Companies

  • 18 May 2007 at 11:13 AM
  • Companies

Microsoft Pays More Than A 100% Premium For aQuantive

microsoftaquantive.jpgOfficially it’s being called an 85% premium from where the stock traded yesterday. But since aQuantive’s shares were trading below $30 a few short months ago—before Google’s acquisition of DoubleClick started a frenzy of speculation about who Microsoft might acquire to get into the internet advertising business—it might be fair to say that the premium is closer to 105%.
Any way you look at the numbers is mind boggling. It’s ten times sales. It’s 45 times cash flow. It’s $6 billion.
It’s hard to make sense of this deal except to look at it through the eyes of Don Lapre.
That’s right. That Don Lapre. The man who brought us the Money making System and taught us all how we were going to get rich. Three words: Tiny classified ads.
His earnest enthusiasm provided a lot of laughs around the dorm room but the campaign also brought him a lot of criticism from those who thought his multi-level marketing plans were pyramid schemes or scams designed to separate the gullible from their money.
As it turns out, Don Lapre was just ahead of his time.

Microsoft snaps up aQuantive for $6 billion
[MarketWatch]

  • 16 May 2007 at 4:52 PM
  • Apple

Engadget Takes A Bite Out Of Apple

appleiphoneengadget.jpgApple shares took a nose dive earlier today on news it was about to announce delays for the release of both its new operating system and the iPhone. The only problem is that the story wasn’t true.
At eleven minutes to noon today Engadget, a popular tech blog, posted an item claiming that the iPhone, which is scheduled to be released in June, would be delayed until September. Shares of Apple promptly plummeted. Less than a half hour later, Engadget began to update the item. A representative of Apple denied the story, and Engadget labeled the delay a “false alarm.”
It seems that Engadget’s initial report was based on a email memo circulated within Apple. The email states that Apple had issued a press release announcing the delay. Commenters on the blog quickly noticed that Apple had not, in fact, issued a press release announcing a delay, raising suspicions that Engadget was a victim of a hoax. (Apple had filed an 8-K today disclosing changes in it’s employee stock option plan and making no mention of product delays.)
Shares of Apple traded heavily as word of the delay spread, at one point pushing the stock down 2.7%.
It’s still not clear how this story got started. Apple says that the email memo about the delay was a fake. Engadget, however, insists it came from a “trustworthy source” and was sent from Apple’s email server.
False alarm: iPhone NOT delayed until October, Leopard NOT delayed again until January [Engadget]

NEWSCORPDOWJONESRUPERTMURDOCHWALLSTREETJOURNALSMALL.JPGOne thing that’s become very clear in the past couple weeks is that a lot of people at Dow Jones don’t trust Rupert Murdoch to preserve the Wall Street Journal’s “journalistic integrity.” Everyone from Pulitzer Prize winners at the Journal, to Journal union representatives, to the Ottaways, to the Bancrofts seem to fear that Murdoch will damage the newspaper. On the face of it, this is rather odd. It almost requires us to accept that the various foes of News Corp’s offer for Dow Jones believe that Murdoch is some kind of monster who wants to acquire Dow Jones in order to destroy it.
It’s very unlikely that Murdoch wants to destroy the journal. And it’s also unlikely that the opposition is motivated by such nonsense. So what’s going on? Well, with a bit of work, we can see that the opposition is not so strange, and we don’t have to believe that his opponents are demonologists. There’s good reason for the friends of the Wall Street Journal to oppose him. They just haven’t done such a good job of spelling it out so far.
Mostly, Murdoch’s foes have pointed to examples which they claim demonstrate his interference with the way News Corp’s properties cover the news. But this evidence is easily countered with examples where Murdoch hasn’t. Indeed, some have said that Murdoch meddles with his low-brow tabloids but leaves the more prestigious titles alone.
“The way I see it, where editorial independence is valuable, Murdoch values it. Where it isn’t, he doesn’t,” Felix Salmon of Portfolio’s Market Movers blog has written.
And we can thank Salmon for helping us narrow the question of why News Corp’s offer is generating so much opposition—because people don’t trust that the values editorial independence enough to leave the Journal alone. But this brings us back to the question: why don’t they trust him. And to really get to the question, it helps to think of it in terms of Blaise Pascal’s famous wager.

