Blackstone Group on Friday reported a tidy profit, citing continued healing of the global economy.

New York City-based private equity firm Blackstone posted a $275 million third-quarter profit on revenue of $604 million compared with a $503 million net loss on a $229 million revenue deficit in the same period a year ago.

Blackstone shares climbed $0.85, or 6 percent, at $14.72 in afternoon trading.

“Debt and equity markets around the world extended their gains from the lows in March. The notable difference between the second and third quarters is the tangible evidence we’re seeing of economic recovery,” Blackstone CEO Steve Schwarzman said on a conference call with analysts.

The financial turnaround for the private equity giant comes as investors expect a near bottom in the global financial markets. Blackstone also attributed gains to improvements in lending markets, access to equity capital, and IPO markets.

Blackstone’s CEO cautioned on celebrating a full economic recovery too soon, noting that unemployment reached 10.2 percent on Friday and consumers are still “weak” and “over-leveraged.”]]>Scott MartinFinanceInternetCommunicationsGeneral newsComputershttp://www.redherring.com/Home/26219#0Fri, 06 Nov 2009 13:57:36 GMThttp://www.redherring.com/Home/26219http://www.redherring.com/Home/26218

Aging startup Ancestry.com finally made its Nasdaq trade debut, but its performance was certainly no return to the heady days of its early roots in the late 1990s.

Investors buoyed shares $0.70, or 5 percent, at $14.20 by close of trading Thursday. The company raised $100 million in the initial public offering. Ancestry.com and its investors sold 7.41 million shares at $13.50 apiece, bringing the company’s market capitalization to $572 million post-sale.

What’s notable about the IPO is that Ancestry.com marks yet another private equity-backed offering. Among selling shareholders were W Capital Partners and Spectrum Equity Investors, the later holding about 10 percent of the company, according to U.S. Securities and Exchange Commission documents.

Provo, Utah, Ancestry.com boasts the world’s largest Web destination for tracking family histories. The company reported over 1 million paying subscribers worldwide September 30, 2009, according to SEC documents.

Ancestry.com shares trade under the ticker symbol “ACOM.”

]]>Scott MartinFinanceInternetMediaMagazineGeneral newshttp://www.redherring.com/Home/26218#0Thu, 05 Nov 2009 14:34:30 GMThttp://www.redherring.com/Home/26218http://www.redherring.com/Home/26174

For VCs, the exit path is still full of blockades.

Venture capital firms’ returns on U.S. investments slipped for the third consecutive quarter in the first quarter of 2009, according to a  report  from the National Venture Capital Association.

The report, which tracks the Cambridge Associates U.S. Venture Capital Index, said venture capital firms logged a 2.9 percent decline in the quarter. That marks an improvement over the 12.5 percent decline for VC firms in the fourth quarter of 2008 but a slight decline compared with the 1.8 percent dip in returns in the first quarter a year ago.

“The venture benchmark’s first quarter return reflected public market declines, the difficult economic environment, and the absence of IPOs,” Cambridge Associates managing director Astrid Noltemy said in the report.

The Cambridge Index declines come as funding to VC firms and startups has plummeted. Last month, the NVCA reported funding to venture firms collapsed a whopping 82 percent as investments in startups skidded 49 percent compared with a year ago.

The Cambridge report said that venture firms will either have to sell their portfolio companies at reduced values or hold onto them longer because of a “shortage of exit opportunities.”

“It is going to take a full-fledged recovery of the venture-backed IPO and acquisitions market to move these returns back to historical levels,” said Mark Heesen, president of the NVCA, in a statement.

]]>Scott MartinFinanceInternetCleantechCommunicationsGeneral newsComputershttp://www.redherring.com/Home/26174#0Thu, 13 Aug 2009 17:19:17 GMThttp://www.redherring.com/Home/26174http://www.redherring.com/Home/26172

Palm’s iPhone-killer, the Pre, is the one getting shot to pieces.

Sunnyvale, California, Palm in June launched its last-ditch effort to turn around the fortune of the pioneering handheld maker, backed by Elevation Partners, releasing its completely redesigned Pre phone and new webOS. The technology was the product of several years of development, raids on Apple’s engineering ranks, and hundreds of millions of dollars pumped in by private equity firm Elevation Partners.

While initial reviews were strong, sales have since faltered.

“Due to weakening demand, Pre production levels for the remainder of the year have been cut by 0.5 million units,” Collins Steward analyst Ashok Kumar wrote in a report released Wednesday.

Palm shipped roughly 300,000 Pre phones in the first two months of availability. After demand began exceeding supply, the handheld maker in July pumped up production. Unfortunately for Palm that came as demand was waning.

