Posted on 05. Mar, 2013 by Harvey Sax.
I have to give Vocus management credit for being responsive to shareholders. I know firsthand that the management of a public company can become beleaguered by shareholders when their stock gets crushed. So when I complained about not getting one of my questions answered by the CEO , I didn’t expect an immediate response. Yet I got one today from the CFO no less.
Vocus is one of the new companies staking out the social marketing space. It’s a cloud based software suite that includes PR Web, iContact, and tools to listen and interact with Facebook and Linkedin users. I tweeted to the CEO that “for someone who was expert at social marketing, he was tone deaf to shareholders.” It didn’t take long to get noticed. The CFO, Steve Vintz took time before catching a flight to answer some of my questions. Anyway you want to slice and dice that, that’s impressive! That’s what social marketing is supposed to be about, catching that person in line waiting to check into the Bellagio and telling them there is no wait at the hotel next door, right?
We are enticed by Vocus’s software application. It’s state of the art. I can’t tell you how well it works yet because it really is a work in progress and they won’t let you trial run it. Maybe if management reads my blog post they’ll consider changing that position. After all giving people a free or near free look got a lot of customers for Salesforce.com.
I still believe, in fact I know I am right that the Company grossly overpaid for iContact, an email list company, but the vision Vocus has for the future is big and they absolutely needed a mail product. They just didn’t need one at a cost of over $2000 per subscriber. I don’t think I’m wrong about that per subscriber figure cost as I gave Mr. Vintz two opportunities to correct my math. Instead he only talked about how transformational an acquisition iContact was. Mr. Vintz, you are right, it was transformational. It turned Vocus stock into a dog.
I was wrong though in my earlier post about when the final bill comes due. They have quite a bit of breathing room, not until February 2017 to come up with the approximate $70 million they will need if their stock is not at or above the conversion price. Either way these stock conversion deals are horrible for existing shareholders. Fortunately we weren’t one of them at the time. If the social media market stays hot for a couple more years, Vocus might be one of the big winners. My suggestion to them is that the next time they think about doing an acquisition, add CRM to their suite so small businesses like my own can have a real option to escape from the tyranny of Salesforce.com. Oh one last thing, Mr. Rudman. Please don’t overpay the next time. Sax Angle Partners, are shareholders now.
Posted on 10. Jun, 2012 by Harvey Sax.
Silicon Valley Faces Private Sanity Check
By ROLFE WINKLER
A wave of sanity is washing over Silicon Valley after Facebook’s FB +3.00% listing debacle, and that may be bad news for private companies looking to raise money. Suddenly, investors seem to care about business fundamentals again.
Instagram surfed the wave perfectly. Despite having no revenue, it sold itself to Facebook for cash and stock currently worth $920 million. But the new focus on fundamentals makes it trickier for hot start-ups like Twitter,LivingSocial and Square to justify the peppy private valuations they have recently received or are seeking.
via Silicon Valley Faces Private Sanity Check – WSJ.com.
Posted on 27. May, 2012 by Harvey Sax.
Facebook IPO Seen Deepening Investor Distrust Of Stocks
By Elizabeth Ody and Margaret Collins – May 25, 2012 10:01 PM MT
Facebook Inc. (FB)’s initial public offering, plagued by trading errors and a 16 percent drop in the share price, will push more individual investors out of a stock market they already distrust after the financial crisis.
“This is clearly the latest in a long string of events that is eviscerating the confidence investors have in the market,” said Andrew Stoltmann, a Chicago attorney who represents retail investors. “The perception is Wall Street jiggered this IPO so the underwriters made money, Facebook executives made money and the small investor got left holding the bag.”
Ironically I feel pretty much the opposite of the headline. If the IPO worked well and crowd mania held sway, I’d say that the market is irrational and impossible to make money or predict correct behavior. Facebook is grossly over-valued as are all social media stocks. Technological obsolescence is so great in this industry, it’s hard to put long term growth rates on any business. Furthermore barriers to entry are low and behavior is fickle. Tomorrow’s disrupter is happening somewhere right now. The Internet, cloud, web, whatever is becoming balkanized. Facebook, Linkedin, Google +, iPhone, etc are all full steam ahead creating silos of users instead of the grand connected experience that advertisers are banking on Once they realize the web is mature in this country and soon most of the world, it’s growth rate won’t be much more than population rates and a fight for market share. This is not a high multiple growth business as the stocks indicated. They are all shorts, everyone of them.
via Facebook IPO Seen Deepening Investor Distrust of Stocks – Bloomberg.
Posted on 11. Apr, 2012 by Wilensky.
Rob May, who is a co-founder of Backupify (online data storage) just posted some interesting information on his blog. In case you ever wondered just how much your Yelp review or Tweet, was worth in real life dollars, here’s what he found:
Check-in on Forsquare= $.40
LinkedIn Search= $.124
Facebook Share= $.024
and last we have a Yelp review= $9.13
Keep in mind, May produced relatively rough estimates of these valuations based on the parameters he came up with. Read more about how he came up with the valuation here: How Much Is a Tweet Worth? – Businessweek.