Read more »

  • 15 May 2007 at 11:01 AM
  • Bancroft

The Dow of Murdoch: The First Pulitzer Prize Winners’ Letter!

NEWSCORPDOWJONESRUPERTMURDOCHWALLSTREETJOURNALSMALL.JPGA group of Pulitzer Prize winning journalists at the Wall Street Journal have written a letter to members and a representative of the family that controls the newspaper’s parent company, Dow Jones & Co, opposing a proposed acquisition by News Corp, Greg Sargent reports on Talking Points Memo. The letter is signed by a team of reporters based in China whose coverage won a Pulitzer this year.
“We are correspondents who report from China for The Wall Street Journal, and we are writing to urge you to stand by the Bancroft family’s courageous and principled decision to reject News Corp.’s offer to acquire Dow Jones & Co,” the letter signed by seven journalists begins.
The letter, dated May 10th, accuses News Corp chairman Rupert Murdoch of allowing business interests to interfere with the journalistic integrity of news organizations owned by the company.
“News Corp. Chairman Rupert Murdoch has a well-documented history of making editorial decisions in order to advance his business interests in China and, indeed, of sacrificing journalistic integrity to satisfy personal or political aims,” the reporters write.
DealBreaker reported last week that Pulitzer prize winners at the Journal were being urged by opponents of the deal within the paper to write letters supporting the initial rejection of News Corp’s offer by the Bancroft family. It is not clear if this letter came as a response to that effort.
The Bancroft family controls Dow Jones through its ownership of most of the company’s super-voting Class B shares, which wield ten times the voting power of shares of common stock. Family members Leslie Hill, Elizabeth Steele and Christopher Bancroft received the letter, as did trustee Michael Elefante, who represents the family trust which controls much of the family’s shares. All four sit on the board of directors of Dow Jones.
Members of the Bancroft family also received a letter yesterday from Murdoch, dated May 11th, denying that he would interfere with the journalistic integrity of Journal.
“The businesses of Dow Jones, and in particular The Wall Street Journal, represent American journalism at its best. Your record of journalistic independence and integrity is second to none. Any interference — or even hint of interference — would break the trust that exists between the paper and its readers, something I am unwilling to countenance. Apart from breaching the public’s trust, it would simply be bad business,” Murdoch wrote.
The editor of the Times of London also authored a letter denying that Murdoch had interfered with the China reporting or editorial policy of his paper.
Wall Street Journal’s Pulitzer Prize-Winning China Reporters Write Letter Blasting Murdoch Takeover Bid [Talking Points Memo]

NEWSCORPDOWJONESRUPERTMURDOCHWALLSTREETJOURNALSMALL.JPGThis week in the Dow of Mudoch opens with the collective lenses of the media tightly focused on the key players—Rupert Murdoch and the Bancroft family.
(Of course, there’s also that news that Murdoch delivered to the family this morning and that the Bancroft’s are holding a meeting to discuss the offer. But we already touched on that stuff a little while ago. Now it’s time to delve into the fun bits: stalking the principals.)
As we predicted, journalists seem to be hunting down the Bancroft family where they live. Over the weekend, the Journal described the Bancroft’s as divided between those who “distrust Mr. Murdoch’s media conglomerate” and “those at least willing to hear what Mr. Murdoch has to say.” The Journal also ran a family treejust like the New York Observer, but less cute—that broke the family down into three factions. The Hill family is “considered to be the most willing” to take Murdoch’s offer seriously. The Branch descended from Jane Hill are described as “the most fervent about maintaining the Wall Street Journal’s independence.” The rest, apparently, is anyone’s guess.