“Momentum appears to have already peaked,” wrote Mr. Kumar.

All this must be giving Palm a hard case of Apple envy. The Mac maker sold 1 million iPhone 3GS models in the first three days after its July 19 launch date. It's that kind of enthusiasm, or cult following, that helped Apple fatten its bottom line, boosting third-quarter net income to $1.23 billion from $1.07 billion in the year earlier.

Elevation Partners can’t be too happy either with its $425 million bet on handheld maker Palm’s resurgence.

Morgan Joseph on Wednesday downgraded Palm to sell from hold, saying sales of its Pre have “slowed significantly.” The investment banking firm said that Palm’s other phones are suffering from cannibalization due to the Pre launch. The firm expects Palm to report a first-quarter 2010 earnings-per-share net loss of $0.24 on sales of $158 million.

Palm shares were down $0.35, or 2.5 percent, at $13.20 in afternoon trading.

VMware on Monday agreed to acquire SpringSource for $420 million in a deal that promises to push the maker of virtualization software into Java development tools.

Palo Alto, California, VMware, a unit of storage giant EMC, agreed to pay $362 million in cash and stock and pick up the tab for some $58 million in unvested stock and options at SpringSource.

“SpringSource is only five years old and has a track record of innovation and expects to be cash flow positive in the first half of 2010,” VMware CFO Mark Peek said on the company’s conference call.

Virtualization software allows a single computer to run multiple operating systems simultaneously, turning one PC into many. What this does is let, for example, companies to run Linux, Microsoft, and Mac servers all at once, on one box, allowing companies with data centers to save resources and money.

San Mateo, California, SpringSource develops subscription-based open-source software. SpringSource’s Spring Framework is the leader in extending the Java programming language and application platform and is used by more than 2 million developers.

“Spring has become the de facto standard programming model for modern enterprise Java, rich web, and enterprise integration applications,” VMware CTO Steve Herrod wrote on the company’s blog.

The VMware-SpringSource marriage promises to boost the combined company’s position in the so-called platform-as-a-service market. The nascent platform as a service, or PaaS, model provides a complete computing platform for others to build Web-based businesses upon. The market for platform as a service is inhabited by the likes of such companies as Amazon and Google. Forrester Research forecasts the market for PaaS to reach $15 billion by 2016.

“We think the deal was motivated by the need to add capabilities for cloud computing that are unique to the cloud computing approach,” Benchmark analyst Brent Williams wrote in a note to clients. Benchmark does not make a market in VMware shares.

VMware is already prepared to sell SpringSource developer tools. That’s because the company has recently added executives from Microsoft and Borland who have a track record in marketing developer tools, Mr. Williams wrote.

For VMware, the acquisition marks its largest such transaction to date. The virtualization software company said it doesn’t expect the acquisition to have an impact on its near-term earnings guidance. Before the SpringSource deal, expected to close in September, VMware had $2.1 billion in cash reserves. 

SpringSource has received about $46 million in venture capital funding since 2007 from Accel Partners, Benchmark Capital, Bay Partners, Meritech Capital Partners, and Dag Ventures, according to Thomson Reuters’ PE Hub.

]]>Scott MartinFinanceInternetMagazineGeneral newsComputershttp://www.redherring.com/Home/26167#0Tue, 11 Aug 2009 16:34:21 GMThttp://www.redherring.com/Home/26167http://www.redherring.com/Home/26162

Chipmaker Avago Technologies on Thursday made its Nasdaq debut, closing nearly 8 percent higher in trading.

Singapore-based Avago on Wednesday sold 43.2 million shares at $15 apiece, the high end of its $13-to-$15 proposed offering price, to raise $648 million in the company’s initial public offering.

Avago shares touched 12.7 percent higher in early Nasdaq trading before finishing up $1.18, or 7.9 percent, at $16.18 by market close.

The Avago IPO represents a hefty exit on the public markets from two of the largest private equity firms at a time when venture capital firms are struggling to take companies public.

Avago was formerly a division of Hewlett-Packard of Palo Alto, California, known as Agilent Technologies, a semiconductor test and measurement company the computing giant spun out in 1999 in a blockbuster IPO.

In 2005, Kohlberg Kravis Roberts and Silver Lake Partners acquired a controlling stake in Avago and took the chipmaker private.

KKR became widely known in the 1980s for its restructuring of former tobacco and packaged foods giant RJR-Nabisco. More recently, the private equity firm has become increasingly involved in technology investments. KKR participated in the $11 billion buyout of SunGard Data Systems in early 2005 as the buyout boom had just begun.