Posted on 21. Mar, 2012 by Wilensky.
LinkedIn shares shot up almost 8% today on good news from the Goldman camp. Analysts decided to raise the price target $55 to $135 and up the rating from Hold to Buy. While shares of LNKD broke the $100 dollar mark for the first time since the IPO on this news, many consider the price target to be rather excessive, despite the fact that nobody should listen to price targets anyway. According to Goldman, there is a “high perceived value” of LinkedIn services among recruiters and is poised to benefit from the increase in mobile usage and advertising. It’s hard to see how, based on these facts, an extra $35 per share will be squeezed out of a company that is more or less a social jobs board.
LinkedIn rises 8 percent after Goldman upgrade | Reuters.
Posted on 31. Jan, 2012 by Wilensky.
I’m sick of Facebook. The name makes me cringe every time the talking heads on CNBC spout out the same regurgitated facts; all too reminiscent of Armani clad penguins feeding vast fields of their young. Regardless, here’s some news that might get a smile out of your spiteful inner self: lawsuits against the social media giant are rapidly piling up as we near the initial public offering. No, the company didn’t decided to go on one last rampant crime spree just before going public. It’s the scent of money in the air that drives the shoals of patent lawyers into a frenzy, the metamorphosis of a galvanizing concept into billions upon billions of dollars. And Facebook is the fattest victim to enter their waters in quite a while…
“Last year, Facebook was named as a defendant in 22 lawsuits accusing it of patent infringement, double the number from 2010, according to a Reuters analysis of court documents on legal database Westlaw, a Thomson Reuters unit. Among the lawsuits is one alleging Facebook violated a patent that covers the core ability to transmit messages to large networks of users. Facebook said in a court filing earlier this month that it will seek to dismiss that lawsuit.
Previously, the bulk of legal challenges brought by patent holders against tech companies has focused on markets like smartphones, with defendants including Apple and Microsoft. The attacks against Facebook signal that social media has become a new front in the Silicon Valley patent wars. The company’s adversaries include a former lawyer at Kirkland & Ellis, one of the biggest U.S. law firms, whose new firm filed the lawsuit over how Facebook transmits messages.
Before 2010, online game developer Zynga, Web discount deals operator Groupon and professional social network operator LinkedIn had not faced a single patent lawsuit, Westlaw data show. Last year, the year those three companies went public, the lawsuits mounted.
Facebook faces more patent cases than any of those other companies.”
via Analysis: Patent plaintiffs target Facebook as IPO approaches | Reuters.
Posted on 24. Jun, 2011 by Harvey Sax.
Balkanization, or Balkanisation, is a geopolitical term originally used to describe the process of fragmentation or division of a region or state into smaller regions or states that are often hostile or non-cooperative with each other..
You need to look no further than a stock chart of Google or this unbelievably depressing Chart of the Day from the SAI Business Insider. Facebook’s Unbelievable Effect On The Rest Of The Web.
Or for that matter the meteoric rise in price of LinkedIn’s IPO. When I first started an Internet company in 1994, the web held the promise of making the world accessible to everyone from their living room. Now it is turning it into silos of data and experience fenced off by proprietary applications with their cumbersome API’s. Facebook is designed more like a shopping mall with labyrinthine pathways constructed to confuse and capture rather than show you the way to your intended destination.
Try communicating with someone in LinkedIn outside LinkedIn? LinkedIn is more like LinkedOut. You have to ask them to send you their email as LinkedIn does everything they can to keep you locked into their shopping mall.
I’m almost a little sorry for the Google believers. The promise of the entire world’s knowledge and experience is actually not quite as important as we thought. And add to the woes of investors- the FTC has been worked up into a frenzy by Google’s rivals and is now investigating the Company whose corporate creed is “Do no evil.” There will be a time to buy Google’s stock again but I don’t think it is here just yet. 15 times this year’s earning estimate of $29.60 would be a fair price in a world of zero interest I guess. That pegs the price at around $444. If Google were to drop to $400 it would be a bargain.
Posted on 04. Jun, 2011 by Harvey Sax.
In Silicon Valley the terms of venture capital deals, the prices of valuations and the real stories of ousters are routinely dished, whether they always show up in the press or not. Sure it’s all off the record or on background or whispered at a coffee shop, but people who live here love what they do and when companies and valuations grow this quickly, it’s hard to keep the juicy details under wraps.
So when they can’t dish, what do they do? Hide.
Posted on 23. May, 2011 by David Spinowitz.
Linkedin is a social network geared to the work world. The company has more than 1,000 employees and 100 million members in more than 200 countries. Now it will be one of the first major social media IPOs. Let’s take a look at the history behind Linkedin’s IPO…
Source: The Credit Score Blog