Bloomberg = Mr Fix It

first they want him to run for president, now just buy the NY Times:

NEW YORK (Reuters) - People close to New York Mayor Michael Bloomberg are encouraging him to buy the New York Times Co and save the company from shareholder assaults, while members of its controlling family are interested in a rescuer, according to media reports.

Bloomberg could take the company private and "help protect the brand" with his estimated $11.6 billion personal fortune, Newsweek magazine said in its April 28 edition, quoting an unnamed source.

Shares of the New York Times, publisher of the newspaper of the same name and the Boston Globe, rose as much as 3 percent.

The New York Post reported on Monday that some members of the Ochs-Sulzberger family want to find a protector, according to unnamed sources.

But a Times spokeswoman, repeating a position frequently attributed to the Ochs-Sulzbergers, said the family believes the company's current capital structure is the best way to protect its editorial independence.

US getting taste of its own medicine

April 10 (Bloomberg) -- The Canadian government rejected the C$1.33 billion ($1.31 billion) sale of MacDonald Dettwiler and Associates Ltd.'s satellite business to Alliant Techsystems Inc., marking the first time Canada has blocked a foreign takeover since at least 1985.

Industry Minister Jim Prentice wrote to Edina, Minnesota- based Alliant on April 8 to say the proposed takeover doesn't provide a ``net benefit'' to Canada, according to an e-mailed statement today from his office in Ottawa.

``It's a shot across the bow and the government knows that this will be taken very seriously, not only by the prospective buyer, but also the U.S. government,'' said Richard Clark, a lawyer with Stikeman Elliott LLP in Toronto who specializes in mergers.

Yahoo may be getting away?

SAN FRANCISCO (Reuters) - Yahoo Inc and Time Warner Inc are "closing in" on a deal where Yahoo would merge with Time Warner's AOL Internet unit, brushing aside Microsoft's bid for Yahoo, a source familiar with the talks said on Wednesday.

The source confirmed a Wall Street Journal story saying Yahoo would receive a cash investment from Time Warner in exchange for a 20 percent stake in the combined Yahoo-AOL business. The deal would exclude AOL's fading dial-up Internet access business and value AOL at about $10 billion.

A deal with Time Warner and AOL would be part of a multi-pronged strategy by Yahoo in which it would outsource Web search advertising operations to Google Inc, the source said.

Separately, The New York Times reported that Microsoft and Rupert Murdoch's News Corp are in negotiations on making a joint bid for Yahoo. That merger would join Yahoo, Microsoft Corp's MSN and News Corp's MySpace, the paper said.

Offloading the crap assets (or are they crap?)

April 3 (Bloomberg) -- Lehman Brothers Holdings Inc., seeking to get high-risk, high-yield loans off its books, created a $2.8 billion collateralized loan obligation.

Freedom CLO contains 66 loans, including debt the fourth- largest U.S. securities firm underwrote for buyouts, according to the indenture filed last week. New York-based Lehman will hold a piece of the $565 million subordinated note, the riskiest portion, according to the term sheet. The bank sold $2.2 billion of bonds with investment-grade ratings.

Lehman joins Deutsche Bank AG and Credit Suisse Group in creating CLOs to reduce loans on their books without selling them in the open market. Banks have $200 billion of buyout debt they can't easily sell after the price of leveraged loans tumbled to 88.8 cents on the dollar from 100 cents on the dollar last June, according to Standard & Poor's.

``Banks are focused on managing their exposure,'' said J. Paul Forrester, the Chicago-based head of the collateralized debt obligation practice at law firm Mayer Brown LLP. ``Balance sheet CLOs allow them to reduce the risk to the size of the subordinated tranche they are holding.''

A Lehman spokesman in New York, Randall Whitestone, declined to comment.

Deutsche Bank created two balance sheet CLOs, both named Genesis, in September and November, according to Bloomberg data. Credit Suisse formed the $1.7 billion Integral Funding in September.

First Data, TXU

Freedom contains loans to buyouts including KKR's First Data Corp., the Greenwood Village, Colorado-based payment processor, and power producer TXU Corp. of Dallas, purchased by KKR and TPG Inc. TXU was renamed Energy Future Holdings Corp.

