal into the Skype interface.
  "One" and "three" make sense, and are sort of two different angles of the same always on presence. "Two" is much more challenging IMHO, owning the conversation conduit is not enough to generate the market.

In memory of the dot-com era

A good Sunday read from CNET.com that features its Top 10 dot-com flops:

1. Webvan
2. Pets.com
3. Kozmo.com
4. Flooz.com
5. eToys.com
6. Boo.com
7. MVP.com
8. Go.com
9. Kibu.com
10. GovWorks.com

Not too sure how the list was compiled, since some of these companies did not go down the hole after spending “that much” money, but they were certainly icons of the bubble era: Kibu.com shutting down within a few weeks of launch, or GovWorks.com that became famous through the feature film Startup.com.

They might also have done a top 50 including the likes of Excite@Home (though one could argue that it was an ISP), wine.com – which raised about $100M – and sold its assets to eVineyard,  NetCentives ($130M VC/IPO – Chapter 11), EggHead.com ($120M VC/IPO – Chapter 11), Jobs.com ($100M VC – Chapter 11), etc.

Even though they were not dot-com themselves, I would also mention two firms that were closely involved with these companies, and had the same fate: lawfirm Brobeck Phleger and Harrison, and merchant bank Comdisco. Just to complete the remembrance.

Let’s just hope that the hyperdrive-charged IPO of Baidu.com, which saw a 354% jump on its first tranding day, does not mark the beginning of the second dot-com bubble.

SpaceStation to Houston: what are those BIDU shares that have shot up into the stratosphere ?

Note: When I came back from lunch, the stock had shot up again to close at $122.54. What’s above the stratosphere ?

Baidu.com (BIDU) just made its debuts on Nasdaq, and went from an original IPO pricing of $14 to an pre-open price of  $27 to an open of $66 to $99 $122.54 in a couple of few hours. This chinese search engine, which is set to earn $12M on $30M of revenues, was awarded a $3.6B market cap – representing a 300x (forward) earnings multiple.

Bambi Francisco wrote in a note before the stock opened:

Due to healthy demand for the 4 million shares available -- Baidu had intended to sell 3.7 million shares at $20 apiece -- it's hard to imagine this stock not trading at $30 or $40 some time in the near future, if not today.

Then a few minutes ago, in Baidu feels like Netcape redux, but where’s Meeker:

To the amazement and even awe of many traders on Wall Street, Baidu shares traded Friday at well above $90, more than three times its initial price of $27. See IPO Report.

Even though this looks like a bubble IPO, Bambi makes the point that there have not been that many interesting tech companies going out since GOOG a year ago. And China is a very big market. Still, a stock shooting 354% on the opening day makes you wonder. Actually, according to MarketWatch, “Baidu.com's first-day gain ranks 18th in history and ranks as the best performance ever by an overseas deal”.

Digging a bit in this registration statement, you find the following information about the company’s 3 rounds of financing:

• In February 2000, we sold a total of 4,800,000 shares of Series A convertible preferred shares in a private placement at a price of US$0.25 per share. Each of Integrity Partners, LLC and Peninsula Capital Fund, LLC purchased 2,400,000 shares from us in our Series A convertible preferred share private placement.
• In September 2000, we sold a total of 9,600,000 shares of Series B convertible preferred shares in a private placement at a price of US$1.0415 per share. The investors in our Series B preferred share private placement consisted of Draper Fisher Jurvetson ePlanet Ventures L.P., which purchased 7,200,000 shares, IDG Technology Venture Investment L.P., which purchased 1,440,000 shares, Integrity Partners, LLC, which purchased 600,000 shares, and Peninsula Capital Fund, LLC, which purchased 360,000 shares.
• In June 2004, we sold a total of 2,248,877 shares of Series C convertible preferred shares in a private placement at a price of US$6.67 per share. The investors in our Series C convertible preferred share private placement consisted of Google, Inc., which purchased 749,625 shares, Draper Fisher Jurvetson ePlanet Ventures L.P. and its affiliates, which purchased 749,625 shares, Integrity Partners V, LLC, which purchased 202,399 shares, Peninsula Capital Fund I, LLC, which purchased 193,403 shares, CMT CV-BD Limited, which purchased 164,918 shares, Venture TDF Technology Fund III LP, which purchased 149,926 shares, China Equity International Holding Company Limited (BVI), which purchased 23,988 shares, and Swiftcurrent Offshore, Ltd., which purchased 14,993 shares from us.

The largest shareholder in the company, Draper Fisher Jurvetson ePlanet, an affiliate of DFJ, invested $7.5M in the Series B, and $5M in the Series C. This $12.5M investment allowed them to own close to 8.2M shares worth today… $1B (and change). Not exactly the $2.4B that Sequoia and KP had (virtually) in their pocket at the close of the GOOG IPO day, but a heck of a deal. Congrats!

