Posts filed under “M&A”

WhatsApp

He’s creatively bankrupt.

Recent studies show that few post and no one clicks through on likes, what’s a poor boy to do?

Buy something with all that Wall Street money to deflect criticism as those prognosticating and investing miss the point.

Steve Jobs is a hero not because he started the computer revolution, but because he continued it. Sure, he dandied up the Mac and got people buying fashion, but truly it was the iPod that broke Apple wide open, with the iPhone and iPad making it the world’s most valuable company.

Amazon has stayed ahead by creating the Kindle, in-house.

I’m not saying that that Apple and Amazon made no acquisitions, didn’t build upon the technology in the field, but I am saying they pushed it to create something new, that caught the public’s fancy. That’s Apple’s challenge today, to continue to innovate with its founder gone.

Microsoft was famous for stealing others’ ideas and then improving upon them. But the lack of vision has hobbled the company. After improving word processing and spreadsheets and the browser and utilizing the company’s OS to leverage their adoption, the company ran out of steam because it just couldn’t innovate.

Facebook innovation is centered on changing privacy and advertising policies, flummoxing users all the while.

The Instagram purchase was akin to an industrialist buying a baseball team.

Nothing is pushing the ball forward, because there’s no vision. The guy in the hoodie is played out.

One can even argue he stole his original idea from the Winklevosses.

Just because you’re under thirty, that does not mean you’ve got your pulse on technology.

Furthermore, execution is key, but it’s built upon a foundation of creativity. You can get a plethora of people to play the notes, but finding someone to write them?

Yes, tech is just like music. A manager can get lucky once. The proof of talent is someone who does it twice, never mind many times.

Kind of like Bruce Allen. Who went from BTO to Bryan Adams to Michael Buble all of whom were different. And Bruce gets little press. But he’s working all the time.

Furthermore, the press and the public were caught flat-footed, because living in the so-called “Greatest Country In The World” they were asleep when it came to WhatsApp. I was too, until I went to Bogota and asked what that app Wendy kept tapping on her iPhone was. She stared at me incredulously…it’s WHATSAPP!

We want to communicate, we want to share. And some are fame whores. But most of us just want to be connected.

And Facebook and Twitter and so many social networks are built upon the fame whore paradigm. Let’s get the wannabe to spread the word, get everybody interested so we can go public and get rich and leave investors holding the bag.

Twitter… Baba Booey said he hadn’t tweeted in weeks. I barely do. Because I see no reason to put another raindrop into a sea of noise. I’m not saying I don’t check my feed, but what happens when only the fame whores are left?

You’ve got Facebook. Which has hit a wall. After the thrill of connecting with everybody you’ve ever known is gone, then what?

BlackBerry missed out, BBM was the first. Well, not really, AOL’s Instant Messenger was the first, but they could never capitalize on that.

Apple has iMessage, but it’s not an open platform.

And we learn that the cell companies are caught flat-footed, the same way the record companies were when ringtones died. Charging for texts? That’s soon to be history.

But is WhatsApp worth $19 billion?

Of course not. But it’s not real money anyway.

Don’t confuse Facebook with Google, which wanted WhatsApp too. Google had a second act, known as Gmail, the company is not only about search. The purchase of YouTube was after the fact. The purchase of Nest? There’s a bit of vision there, but…

Apple is still the king. Because it’s actually making products people want. That they’re paying hard cash for.

But it’s not forever, it’s just until the next big thing.

Social networking is forever. Facebook and Twitter may not be, they may just be features in a future ecosystem.

Meanwhile, WhatsApp is news today and we’ll be talking about something else tomorrow.

But unlike tech, a great song is forever. You don’t have any use for your Windows XP machine, but you still want to hear Gnarls Barkley’s “Crazy.”

You can’t buy the world, the same way you can’t buy romance. Connection is something you feel. Creativity is something inbred. Just because Mark Zuckerberg fleshed out Facebook that does not mean he’s a visionary.

He’s anything but.

Stop drinking the kool-aid.

P.S. It’s truly a global village. But only someone from Kiev seems to know this. Jan Koum set about to lasso the entire world’s users, not just those in the media-savvy, media-hungry United States. If you’re not marketing to the entire world, you’re not dreaming big enough.

P.P.S. Like a great band, the message was sent by fans, not publicity. Marketing is secondary to usage. In other words, people know a good app/track when they see/hear it, and they find out about it from other users.

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Category: M&A, Technology, Valuation

Google’s Nest Labs Acquisition is a Smart Move

Defense! Google’s Nest Labs acquisition is a smart move Barry Ritholtz Washington Post, January 26 2014     With the Super Bowl just a week away, the age-old question of whether offense or defense wins big games is at hand. “The best defense is a good offense,” goes the saying, with the Denver Broncos called…Read More

Category: Apprenticed Investor, M&A

Why Google Bought Nest Labs

>   My Sunday Washington Post Business Section column is out. This morning, we look at Google’s acquisition of Nest Labs. My perspective is that Google is trying to avoid being disrupted or marginalized the way so many other tech companies have been. Here’s an excerpt from the column: “Perhaps the granddaddy of cautionary technology…Read More

Category: Corporate Management, M&A, Technology

Google’s Nest Labs Acquisition is a Smart Defensive Move

I have been thinking about Google’s acquisition of Next Lab’s last week for the eye-popping sum of $3.2 billion dollars. There have been numerous criticisms of the acquisition in terms of cost, with some chatter of this as evidence of a bubble in Silicon Valley. Perhaps it is worth considering this from a different perspective….Read More