Silver Lake led the storied $20 billion acquisition of disk drive pioneer Seagate in 2000, a move that would take the Silicon Valley giant private.

Lead underwriters in the offering included Deutsche Bank Securities, Barclays Capital, Morgan Stanley, and Citi. Co-managers in the offering included Credit Suisse Securities, Goldman Sachs, JP Morgan Securities, UBS Securities, and KKR Capital Markets.

Avago trades under the ticker symbol “AVGO.”]]>Scott MartinFinanceInternetCommunicationsGeneral newsComputershttp://www.redherring.com/Home/26162#0Thu, 06 Aug 2009 16:57:14 GMThttp://www.redherring.com/Home/26162http://www.redherring.com/Home/26159

Google on Wednesday agreed to acquire On2 Technologies in a stock deal valued at $106.5 million, sending shares of the video compression company soaring 50 percent higher in trading.

Clifton Park, New York, On2 develops codecs, or software that allows video to be compressed or decompressed, making it easier to shuttle the smaller files online. Such technology could be used to speed delivery of videos from Google-owned YouTube as well as cut bandwidth costs.

"Today video is an essential part of the web experience, and we believe high-quality video compression technology should be a part of the Web platform," Google VP Sundar Pichai said in a statement.

Mountain View, California, Google paid a 57 percent premium to acquire On2, based on the trading price of the video compression company the day before the deal’s announcement. On2 has a market capitalization of $67 million.

On2 shares jumped $0.20, or 51 percent, to $0.58 in midday trading. Google shares edged lower $2.24, or 0.49 percent, at $451.49.]]>Scott MartinFinanceInternetCleantechCommunicationsGeneral newsComputershttp://www.redherring.com/Home/26159#0Wed, 05 Aug 2009 12:38:39 GMThttp://www.redherring.com/Home/26159http://www.redherring.com/Home/26157

Bill.com on Tuesday announced it has bagged $8.5 million in funding from investors.

Palo Alto, California, Bill.com provides online-delivered bill management and payment to accounting firms and small businesses. The investment brings its total funding to $17 million.

August Capital led the funding round and was joined by DCM and Emergence Capital. Under the deal, August Capital general partner David Hornik will join Bill.com’s board of directors.

Bill.com founder and CEO Rene Lacerte previously founded PayCycle, also backed by August Capital, which sold to Intuit last month for $170 million.

“In particular, I look forward to continuing my work with David Hornik, who backed me at PayCycle nine years ago,” Mr. Lacerte said in a statement.

DCM is an investor in Red Herring.

]]>Scott MartinFinanceInternetCommunicationsGeneral newsComputershttp://www.redherring.com/Home/26157#0Tue, 04 Aug 2009 15:15:43 GMThttp://www.redherring.com/Home/26157http://www.redherring.com/Home/26156

Ancestry.com on Monday filed with the U.S. Securities and Exchange Commission to go public, intending to raise $75 million.

The aging startup has something Wall Street likes: profits. For the first half of 2009, Ancestry.com reported net income of $8.2 million on revenue of $108 million compared with net income of $1.2 million on revenue of $95 million for the same period a year ago.

Provo, Utah, Ancestry.com is the world’s largest genealogy Web site, counting nearly 1 million paid subscribers as of June 30, up from 460,000 members in January 2004.

Ancestry.com subscribers paid an average of $16.50 per month in the first half of 2009, according to the SEC filing, as subscriber acquisition costs ran $67.30 per member for the period.

Ancestry.com may be the biggest genealogy Web site but it has no shortage of rivals offering similar services for free. MyHeritage, USGenWeb Project, RootsWeb, and Mormon-owned FamilySearch are just a few of the Internet destinations that offer free services.

Spectrum Equity Investors, a private equity firm, wants to cash in on its Ancestry.com investment. Spectrum holds 67 percent of the company’s common stock. Other investors include Crosslink Capital, with 6.2 percent; W Capital Partners, with 6.1 percent; and Sorenson Media, with 5.9 percent.

Ancestry.com took $50 million in venture capital funding between 1998 and 1999 under another moniker, according to Thomson Reuters-owned PE Hub.

Merrill Lynch and Morgan Stanley are the lead underwriters in the offering that counts co-managers Jeffries & Co., Piper Jaffray, and BMO Capital Markets on the ticket.

The company intends to list shares on the Nasdaq or the New York Stock Exchange under the ticker symbol ACOM.

The move brings together two Internet brands known for enormous selections and easy returns. Zappos promises free shipping on delivery and returns.

"Zappos is a customer-focused company," Amazon CEO Jeff Bezos said in a statement. "We see great opportunities for both companies to learn from each other and create even better experiences for our customers."