Update: Now, Reuters is pointing out that in this ‘95–like run-up, Baidu has actually missed on an opportunity to price higher. However, as CEO Robin Li is pointing out, Baidu only sold 4M shares and can enjoy its market capitalization of $3.6B. Li is now worth $800M (on paper), and pocketed about $6.5M selling 250,000 shares in the offering.

I would not be surprised if someone involved in Baidu today had said: “Told you we should not sell to Google”. Not too bad of a day for Google anyway, their 2.6% in Baidu is worth $100M (on paper).

More:

• SiliconBeat has a great analysis (as usual) of Baidu’s situation:  Baidu's 1,000 PE ratio. Sure, that's sustainable...

Computer Associates takes out Qurb

Linus Upson, one of the co-founders of Qurb sent me a note announcing that Computer Associates Acquires Qurb. This is not a real surprise as the anti-spam market is still undergoing a consolidation after acquisitions from Symantec (BrightMail, TurnTide), Sophos (Activestate), Mc Afee (DeerSoft) and Microsoft (FrontBridge) in the space. And there are still a lot of independant players: MailFrontier, CloudMark, Proofpoint,...
The acquisition was actually announced last Tuesday (press release here), but I missed it as I was traveling back to the US.

I hope that the Qurb team did OK in the cash deal (terms not announced). They had licensed their technology to CA for inclusion in its eTrust platform, and as often, got acquired as a logical next step. CA is not renowned to pay great multiples though.

Qurb was actually developing a couple of other products, bundled together in a suite they were selling $29.95: an email search that was ultra-fast (so much faster than LookOut) and that I had been happily using ever since Linus introduced me to it, and an Outlook-based RSS feed reader that was still in beta but included a couple of interesting concepts.  The anti-spam product  was good, I was not really making use of it since Gmail filters very effectively most of the spam I get.

All the best to the Qurb team for the integration in CA, and to Linus for his pre-announced next move.

Stunning returns for Google VCs

In one of his landmark posts, Bill Burnham dissected SEC filings and other publicly available information to tell us Just How Much Did VCs Pocket On Google?

I recommend the reading to anyone interested in understanding VC exits, and to some extent, how profits are split in VC partnerships - unequally so.

As a reminder, Kleiner Perkins Caufield & Byers and Sequoia Capital invested $12.5M each in Google in 1999, for about 24M shares. Both funds have distributed a majority of these shares to their own investors, otherwise their investment would be worth $7.1B (at today's closing price).

Because of the distributions of shares at "lower prices", Bill estimated the value of KP's investment at $4.3B, i.e a multiple of 344x in 6 years. This is the number that will be used to calculate the performance of their $500M fund IX (?), which was returned multiple times with just that investment.

Sequoia Capital invested out of their $250M fund VII, and got similar returns (Bill could not track down the exact timing of distributions to Limited Partners).

In both cases, General Partners - whose carried interest is reportedly 30% - made at least $1B.

Not bad for backing something that started as "BackRub".

French software maker Meiosys picked up by IBM

I have often mentioned Meiosys in my talks on European Venture Capital as a model of European technology company that had developed a strong IP and product suite "over there" in Toulouse, France - financed by French and German capital, and then "flipped" to become a Delaware company,  and hired a US CEO.

The exit is also "by the book" for a European company: the company has been acquired by IBM this morning for an undisclosed amount. Employees in the Palo Alto office will be moving to Menlo Park with their newly distributed IBM laptops, in a remarkably speedy integration.

Meiosys had raised a total of $16M from Partech, Siparex, Cisco Systems, Credit Lyonnais Private Equity , Alven, Baytech Venture Capital and Wellington Partners. The last round was a $7.5M series D that closed last September. They had developed a very interesting Linux clustering technology that enables the pooling and virtualization of servers, enabling increased resource optimization, application performance and fault tolerance.

The Register had the following quote from IBM:

"The state-of-the-art application-relocation capabilities and fault-tolerant technology from Meiosys complement IBM's current systems software offerings," said Rod Adkins, a VP at IBM. "This acquisition gives IBM the ability to provide even more innovative capabilities for Unix and Linux, and will help advance our information on demand strategy and virtualization capabilities for clients."

Philippe Collombel from Partech was on my VC panel at Innovate!Europe (which I have yet to blog), and hinted that they had an exit in the works (but would not tell me which). One of the remarks he shared with the audience was "Thank you Corporate America for providing us with exit opportunities". One more example - by the book.

Congratulations for a great exit to Marc Rougier, the Founder of the company, and to my friend Nicolas El Baze, who represented Partech on the BOD of the company.

Reuters: Future looking brighter ?

This one is close to my heart, since I have spent 15+ years of my professional life in the Reuters world, successively as a business partner, a senior executive and a venture capitalist.

Rafat points to a great piece from TheDeal.com: Dispatch from Reuters, which goes in quite a bit of detail into the history of M&A deals that have shaped the past 12 years of Reuters.

