Benjamin Kuo’s Blog

Here’s an interesting item: Silicon Alley Insider is reporting that Scripps is trying to sell Shopzilla, which it purchased in June of 2005 for $525M. According to the Insider, Scripps is hoping to get somewhere between $500M and $600M for the company.

There’s more money going into the online advertising  sector again, with the announcement this morning that Specific Media has raised an astounding $100M to invest in mergers and acquisitions.  This space is hopping. Some local companies recently in the news in the sector: Santa Monica’s The Rubicon Project recently raised $6M in October from Clearstone for their online ad optimization software; Los Angeles-based Gorilla Nation, which reps advertising for online sites grabbed $50M in a round in May; Spot Runner raised $32M in August; and Santa Barbara’s AdECN was acquired by Microsoft in July. Not to mention, a continual swirl of rumors around whether or not ValueClick is or is not the target of acquisition.

I was sitting at a lunch the other day at a conference with David Moore, Chairman of 24/7 Real Media (which was recently acquired by advertising giant WPP for $649M) and were were talking about this, and I asked him when the merger/acquisition frenzy in the Internet advertising market was going to end. He told me that right now it’s a giant game of “whack-a-mole” — everywhere you look, a new Internet advertising firm pops up, and then some player in the industry will buy them.

Linksys has been one of Southern California’s big success stories — bootstrapped by Victor Tsao, it was purchased by Cisco for $500M in 2003. Until now, the brand has continued as a separate product line over at Cisco, but there’s been some debate over whether or not to kill the brand name and just go with Cisco. Link to the Slashdot article, plus Om Malik has more over at GigaOm on the ongoing debate.

If Linksys does disappear, the brand will go the way of many other, Southern California businesses which were purchased and disappeared (for example, Overture Services, which is now Yahoo’s advertising unit). Personally, as a consumer (and former product manager) I’d keep the brand name, which has a lot more brand equity than Cisco does in the consumer market; in the consumer hardware business, where margins can be razor thin and consumers gravitate towards brands they have used and trust, it’s probably worth more to be a Linksys than a Cisco.

Interestingly enough, the technology industry hasn’t yet sided with the consumer goods industry, where branding and brand management is a huge deal and no one dares to kill a trusted brand (some examples: Best Foods and Hellman’s; Edy’s/Dreyer’s Ice Cream).

Business.com has finally been acquired, by Yellow Pages publisher R.H. Donnelley, in a deal worth $345M. The company has been rumored to be looking for a buyer since June, and was shopping a pricetag of between $300 and $400M for the company. I spoke with Jake Winebaum about the company earlier this year, on the firm’s move towards user-generated content with Work.com, how the business has been doing, and also on the notoriety the firm has for its record breaking purchase (during the go-go dot com years) of its domain name for $7.5M.

The Wall Street Journal is reporting this morning that Business.com is up for sale, for between $300M and $400M. I interviewed Jake Winebaum, the CEO of Business.com, back in February.

Also, former Intermix founder Brad Greenspan is continuing his vendetta against News Corp., with his own bid for Dow Jones.  For those not familiar with the drama, Greenspan filed (and lost) several lawsuits claiming the sale of Intermix Media to News Corp. defrauded shareholders of the firm by undervaluing MySpace.

Dan Primack reports that San Diego music service Slacker has just raised $40M; plus, Google just confirmed its purchase of Feedburner, which means that Google now owns (almost) everyone’s RSS feed. Plus, the city of Carson loses $45,000 to hackers– and needs to hire a decent IT team — their Treasurer says she “doubts (her computer) had the latest security software patch protections”. Finally, eHarmony gets sued for not offering its services to gays, lesbians and bisexuals..

In the ongoing debate over blog credibility, it seems like the past week or so has been heavy on the rumors, and pretty light on details. False rumors published on Engadget of a delay to Apple’s iPhone took a chunk out of Apple’s market cap last week, and although there were very few announcements, there were rumors that MySpace was acquiring Photobucket; rumors of Microsoft acquiring Yahoo (later denied by the company); rumors of Yahoo Acquiring Bebo; yet more rumors of Google acquiring Feedburner; just to mention a few of the myriad of rumors spreading around the blogosphere. Popular tech celebrity Guy Kawasaki even launched a (much panned) site totally focused on allowing people to post their own rumors.

Although some of these deals may actually happen, in reading about all of these rumors, I keep thinking back to the false Emulex earnings release back in 2000, which cause Emulex to lose $2.2B in market cap, and resulted in InternetWire renaming itself to Marketwire. In that case, a pseudo-trusted source (a press wire) was duped into sending out a bogus release; however, nowadays almost anyone with a blog and an audience can start their own rumor of an acquisition or merger. I wonder if the many rumors/repeated rumors and third hand news reports are doing more harm to the general credibility of bloggers than good?

The online advertising M&A frenzy is continuing unabated this morning, as Microsoft announced it is acquiring online ad firm aQuantive in a $6B deal. The deal comes one day after advertising firm WPP said it would acquire 24/7 Media for $649M in cash, and shortly after Google purchased Doubleclick in a $3.1B deal, and Yahoo purchased Right Media for $680M. The online advertising M&A frenzy has Westlake Village-based ValueClick seeing a brisk rally on Wall Street this morning.

There’s been a lot of rumors about an acquisition of Photobucket by MySpace in the last few days (to the tune of about $300M) , in what appears to be a wildly overheated M&A environment. Aside from waiting for actual details of the deal, it’s interesting to note how Southern California companies have started to become the companies doing the acquiring.

Historically, Southern California companies have been the ones being acquired — usually smaller venture funded firms here have been acquired by larger, Silicon Valley competitors. That still happens quite frequently–Google, for one, has made lots of acquisitions here. And, even the larger, public firms have been the targets of recent acquisitions–i.e. Digital Insight by Intuit, and Filenet by IBM.

However, I’ve noticed that there’s a lot more companies here on the acquiring side of the table nowadays– Broadcom (having recently acquired Octalica and LVL7); Systems, ValueClick (Shopping.net, Fastclick, Pricerunner), Websense (PortAuthority, SurfControl), Experian, Internet Brands (Client Shop, SlowTrav.com, DoItYourself.com, CruiseMates.com, CruiseReviews.com, among others). And, even in the case of acquisitions (for example, the acquisition of ExpertCity by Citrix, and the acquisition of Overture by Yahoo) large operations have continued to run here. The big difference is that with the acquiring companies here, you don’t get that big sucking sound the area has seen in the past when firms have been acquired companies from out of the area (two big examples: Geocities and Earthlink).

InsiderPages.com, which started in Pasadena but moved up North last year, apparently is being acquired, according to TechCrunch. The firm moved to Redwood City  a little less than a year ago after $8.5M in northern California venture capital. InsiderPages started as a project at Idealab in 2004.