Still wondering if cloud computing is the real deal, if it will find its way to a data center near you? Whether they’re buying, building or buddying up, vendors are surrounding their core competencies with everything they’ll need to compete in an increasingly integrated IT market.
Still wondering if cloud computing is the real deal and if it will find its way to a data center near you? Take a look at the last several months: Whether they’re buying, building or buddying up, vendors are surrounding their core competencies with everything they’ll need to compete in an increasingly integrated IT market.
There has been some back and forth over whether the recent spate of IT acquisitions is trend or merely a string of coincidences. Thanks to today’s news that HP is buying automation vendor Stratavia, you can put me in the trend camp. Apart from Dell, HP and IBM buying like crazy, we’ve also seen smaller companies like Quest Software padding their product portfolios, and talk is rampant about who’s next on Oracle’s hit list. EMC bought Greenplum last month. Cloud computing and big data tie all these purchases together. It’s all about scalability, automation and analytics, and how they all fit together.
Ten years ago, the dotcom crash changed the Internet business forever. There’s more emphasis today on making sure that the fundamentals of an Internet business are stronger. Most startups are obsessed with monetization, even if they don’t like to admit it. While nobody would argue that basing a business on fiscal reality is a bad thing, this newfound conservative approach has also had negative effects.
Google (s GOOG) has amended its offer to acquire the video encoding company On2 Technologies (s ONT), throwing in another $26.5 million in cash to sweeten the deal. The move comes after months of protest by On2 shareholders, who filed lawsuits and threatened not to vote in favor of it.
Under the new terms of the proposed deal, Google would still provide 0.0010 of a share of Google Class A Common Stock for each share of On2 common stock, as previously announced. But On2 shareholders would also get 15 cents a share in cash, which adds an additional $26.5 million to the value of the deal to bring it to $133 million.
Limelight Networks (s LLNW), in a bid to get into the fast-growing online ad-serving business, has agreed to purchase EyeWonder for $110 million in cash and stock. The company expects the deal, which it hopes will close in the first half of 2010, to add some $40 million in annual revenues and to substantially boost Limelight’s gross margins as it attempts to move away from a high-capital, low-margin commodity CDN business.
Of the $110 million that Limelight has agreed to pay for EyeWonder, $62 million will be in cash, plus 12.74 million shares of Limelight stock worth some $48 million. An additional 4.86 million shares could be issued in 2011 if EyeWonder achieves certain financial results in 2010. On an investor call announcing the deal, Limelight CEO Jeff Lunsford said the acquisition is expected to be accretive on a pro forma basis by the end of 2010.
EyeWonder will provide a fast-growing and high-margin revenue stream to complement Limelight’s existing CDN business. According to Lunsford, the ad-serving company is expected to have sales of $32-$35 million in 2009, with gross margins in excess of 70 percent. That revenue grew 40 percent on capex of less than $1 million over the past year, according to Lunsford, and Limelight expects EyeWonder’s sales to rise an additional 30 percent in 2010.
General Electric (s GE) and Vivendi (s VIV) have agreed to a $5.8 billion valuation for the latter’s 20 percent stake in NBC Universal, according to multiple reports, making the prospect of a Comcast-NBC joint venture more likely.
By agreeing to a purchase price for Vivendi’s stake, GE can move forward with a separate deal to create a joint venture between Comcast (s CMCSA) and NBC that is valued around $30 billion. Under the terms of that deal, Comcast would own 51 percent of the new entity, which would combine NBC Universal’s broadcast network, theme parks, movie studio, and cable-television channels USA, Bravo, CNBC and MSNBC with Comcast cable networks E! Entertainment, Versus and Golf Channel.
Today’s news comes about a week after GE CEO Jeff Immelt met with Vivendi head Jean-Bernard Levy in Paris to discuss the price and structure of a deal. At that time, the parties were reported to be about $500 million apart in what they believed the stake to be worth.
The companies also differed on when the purchase would go through. Vivendi was looking for some cash upfront in case GE’s deal with Comcast didn’t pass regulatory review, while GE wanted to hold off on a transaction until it was ready to sign off on the Comcast-NBC joint venture. According to a Bloomberg report, the deal comes with some concessions to quell these fears. GE has reportedly agreed to pay up to $2 billion to Vivendi if the Comcast-NBC transaction isn’t completed by the end of next year.
Terms of the deal weren’t disclosed, but the acquisition will come as little surprise to anyone that’s followed the company’s downward trajectory after launching in 2007 with more than $45 million in funding from heavy hitters such as Sequoia Capital, Index Ventures, Viacom (s VIA), CBS (s CBS) and Chinese tycoon Li Ka-shing.
The company was rumored to be up for sale back in the spring, with Time Warner Cable (s TWC) topping the list of potential acquirers. From an operational standpoint, Joost has been badly hobbled since June, when it announced that it had laid off most of its staff and was trying to reshape itself as a white-label video management platform.
In its press release, Adconion said that it intends to continue pursuing the video management business, and that the addition of the Joost assets will further “solidify its position in the online video and content syndication market.” Adconion’s business is all about mass distribution of ads and branded entertainment, so having a video management platform like Joost makes sense. The company also said it would continue to operate Joost.com, both as a place to serve its own ads, and as a showcase for branded entertainment content that it produces.
The new year doesn’t promise to bring much in the way of good tidings for most startups, much less those with the shaky business models found in digital media. But, at the same time, online video consumption is a strengthening reality that won’t be suppressed by tough economic times. So, if you’re involved in a video venture looking out at the spread for 2009, where do you stand? [digg=http://digg.com/tech_news/Your_Favorite_Video_Startup_Might_Shut_Down_in_2009]
First of all, let’s talk about where things ended up last year. The big news items for video startups (and young, internal ventures at big companies) in 2008 were acquisitions, layoffs and shut-downs — and of course fundings. Many of the companies we cover raised funding last year, though the pace of new investments slowed along with the economy. (As for including a category for IPOs…yeah right.) To recap some of the highlights (and lowlights):