The piece obviously forgets to mention the 1993 acquisition of Effix (the startup that yours truly was involved in), which was bought for the Unix applications we had developed, and that were competing furiously with Teknekron Software Systems, bought by Reuters in 1994. I'll always remember our first dinner at Il Fornaio after the acquisition, the two teams meeting for the first time and trying to figure out how we'd turn from external enemies into internal allies. But that's another story... and now they are very good friends.

As I was joking with Eric Lint (the Head of Corporate Development of Reuters) over IM, the acquisition of Effix must not have been that bad, since it is one of the only acquired entities that is still alive and kicking in the Reuters Group, developing the Reuters Desktop and the Risk Management product line, amongst many things.

This paragraph summarizes the Reuters situation:

[Started 3+ years ago] A program of divestitures and restructuring, dubbed "Fast Forward," has stabilized and rationalized Reuters, a company that used to have 1,400 products and now has about 50. A couple of well-integrated acquisitions have brought in new talent and helped position the company to better compete with archrival Bloomberg LP. Sometime this year, Reuters expects that revenue from its core financial services businesses will finally stop shrinking and start growing again. And soon — but not yet — CEO Tom Glocer plans to unveil a new corporate strategy. "It's a growth-oriented strategy," is all Glocer will say until July. "And although we're open to a lot of interesting new markets, the good news is that our existing markets, as we've redefined them, have the ability to support decent growth."

As the revenue of financial products finally stabilizes, it sounds as though Reuters is also going to establish a larger footprint directly with consumers, fueled by recent hires such as Janet Scardino, the former VP of International Marketing at AOL. Rafat's audio interview of Chris Ahearn, the President of Reuters NewMedia (and former head of LabMorgan) also clarifies this position.

I still have many many friends in the Group, and wish them all a great success.

Disclosure: I am still a Reuters shareholder.

M&A: another week, another $5B. Update: Make it $6B.

Another busy week in perspective:

• The Financial Times reported over the week-end that an acquisition of Instinet was about to be announced, for  $1.8B. Nasdaq would buy the electronic trading platform, whilst Roger Mc Namee's Silver Lake Partners would acquire the brokerage operation. It is actually not clear whether the $1.8B figure covers the latter business (Dow Jones values it at an additional $400M)
  Nasdaq already bought Brut and the Brut ECN last September for $190M. Brut was one of the properties of Sungard Data Systems, which has just been acquired for $11.3B by a syndicate of Private Equity firms led by... Silver Lake Partners (the largest tech buyout ever). Small world...
  
  Reuters, which would receive $1B if the deal closes as reported, was still a major owner of INGP. It had announced their intentions to get out of the electronic business last year. I still remember when INET went public at $14 in 2001 (and I sold it for $20 or so).
  
  Update: CBS MarketWatch reports that Nasdaq has announced the $1.88B acquisition of the Instinet group.

Instinet stockholders will receive approximately $1.88 billion in cash. Nasdaq will pay $934.5 million, according to the terms of the deal, while private-equity firm Silver Lake Partners will pay $207.5 million. The balance comes from Inet's available cash, including approximately $174 million from Bank of New York.
Instinet's other major unit -- Instinet, the Institutional Broker -- will be acquired by Silver Lake once Nasdaq completes its acquisition.
Bank of New York will acquire Instinet's Lynch Jones & Ryan Inc. unit, which provides commission recapture services to institutional clients.
Nasdaq will go into debt to pay for the deal. The market will issue $750 million in six-year corporate bonds and another $205 million in convertible notes to cover the costs of the acquisition.
Silver Lake Partners and buyout firm Hellman & Friedman LLC, Nasdaq's largest shareholder, will receive warrants to purchase additional shares of the Nasdaq.

• CBS MarketWatch reports that Adobe Systems and Macromedia's board of directors have approved the an all-stock acquisition of MACR by ADBE for $3.4B, at a 25% premium of the last closing price of MACR. Shareholders of Macromedia will own 18% of the resulting company, which will be led by Adobe's CEO, Bruce Chizen and will have combined revenues of  $2.14B.  And Adobe will buy back $1B worth of stock after the close of the transaction.
  
  "Customers are calling for integrated software solutions that enable them to create, manage and deliver a wide range of compelling content and applications – from documents and images to audio and video," said Bruce Chizen, chief executive officer of Adobe. "By combining our powerful development, authoring and collaboration software – along with the complementary functionality of PDF and Flash – Adobe has the opportunity to bring this vision to life with an industry-defining technology platform."
  The press release is here.

More: ZDNet UK positions the combo against Microsoft, CNET reports on the conference call Chizen held this morning. And don't miss Marc Canter's take (as the founder of Macromind).
Jason Kottke has one of the most comprehensive roundup on the deal.

• A couple of days ago, the New-York Stock Exchange has announced that it was acquiring Archipelago Holdings, which runs another ECN, ArcaEx. The value of the transaction has not been reported, but AX had a market cap of $885M the day of the announcement. Again, CBS MarketWatch has a good coverage of the news, including market and regulatory implications.