The portfolio also has loans that couldn't be sold to investors, including Sequa Corp., purchased in December by the Carlyle Group, and bank lines for companies such as Countrywide Financial Corp., the largest U.S. mortgage lender, and Imperial Tobacco Group Plc, the maker of Davidoff and West cigarettes, according to the prospectus.

Loans for First Data trade below 90 cents on the dollar. The Countrywide five-year revolving bank line is priced at 79.5 cents on the dollar, according to the prospectus.

Freedom CLO sold the bonds in a private placement. The $2.2 billion in notes will pay interest of 2.25 percentage points above the three-month London interbank offered rate. That debt is rated A2 by Moody's Investors Service, the sixth level of investment grade, and an equivalent A from Standard & Poor's.

Private Equity

The unrated subordinated note pays interest generated by investments in the loans after the rated debt has been repaid. The loans pay an average coupon of 3.5 percentage points above three-month Libor, currently 2.73 percent.

Blackstone Group, Apollo Management LP and Kohlberg, Kravis Roberts & Co., all based in New York, were among the private equity firms that negotiated more than $370 billion in financing to back acquisitions before losses on subprime-related mortgage securities spread to loans, bonds and CDOs.

CDOs, which have helped fuel $232 billion in bank writedowns since the beginning of 2007, repackage assets into new securities with varying risks. CLOs, a type of CDO, repackage buyout loans into new securities.

CLOs bought 60 percent of buyout loans before credit markets froze last year, said Mark Shafir, the global co-head of mergers and acquisitions at Lehman, in an interview last week on Bloomberg Television.

Debt Backlog

Unable to sell primarily to CLOs, banks have reduced the buyout debt backlog by selling loans at discounts to face value to hedge funds and private-equity firms. Several transactions have also failed, such as J.C. Flowers & Co.'s $25.3 billion acquisition of SLM Corp., also known as Sallie Mae. An acquisition of San Antonio-based Clear Channel Communications Inc. may be canceled over a dispute about bank financing.

This year, banks have sold $28.5 billion of CDOs backed by high-yield, high-risk loans, versus $62 billion for the first quarter of last year, according to JPMorgan Chase & Co. data. Lehman's CLO accounted for 40 percent of total March volume, according to an April 2 report from Wachovia Corp. analysts led by Brian McManus.

Lehman reduced its LBO backlog by $6.1 billion to $17.8 billion since the beginning of the year, Chief Financial Officer Erin Callan said on a conference call with investors on March 18. The bank booked losses of $500 million on leveraged loans during the quarter, she said.

Lehman this week sold $4 billion of convertible preferred shares to shore up capital depleted by the U.S. housing slump.

holy sh*t!!!!

from silicon valley insider:

As we prepare to release our SAI 25: World's Most Valuable Startups list, we're running through some final valuation numbers. One company that is a shoo-in for the list is Craigslist (yes, it has been around a while, but we're defining "start-up" as private companies founded in recent memory that has yet to go public or sell out).

We've struggled to get formal business metrics for Craigslist, but ClickZ has summarized a recent report from Classified Intelligence that should help. CI estimates Craiglist's numbers, but it has at least gone through the laborious process of counting listings, pageviews, etc.

So here are some metrics:

2007 Est. Revenue: $55 million
2008 Est Revenue: $81 million
Monthly Pageviews: 9 billion
Monthly Job Listings: 2 million
Monthly Ad Listings: 30 million
Employees: 25

Estimated Costs

Let's assume that each of Craigslist's 25 employees costs about $125,000 a year, all in. That's probably high--Craigslist is run like a non-profit--but it should be in the ballpark. This adds up to about $3 million of salary and other HR costs. Let's assume that Craigslist will grow this year, and let's assume that it spends another few million on prosaic costs like rent, insurance, travel, etc. Total estimated 2008 operating expenses: $7.5 million.

On the "cost of sales" line, let's assume that Craiglist spends a boatload on servers and bandwidth to keep the site running smoothly. Craigslist's content is not at all bandwidth intensive--all light text, no computation or transactive processing like eBay or Google--so this should keep its costs well below those of other huge global sites. Let's call it $50 million a year. (This is probably high--grateful for any help in refining).