Category: M&A, Technology

Happy 100th Birthday, Mother Merrill. We Miss You

click for bigger graphic Source: Bank America     Merrill Lynch Pierce Fenner & Smith turns 100 today. At least, she would have been, if she was a standalone entity, and not a government rescued TBTF entity, forced into a shot-gun wedding with Bank of America. I have a warm place in my heart for…Read More

Category: Bailouts, Corporate Management, Digital Media, Investing, M&A

Too Big To Jail

click for ginormous graphic Source: Source Watch

Category: Digital Media, Legal, M&A

Due Diligence Disasters

Via: Firmex

Category: Legal, M&A

JPM: The Washington Mutual Story

Josh Rosner (@JoshRosner) is co-author of the New York Times Bestseller “Reckless Endangerment” and Managing Director at independent research consultancy Graham Fisher & Co. He advises regulators, policy-makers and institutional investors on banking and financial services (a more complete bio appears at the end of this column).

This is part 2 of 5; Yesterday evening, we published the Introduction. We will be releasing a different part each evening and morning culminating in the release of Rosner’s complete report on Friday morning. On that date, the Senate Permanent Subcommittee on Investigations will release their final report on JPM’s CIO Group (aka the London Whale).

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We will address under-appreciated but material fundamental issues in a forthcoming report. Consistent with the purpose of this report we felt it important to consider outstanding internal control, headline and other extraordinary items that could materially impact JPM’s profitability and potentially highlight further breakdowns in controls.

Washington Mutual: a Story of Opacity and Impunity

Perhaps no other example illustrates JPMorgan’s scorched-earth legal approach better than the disputes over the estate of Washington Mutual (WaMu), which the firm acquired from the FDIC in September 2008. JPMorgan portrays its purchase of WaMu during the depths of the financial crisis as a patriotic act performed by a well-run bank. Its public statements and regulatory filings tell a different tale.

In August 2009, Deutsche Bank, as trustee for about $92 billion of notional WaMu securitizations, filed suit against the FDIC demanding the repurchase of billions of dollars of mortgages that they argued violated representations and warranties in the pooling agreement. The FDIC moved to dismiss the complaint, arguing that JPMorgan had assumed the liabilities in the WaMu purchase. Consequently, Deutsche Bank amended its complaint to add JPMorgan[i]. JPMorgan is protected by a broad gag order that has sealed away, from public view, any internal communications on Washington Mutual. We have had to rely on public information and information provided as a result of freedom of information requests.

After several years of agreeing with the FDIC’s position and acknowledging that it acquired the mortgage liabilities of Washington Mutual[ii], JPMorgan appears to have changed its mind when it realized the enormity the industry’s mortgage putback risks[iii]. JPMorgan is now boldly demanding indemnification from the FDIC Insurance Fund.

JPMorgan, which in the aftermath of the financial crisis, accepted more than $391 billion of government emergency program support[iv], is seeking to shift losses on over $190 billion of Washington Mutual-related mortgage securities onto the FDIC – claiming that for a mere $1.9 billion it bought nearly all of the positive value of WaMu and was able to stick the public with essentially all of the ongoing losses. If the firm fails in these efforts it could be stuck with settlement costs on claims of between $3 and $5 billion. Unfortunately, a continued lack of clarity about the firm’s reserves coupled with recent plaintiff-friendly court rulings that may increase putback settlement costs make it difficult to assess whether JPMorgan is adequately reserved.

Since it began to deny its obligation, JPMorgan has repeatedly tried getting the FDIC to agree that it has approval to settle and then send the FDIC the bill.  The arrogance, impunity and extent to which lengths JPM’s lawyers go in attempts to saddle the FDIC with its own losses are amazing. In a strongly worded letter of response to JPM’s repeated attempts to fool the FDIC into stating or implying it accepted consent, the FDIC strongly states that it has not consented to any actions or inactions by JPM and that “insomuch as these assertions may have become boilerplate language in correspondence from this firm, please consider this letter to be the FDIC’s standing rebuttal” [v]. Still, recent press reports suggest that JPMorgan and Deutsche Bank are engaged in settlement talks and that JPM’s strategy may be to settle with the Deutsche Bank (Trustee) investors, indemnify those investors and have them file a claim against the FDIC for indemnification.

Even beyond losses on the $92 billion of original principal balance for which Deutsche Bank is trustee, there are losses associated with another $100 billion of WaMu mortgage securities over which either JPMorgan or the FDIC will ultimately be required to settle.

The Acquisition

In early 2008, JPMorgan began to do due diligence on Washington Mutual with an eye to acquiring the troubled but still solvent firm, but because of the potential for big losses at WaMu, JPMorgan CEO Jamie Dimon chose not to move forward with an acquisition[vi]. Three months later, WaMu was bankrupt. As the FDIC began to plan for the closing and sale of WaMu, it offered bidders five possible transaction structures[vii], each with different levels of acquired liabilities.

On September 23 and 24, 2008, the FDIC negotiated over JPMorgan’s bid, which was for the acquisition of all of WaMu’s assets and liabilities except for the preferred stock, subordinated debt and senior debt of the bank[viii]. The deal structure that JPMorgan chose also required that the winning bid come at the least cost to the FDIC.

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Category: Corporate Management, Credit, M&A, Regulation, Think Tank

How the USA Ended up with only 4 Airlines

The various bankruptcies and mergers have reduced the major U.S. airlines down to four mega-carriers:   click for ginormous graphic Source: CNN/Money

Category: Digital Media, M&A, Travel

Autonomy Merger Pitchbook

autonomy pitchbook

Hat tip Zero Hedge

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Category: Legal, M&A, Think Tank