Read more »

NEWSCORPDOWJONESRUPERTMURDOCHWALLSTREETJOURNALSMALL.JPGThe family that controls 64% of the voting power of Dow Jones & Co is reportedly meeting right now to discuss News Corp’s bid for the company. David Faber of CNBC reported just a short while ago that the Bancroft family, which controls Dow Jones through its super-voting shares, was holding a conference call “right now” to discuss the bid. This may be a sign that the family is re-considering its rejection of the News Corp offer.
Today Bancroft family members received a letter from Rupert Murdoch stating that he regrets the details of the offer had become public and promising to establish an “independent, autonomous editorial board” to oversee the paper. In the letter, Murdoch describes himself as a “first and foremost…newspaper man,” praises the Wall Street Journal’s “journalistic independence and integrity” and says his is “unwilling to contemplate” any interference with the paper’s integrity. He writes that he would like to appoint a member of the Bancroft family to the board of Dow Jones.
“This letter may give the Bancroft’s a way to accept Murdoch gold , if that’s what they’re looking for,” an investment banker familiar with the deal told DealBreaker. “They’re haven’t been any other bidders, which must put pressure on them to accept this offer.”
Murdoch probably hopes that this is exactly what effect his letter will have. He’s steadfastly refused to offer more money than his original offer. Last week, CNBC’s Charlie Gasparino reported that he had been advised not to offer more by his bankers at JP Morgan had told him not to increase the bid. As we explained on Friday, Murdoch’s strategy to win over the Bancroft’s now appears to rely on charm and promises to not ruin the paper.
Murdoch also promises to make efforts to keep the team of “journalists, editors, management” of the Journal and other Dow Jones properties, expand the Journal in Europe and Asia and improve the Journal’s New York headquarters.
Text of Murdoch Letter to Bancrofts [Wall Street Journal]
News Corp & DJ Update [CNBC.com]

NEWSCORPDOWJONESRUPERTMURDOCHWALLSTREETJOURNALSMALL.JPGThe story at the end of week two of News Corp’s bid for Dow Jones is clearly the loss of confidence that this will end in an acquisition. No other bidders have emerged. News Corp hasn’t made any gestures that it might increase it’s bid. Quite the opposite—word is spreading that News Corp won’t increase it’s bid and that News Corp CEO Rupert Murdoch has told a close associate that he is not certain he will prevail.
Murdoch seems to be trying to use charm rather than money to win over the Bancroft family, which controls the company through its super-voting shares and has announced—through a representative on the Dow Jones board—that it isn’t going to take News Corp’s offer. He’s telling jokes. Keeping it light. On the News Corp earnings call he spoke of his admiration for the Bancroft family and Dow Jones management. And he’s more or less apologized for the fact that his offer became public, claiming he hoped to negotiate the deal in private—contrary to rumors that the leak came from News Corp. The point of this is to make nice with the Bancrofts, to take away the impression that Murdoch went public with his offer in an attempt to get the public shareholders to pressure the family into selling the company. No one likes to be strong-armed.
(After the jump: A completely paranoid deal judo conspiracy theory.)

Read more »

Insider-trading-ticker.jpgThat was fast! The Securities and Exchange Commission didn’t waste much time going after investors who bought shares of Dow Jones & Co in the weeks prior leading up to the public revelations that News Corp had offered to buy the company at a steep premium. Yesterday, the SEC filed a lawsuit against a Hong Kong couple, Kan King Wong and Charlotte Ka On Wong Leung, accusing them of insider trading. The couple had purchased $15 million of Dow Jones shares prior to the May 1st announcement.
“It was their first purchase of Dow Jones shares — and a profitable one,” the Wall Street Journal reports today. “After the unsolicited offer was disclosed May 1, Dow Jones shares rose more than 50%. Three days later, the couple had their broker sell their entire position in the stock for a profit of $8.2 million.”
The close timing of the purchases with the announcement make it highly unlikely that this was simply a case of lucky timing on the part of the Wongs. Adding to the suspicion that the couple had insider information is the risk they took on buying the $15 million of stock. Prior to the transactions, the Wongs reportedly had only $433,000 in their Merrill Lynch account available for purchasing equities. They borrowed money from Ms. Wong’s father and used margin loans to buy the stock. Another stock purchase was funded by a money transfer from an unknown person using a JP Morgan Chase account in Brussels. The stock purchases—the couple accumulated the stock over the course of a couple of weeks beginning April 13—were also a stark departure from the usual investment pattern of the Wongs. “The SEC said that prior to their Dow Jones stock purchases, the Wongs owned mostly fixed-income securities, as well as equities valued at $606,600,” the Journal writes.
The questions everyone is asking is: what did the Wongs know and how did they know it?

Read more »