Add all that together and use the CI revenue estimate, and you have a business with about $80 million in revenue and, say, $25 million in operating profit. Apply a 10X revenue multiple and/or 25X operating income multiple, and you would have a company worth about $750 million. But obviously Craigslist is worth a heck of a lot more than that.

Craigslist's Real Value

Why is Craigslist worth more than meets the eye? Because it's run like a non-profit. Craig Newmark and co. don't give a damn about generating revenue or profit, and more power to them. But if Craig ever want to sell Craigslist, he'd probably want to get something closer to true value for it--which means we need to think about the company's real earning power.

Let's assume that, instead of charging for job ads in only 11 cities, Craigslist charged for all job ads (currently 2 million a month). Let's assume that it also charged for another 5 million of the 30 million ads on the site each month. Let's assume that Craigslist users were so horrified by the outrage of being charged even a de minimus listing fee that two thirds of these listers stormed off in a huff so that the 7 million of paid listings dropped to, say, 2.5 million a month. And let's assume that Craigslist charged its standard $25 job listing fee for all of them.

What would that generate in revenue? $62.5 million per month, or $750 million a year.

Let's further assume that this outrageous affront to a minority of users--$25 per listing!--would require huge customer service and processing costs, so that Craigslist's overall cost base jumped to $250 million a year. Then we'd have a business with $750 million in revenue and $500 million of operating profit.

Let's put very conservative revenue and operating profit multiples on that--say 7X revenue and 10X operating profit--and we're conservatively looking at a business worth $5 billion.

Thoughts? Speak now or forever hold your peace.

As seen on Techme - Microsoft paid $500m for Danger - Whoa!

genius take - moishe loves himself angles and deals. cant get enough.

Microsoft paid $500 million for Danger, and there’s got to be a reason

Posted By Matt Marshall On February 12, 2008 @ 11:26 am In Business and Technology | 1 Comment

Software giant Microsoft reportedly spent $500 million to acquire [1] Danger, the company that developed software to power the youngster-popular Sidekick.

The figure, while not officially announced, was dug up in reporting by [2] GigaOm’s Om Malik. We haven’t confirmed that exact figure, but we do have enough info that suggests investors made a very good return.

The acquisition comes after Danger swallowed some $225 million from investors, Om says, though I think that some of that may have been debt because we’ve been told the equity investment was less than that. The company’s chief executive Hank Nothhaft was insisting yesterday that the outcome was a “very, very strong exit” for its backers, and it probably was. The company’s valuation crept up steadily from 2000 from about $27 million to $190 million last year, according to our source. So investors pumping in money at these levels all appear to have done well, even the earliest ones who had their money locked up for eight years ([3] we mentioned the investors in our story yesterday; Mobius, though, was the earliest backer).

More interestingly, however, is Om’s thought on why Microsoft is making the move — it wants to “pull an Xbox” on its mobile phone business. Not only does it want to extend beyond the business world and entice consumers, it also wants to use Danger’s software-as-a-service technology to offer “Microsoft Services” such as search, mail and instant messaging on the Danger platform, using it to compete with Google Android.

Like Om, we believe Microsoft should open up Danger’s platform in a more radical effort to make it attractive to developers. In the mobile world, it still has a lot less to lose than it does with an open strategy in the desktop software business, and in fact, it’s probably the only way it will win at this stage.

More Background on the Microsoft/ Yahoo Deal

From the great financial blog, The Big Picture. Click here for other deal related content on Morty and Moishe Recommend...

Was a Private Equity Bid for Yahoo Thwarted by Microsoft ?
Monday, February 11, 2008 | 06:00 AM
in Corporate Management | M&A | Valuation | Web/Tech

Last week, before the Microsoft (MSFT) deal was rejected by Yahoo's Board, some interesting chatter was bouncing around NYC.

The latest rumor to make the rounds was that Yahoo (YHOO) was just about to announce a negotiated transaction for the sale of the company to an East Coast private equity firm. Then Microsoft stepped in the way. We first heard this story sometime between Mister Softee's $31/share, $44 billion hostile bid, and this weekend's rejection of that offer by Yahoo as an insufficient valuation for all of Yahoo's properties.

The rumors of this now pre-empted private bid include the following:

-to be announced as early as February 5th;
-negotiated price was in the $23-25 range;
-some Yahoo! properties to be spun out to shareholders;
...
While this remains unconfirmed by anyone willing to make an on-the-record statement, it is well sourced enough that I suspect there is sat least some degree of truth to it.
...