Under the deal, the Internet retail giant has agreed to acquire all outstanding Zappos shares and outstanding options and warrants in exchange for 10 million shares of Amazon. The Seattle retailer agreed to pay employees $40 million in cash and restricted stock.

Zappos investors include Sequoia Capital, which pumped at least $35 million into the Internet shoe retailer over several rounds.

Las Vegas-based Zappos was founded in 1999 and has since grown to become the largest shoe store online. The shoe seller boasted sales in excess of $1 billion for 2008.  

Amazon also operates Endless.com, an Internet-based shoe and handbag store it started in 2007.  

Aloqa on Thursday snagged a $1.5 million first round investment for its Android application capable of providing users suggestions on places to go.

Palo Alto, California, Aloqa also beta launched its “context aware” app that offers restaurant and entertainment ideas, among other options, to mobile phone users based on their location, preferences, and social connections.

The funding underscores heated investor interest in location-based services on mobile phones.

Along with the funding, Aloqa named Sanjeev Agrawal, a former Google executive, as chief executive. Mr. Agrawal previously served as head of Google’s global marketing and later as vice president of products at TellMe Networks, acquired by Microsoft for about $800 million in March 2007.

“Aloqa makes mobile phones a lot more useful,” Mr. Agrawal said in a statement. “As a user, it’s painful launching browsers and typing or speaking into apps.”

Investors included Wellington Partners and undisclosed angels. Wellington is a pan-European venture capital firm with over $1.1 billion under management.

There’s been rampant speculation about Apple quietly planning a handheld laptop or tablet-sized computing device. Now those rumors may be growing closer to reality.

Cupertino, California, Apple is preparing to launch a tablet PC in October, according to a China Times report. The report said that Taiwanese component makers are busy supplying parts for the new device, expected to cost about $800.

Apple shares advanced $3.82, or 2.76 percent, to $142.34 after the news.

The report is consistent with analyst forecasts.

“Last week we spoke with a Taiwanese component supplier and continue to believe that Apple will launch a tablet, not a netbook, by CY10,” Piper Jaffray analyst Gene Munster wrote Monday in a note to investors.

Mr. Munster said he expects Apple’s tablet PC to be priced around $500-$700. That would mark a formidable product rival to launch against netbooks from the likes of Hewlett-Packard, Dell, Acer, Asus, Lenovo, and others.

Separately, media outlets in China reported that Apple is closer to a deal with China Unicom to distribute the iPhone sometime in the first half of 2010. China Unicom has about 140 million wireless subscribers, nearly double the 78 million of Apple's U.S. partner, AT&T.

Google is not the only one banking on an Internet-based operating system.

Paris, France-based Jolicloud on Wednesday said it has attracted $4.2 million in a first round of funding for its “Internet operating system” aimed at netbooks. The startup plans to use the capital to further develop its operating system, currently in an early test phase, that promises to provide free access to Web application for netbooks.

The investment comes a day after Google on Tuesday made waves with the announcement of its planned open-source Chrome OS, a move that could one day threaten Microsoft’s Windows franchise.

"Jolicloud is a classic example of a massive disruptive opportunity in a market where high risk has a potential to lead to a high return," Atomico Ventures co-founder Niklas Zennström said in a statement.

The funding round was led by Atomico Ventures and had participation from Mangrove Capital Partners. Under the deal, Mr. Zennström, the Swedish co-founder of Skype and Kazaa, has agreed to join Jolicloud’s board.

Formed in 2008, Jolicloud was founded by Tariq Krim, who founded Netvibes. The company plans to release its operating system into public beta later this year.]]>Scott MartinFinanceCommunicationsGeneral newsComputershttp://www.redherring.com/Home/26114#0Thu, 09 Jul 2009 18:05:39 GMThttp://www.redherring.com/Home/26114http://www.redherring.com/Home/26101LogMeIn, a venture-backed startup that offers remote connections to computers, on Wednesday jumped 29 percent in its trading debut on the Nasdaq.

Underwriters on Tuesday priced nearly 6.7 million shares at $16, the high end of the offering range, to raise about $107 million. In the first day of trading, shares advanced $4.61 to $20.29, giving LogMeIn a market capitalization of $441 million.

JP Morgan and Barclays Capital were the lead underwriters in the offering. LogMeIn trades under the ticker symbol “LOGM.”

]]>Scott MartinFinanceInternetCommunicationsGeneral newsComputershttp://www.redherring.com/Home/26101#0Wed, 01 Jul 2009 12:55:44 GMThttp://www.redherring.com/Home/26101