re: Laurel: Startup Holdout?You guys seem to think that relativism applies here.
It does not matter what the going rate was or how many other people did it. Fore cost too much money and it was a cash deal. It was a bad deal and Marconi shareholders have dearly paid for it.
Are the other things you mention here bad? Yep. The fact that they are bad (and in many cases much worse), does not make the deal mentioned here (Marconi/Fore) bad.
By the way, all I said is before you all attack Bobby on this one is admit this is a bad deal. And Geoff you are taking it personally. He said it was garbage. He was not specific, so you took it as the products are garbage. You have implied that not read it. I provided another interpretation under which garbage is accurate.
Sorry, but facts are facts. $1B in revenue does not equal $4B in PROFIT. And then you need a return on the PROFIT. Revenue is not meaningful in the calculation of larger public companies. Only early revenue startups. For public companies its all about profit.
re: Laurel: Startup Holdout? >>For public companies its all about profit.
So when Lucent bought Yurie (annualized sales $80m for $1Bn cash) and Ascend (annualized sales $1.5Bn) for $21Bn cash and stock this was garbage too?? Look what it did for Lucent .....!!!
Errr ... actually, the more I think about it the more right you are ....
re: Laurel: Startup Holdout?I think this is an over simplification. GEC paid "the going rate". Sure, in hindsight the going rate was way too high - but as I said, everyone was doing it back then.
Speaking with a local school board representative in CA yesterday suggests the effects of the stock bubble, and its collapse, has a ways to go before "values and rates" return to sane levels. And unfortunately, many budget revenue forecasts are still based on a real estate valuations and those growth projections. If real estate pops there will be some serious challenges ahead. Also, we'll need to keep an eye on Greenspan's and his suggestion that deflation can be managed by the feds. (How can he manage that if he couldn't manage a bubble?)
Be careful folks. We are far from being out of the woods from what I can tell. It seems wise to watch the cash and reduce debt burdens as much as possible.
PS. Kudos to any tech startup that survives. They deseve it just by the fact that they remain standing. Though it seems the US environment has a long way to go before the US masses will be able to benefit from their engineering advances.
PSS. I spoke with a power utility crew actually climbing a utiltiy pole today (unlike SBC where they hire actors for TV ads). Unfortunately, this crew was merely working on a failed transformer. We've got a long way to go before both Middle East peace and democracy, as well bandwidth abundance and structural separation, become the norm ;-)
Sorry, I still don't understand why FORE was any more of a bad buy than other technology acquisitions in this period.
The only reason that the price paid by Alcatel, Cisco, Lucent and Nortel didn't (yet) drag these companies into debt for equity swaps is that they paid in stock, not cash.
IMHO, technology acquisitions have always been a waste of money. The fact that they continue to happen simply shows that the internal development processes in large companies are horrendously inefficient. There's no lack of inspiration or talent.
When Bobby called FORE garbage, of course I interpreted that to mean the products, because that's exactly what GEC was buying. They weren't buying management expertise or customer base. In fact they knew that FORE's customer base was all "wrong" for GEC (ie. 70% Enterprise, 30% carrier at that time), but they were looking for "complementary markets".
I would fully accept your interpretation of garbage in that we've now seen that all such deals were, in the end, errr..garbage :-)
re: Laurel: Startup Holdout?IMHO, technology acquisitions have always been a waste of money.
Not always. Some key acquistions make a huge difference, particularly when they build products which are natural compliments to the parents portfolio, when the acquisiton needs the parents distribution channel, and when those being acquired came with a work ethic that carries on years and years beyond the acquistion.
The fact that they continue to happen simply shows that the internal development processes in large companies are horrendously inefficient.
Or that a company hired too many MBAs who create "deal flow" to justify their jobs.
There's no lack of inspiration or talent.
Agreed here. There tends to be a lack of leadership. The corporate world tends to embrace "reasonableness" much of the time, while the new minions tend to embrace yesterday's idols instead of discovering their own potentials. Corporate America can quickly become a herd mentality where silly things like cube size becomes the topic of discussion.
Buidling a long lasting environment seems to be a challenge that few have figured out. Let's hope somebody from this generations steps up to the plate and gets the job started. And this time around, let's forget about Wall Street for at least 21 years.
If the VP of sales is out looking for work, it could mean that he anticipates that his position will be eliminated after a merger and he is trying to do his homework early. It is seldom that a VP of sales survives an aquisition.
If he is leaving now, that would in deed be strange if an aquisition is in the works."
Or he is being courted to join another company. Perhaps to replace the VP Sales at Juniper? He and the Unisphere guys likely know each other from past lives...
re: Laurel: Startup Holdout?Or that a company hired too many MBAs who create "deal flow" to justify their jobs.
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RJ,
I have seen a stupid Ph.D. who thinks he is a MBA trying to reinvent every piece of paperwork including trains of super "deal flow". There are stupid people in every trade. I found your comment very distastful.
re: Laurel: Startup Holdout?I have seen a stupid Ph.D. who thinks he is a MBA trying to reinvent every piece of paperwork including trains of super "deal flow". There are stupid people in every trade. I found your comment very distastful.
Distasteful or not, calling what I saw for what it was. Little value creation occurred during that acquisition bubble. Today, there are governments and real estate markets still hanging their revenue hopes on what has collapsed. They still haven't accepted the budget pains ahead.
And I have yet to find one MBA that'll step up to the plate and make an honest assesment of that past performance. Most I meet, some who took home some serious lottery winnings, are still pitching Wall Street's greed as the way out of this mess. Sad statement about what these kids are being taught, in my opinion.
PS. No PhD badge on this chest so my stupidity isn't related to that.
re: Laurel: Startup Holdout? So, I do want to say that the words that Bobby used to describe Fore/Marconi were harsh.
I also concur that the bubble acquisitions were generally all horrible. Couple of differences between stock and cash deals at that time, however. People buying with stock were using massively overinflated "currencies" to pay overinflated prices for companies. Lets use the example that started it all off.....Cerent!
The day the deal was done it was a $7B deal. At one point it actually was closer to a $30B deal. Using todays value of Cisco Stock its closer to a $3B deal. Buts its all "funny" money printed at the time of the acquisition. Ever think about why Cisco paid stock when they have $20B+ in cash?
Unfortunately (given the history that Geoff provided) Marconi paid with real money, cash. They then paid some of the most outrageous sums for companies (Fore ok, but $270M for Mariposa?). Remember in those days management teams were being pillaried if they were not making big acquisitions. People got way ahead of themselves.
It does not matter what the going rate was or how many other people did it. Fore cost too much money and it was a cash deal. It was a bad deal and Marconi shareholders have dearly paid for it.
Are the other things you mention here bad? Yep. The fact that they are bad (and in many cases much worse), does not make the deal mentioned here (Marconi/Fore) bad.
By the way, all I said is before you all attack Bobby on this one is admit this is a bad deal. And Geoff you are taking it personally. He said it was garbage. He was not specific, so you took it as the products are garbage. You have implied that not read it. I provided another interpretation under which garbage is accurate.
Sorry, but facts are facts. $1B in revenue does not equal $4B in PROFIT. And then you need a return on the PROFIT. Revenue is not meaningful in the calculation of larger public companies. Only early revenue startups. For public companies its all about profit.
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