Corporate chess game - MSFT YAHOO

From Alley Insider - great site!

It's no secret Moishe likes deals and even more then deals he likes angles - here is a story covering the MSFT YHOO deal that talks about all the angles.

How Will MSFT Respond To YHOO's Counter?

Henry Blodget | February 9, 2008 5:54 PM

Yahoo's "rejection" of Microsoft's $31 bid isn't a rejection but a counter-offer of $40 a share. It remains to be seen whether the company will state this explicitly in its letter to Microsoft (unlikely), but it has already sent the message through theWall Street Journal. So the next question is...how will Microsoft respond?

The answer likely depends on how impatient Steve Ballmer is. Microsoft is in a strong position. No other bidders for Yahoo have emerged, and none are likely to. Yahoo has now indicated that it won't refuse to sell the company--thus forcing Microsoft to decide whether to pursue a hostile takeover--and many Yahoo shareholders have gone on record saying that they like the $31 deal (although they'd no doubt like a $40 one better).

Microsoft might therefore choose to take another page out of Rupert Murdoch's playbook by saying, politely, that it's not going to raise its offer and that it hopes to persuade Yahoo's shareholders to take it. And then, as Yahoo's stock drops back to the mid-20s and shareholders begin to grumble that Yahoo should have just accepted the bid, Microsoft will slowly ramp up its charm offensive.

After the Bancrofts rejected Murdoch's bid for Dow Jones, Murdoch quietly launched a full-court schmooze. Specifically, he met with the Bancrofts and reassured them that he wasn't going to destroy their baby. In Yahoo's case, there are no controlling shareholders to win over, but there are plenty of big ones. And Steve Ballmer has already met with the largest--Capital Research and Management--last week.

Cap Group Meeting in NY Post: A Message to Yahoo

The stated reason for the Ballmer-Cap Group meeting, as leaked to the New York Post, was Cap Group's desire to see if Ballmer was considering raising his Yahoo bid. Cap Group also owns 6% of Microsoft, and it was reportedly concerned that if Ballmer raised his bid, Cap Group would lose more on its Microsoft position than it made on its Yahoo one.

This may have been one reason for the Ballmer-Cap Group meeting, but there were undoubtedly others (Ballmer wanting to take Cap Group's temperature). News of the meeting was also obviously leaked for a reason (Microsoft and Capital Group are perfectly capable of keeping their mouths shut unless they have some ulterior motive). Our guess? Team Microsoft wanted to tell Team Yahoo that Yahoo's largest shareholder was already pressuring Steve Ballmer NOT to raise his bid.

Risks to Waiting? Some, But Slim

There are some risks to Microsoft's biding its time, of course. No other bidders have emerged, but given enough time, Yahoo might be able to put some kind of alternative deal together. Yahoo has already used the Journal and NYT to suggest that it has an alternative--outsourcing search to Google*--but this isn't really an alternative and Microsoft probably won't be fooled by it. One other issue that makes time a factor: Yahoo may deteriorate as an asset if a prolonged period of purgatory causes its best people to leave. Microsoft can't start locking up executives until it gets a commitment, and in the meantime, many executives may exit.

Microsoft may well be willing to raise its offer by a couple of dollars, especially, if, as the NYT reports, it was ready to offer $35 until Yahoo blew Q4. But if Microsoft's "final offer" is, say, $35, there's no reason to make an explicit counter-offer now. Instead, it can wait until the parties are at the table and throw in a concession to make Yahoo feel like it has won something. It's also worth noting that, based on Microsoft's current share price, the offer isn't $31 but $29. So Microsoft's last- minute concession could merely be to hike the offer back to the original bid.

Our current guess, therefore, is that Microsoft will respond to Yahoo's counter-offer by trying to win over Yahoo's big shareholders and biding its time.

First Soros funds NORML now Bollywood, whats next?

From Variety.com:

Iconic financier George Soros has paid $100 million for a stake in Indian movies, gaming and Internet conglom Reliance Entertainment.

He is picking up a 3% stake in the privately held operation controlled by the billionaire industrialist Anil Dirubhai Ambani's Reliance ADAG. Deal values Reliance Entertainment at some $3.3 billion, making it the most valuable entertainment company in the fast-developing territory.

Reliance Entertainment controls the Adlabs group, which is India's biggest film processor, and in recent years has diversified to become a front-running movie production and theater operation.

Group has been a leading investor in the fast developing FM radio sector, has plunged into Internet services and is on course to become a direct-to-home satellite TV platform operator later this year. It operates Zapak, a gaming portal; Big Adda, a social network and social media venture; Big Flicks, an on- and off-line movie rentals business; and Jump Mobile, a mobile entertainment venture.

New coin is to be used to expand Reliance Entertainment's activities in all these sectors and it is likely to tap other financing, including a possible partial flotation.

"We are delighted to have a sophisticated investor like George Soros as a stakeholder in the company that operates in a high growth and high potential entertainment sector, offering a complete bouquet of innovative products and services to its audience," company spokesman Sharad Goel said.

Adlabs has recently signed up directors including Farhan Akhtar, Madhur Bhandarkar and Vivek Agnihotri for pics under its banner. Reliance Entertainment has also recently bought a controlling stake in ND Studio, one of the largest production studios in India.

Sister company, ADAG Reliance Communications, India's second-largest mobile-phone operator, in November connected with Microsoft Corp. to jointly offer Internet-based television services in India.

Soros, whose currency speculation in 1992 forced the U.K. to devalue the pound and pull out of Europe's Exchange Rate Mechanism, this week warned that the world is facing its most serious recession since WWII. But he described China and India as the "new colonialists," and the territories with the greatest potential for growth in coming years.

In honor of this weeks American Securitization Forum - we present John Devaney - thanks Wall Street Folly

keep one thing in mind, this guy was buying securitized pools of airplane leases post 9/11 and made an absolute fortune, he understands risk and is willing to bet big. I wouldn't count him out just yet.

From: wallstfolly.typepad.com

John Devaney, skipper of United Capital Markets Holdings Inc., and former skipper of "Positive Carry", one of the two yachts he was forced to sell last year after he was nearly sunk by bad sub-prime bets, thinks it's time to test the waters again.

The chief executive officer of United Capital Markets Holdings Inc., who lost more than 35 percent for at least one client last year and prevented investors from withdrawing their cash, says bonds derived from subprime mortgages are a bargain after falling as low as 10 cents on the dollar. TCW Group Inc. and Pacific Investment Management Co. are also betting that prices will recover.

``Just because I lost money doesn't mean I will quit, no way,'' Devaney, who sold his boat ``Positive Carry'' and Gulfstream IV, said in a telephone interview from Key Biscayne, Florida. ``Prices have collapsed and this is the best opportunity I've seen in my career.''

Losses, mainly from mortgage bonds and CDOs, forced Devaney to sell his 142-foot (43 meter) yacht, the jet and real estate. ``We took a bad loss,'' Devaney said. ``Selling the boats and planes helped reduce overhead and raised money to put back into the business.''

Devaney's call to buy coincides with the American Securitization Forum, a big annual conference being held in Las Vegas beginning tomorrow at the Venetian. 5,700 attendees are scheduled to be there, including speakers from Countrywide Financial and Bear Stearns that have had their own well publicized problems with sub-prime.

Devaney, 38, paid for comedians Jay Leno and David Spade to perform in previous years. This time, he's sponsoring dinner and a show by the Blue Man Group, a theatrical troupe that sprays paint on the audience and vomits fake food.

Presidential politics and Big Oil, contributions - thanks Portfolio.com

Donations made by oil companies to different candidates:

Rudolph Guliani - $550,608
Mitt Romney - $336,783
Hillary Clinton - $223,350
John McCain - $196,285
Fred Thompson - $119,550
Barack Obama - $106,112

Source: Follow the Oil Money

Google looking to cockblock Microsofts Hostile Take Over of Yahoo?

SAN FRANCISCO (Reuters) - Yahoo Inc would consider a business alliance with Google Inc as one way to rebuff a $44.6 billion takeover proposal by Microsoft, a source familiar with Yahoo's strategy said on Sunday.

Yahoo management is considering revisiting talks it held with Google several months ago on an alliance as an alternative to Microsoft's bid, which, at $31 a share, Yahoo management believes undervalues the company, the source said.

A second source close to Yahoo said it had received a procession of preliminary contacts by media, technology, telephone and financial companies. But the source said they were unaware whether any alternative bid was in the offing.

Few natural bidders exist beside Google that could engage in a bidding war, and Google would be unlikely to win approval from antitrust regulators, some Wall Street analysts said on Friday....

Read On:

First Yahoo, is AOL next?

Interesting take from Portfolio.com:

The news that Microsoft finally put a formal offer on the table for Yahoo places new emphasis on an oft-asked question: What will happen to AOL?

Speculation that Time Warner would spin off the troubled internet unit it merged with seven years ago has persisted since shortly after the deal closed. The $124 billion merger, reached at the very peak of the tech bubble, is widely regarded as one of the worst corporate combinations ever.

Time Warner could seek a buyer for all or part of AOL, or it could spin it out in an initial public offering. Today's news that Microsoft values Yahoo at a 60 percent premium to what the market values it is great news for Time Warner brass looking to unlock shareholder value.

David Katz, a Time Warner shareholder and chief investment officer at Matrix Asset Advisors, believes that AOL is worth 60 percent more today than it was yesterday. "It puts significantly different valuation metrics on the business," he says.

Only that's not how the market is viewing it. Time Warner shares surged more than 9 percent before the market opened, but they've since settled down to trade about 1 percent higher.

This makes an I.P.O. look like a challenge for AOL. Even though the cash-rich Microsoft values Yahoo at a premium, there's no guarantee that investors will do the same for AOL.

The company is in the midst of a turnaround as it shifts from a subscription-based business model to an advertising-based one. As a result, AOL's subscriber numbers have fallen off a cliff in recent quarters. But the advertising side has yet to pick up the slack: During the last quarterly earnings conference call in November, Time Warner said it expected advertising revenue growth to slow in the fourth quarter, and it believed its pageviews would be flat.

Instead, the company is focused on growing profits by slashing costs—not exactly the kind of show to take on the road. They could spin it as a separate entity for Time Warner shareholders, but the sales pitch might still be challenging.

An alternative scenario would be that another major media player takes Time Warner's problem off of its hands by acquiring it. Google took a $1 billion stake in AOL, in a deal that valued the company at $20 billion.

But that was two years ago. Yahoo's market value has been cut in half since then (as of yesterday's close), so it's hard to argue that AOL's has fared much better. At the time Google made the deal, AOL accounted for 10 percent of its advertising revenues. Now it accounts for half that.

Perhaps a better option for Jeff Bewkes, who took the helm at Time Warner last month and who has pledged to focus on shareholders, is to use Microsoft's lofty valuation of Yahoo to sell AOL for a deal.

It's hard to imagine Google swooping in and coughing up a 60 percent premium for a company in which it's already realized a loss. Another potential acquirer, News Corp., already paid that eye-popping premium for Dow Jones last year, so it might be tough to pull off two years in a row, even for Rupert Murdoch.

But Matrix Advisor's Katz does have a point. Valuation metrics in the online advertising industry are changing with today's news. If Microsoft is willing to buy Yahoo for a 60 percent premium, then AOL at a 20 or 30 percent premium looks like a steal.

But a premium to what? A clearer answer should emerge next week, when more is revealed about just how bad things are at AOL during Time Warner's fourth-quarter earnings call on Tuesday.

Microsoft to buy Yahoo - thats some s&$t!!!

Microsoft said Friday it offered to buy Internet media giant Yahoo for $44.6 billion in stock and cash, in an attempt to boost Microsoft's presence in the online services market.

Yahoo said its board plans on reviewing Microsoft's proposal in the context of its strategic plans and will "pursue the best course of action to maximize long-term value" for its shareholders.

DANG! Harry Macklowe giving buildings back to lenders

From Wall Street Journal:

Troubled New York real estate titan Harry Macklowe has reached a tentative agreement with his lender to turn over effective control of seven Manhattan office buildings he triumphantly acquired less than a year ago for $7.2 billion, according to a people familiar with the matter.

Mr. Macklowe borrowed $5.8 billion from Deutsche Bank to acquire the buildings in a highly leveraged transaction during the height of the real estate frenzy early last year. The debt is scheduled to come due on Feb. 9. But with the real estate debt ...