Alphabet’s earnings press release didn’t talk about it. Alphabet CFO, Ms. Porat, did say that revenues increased 22% from the prior quarter, making it a “terrific start to 2017”. You’ll need to wait until Alphabet releases its next quarterly 10-Q to find out about the Waymo v. Uber lawsuit.
Filed in February 2017, Waymo v. Uber avoided disclosure in Alphabet’s last filing for the quarter ended December 31, 2016. What’s known about the case has come mostly from court filings, but we have not heard much official from Alphabet. That should end when Alphabet files its 10-Q for first quarter of 2017.
Legal proceeding can be boring, but when money is at stake, then the bottom line can be impacted. Alphabet recently escaped paying billions in damages to Oracle in another lawsuit over intellectual property. Waymo v. Uber should prove that tech companies not only fight in the marketplace, but also in the courtroom.
Inside Intel’s recent earnings filings was more information on its Mobileye acquisition. Intel expects to close the deal later this year after purchasing all of Mobileye’s stock for about $15 billion.
All those billions are coming from Intel’s overseas operations, which have only $14 billion in cash as of April 1, 2017. So Intel needs an extra billion to buy Mobileye.
Silver Lake Partners closes yet another tech fund. This time, this fund raised about $15 billion and joins other tech funds with lots of “dry power”, such as the $100 billion Softbank Vision Fund. Unlike the Vision Fund, Silver Lake’s latest fund will focus on US tech deals rather than international ones.
With billions following into tech, Samantha Greenberg of Margate Capital, predicts consolidation in the semiconductor and software sectors. Ms. Greenberg made her forecast in January, before the closure of Silver Lake’s latest fund.
Whether Ms. Greenberg’s thesis works out, money will continue to flow into tech companies and could dramatically increase assets prices. Toshiba recently received multiple offers for its memory unit from public companies, such as Apple, and private equity firms including Silver Lake Partners.
Blackstone hints at a venture capital unit in this week’s earnings call. Stephen A. Schwarzman, Blackstone co-founder, now follow his peers – KKR and TPG- into an another asset class. Early in their founding cycle, Airbnb and Uber received TPG’s money and most recently, Lyft got money from KKR.
No should ever doubt Blackstone performance in leveraged buyouts. In fact, Blackstone has also been successful applying private equity strategies to real estate under the guidance of Mr. Jonathan Gray.
Unfortunately, private equity firms have not been successful in other alternative assets, such as hedge funds.
In the past several years, private equity firms – KKR, TPG, and Carlyle – have shut down some or all of their hedge funds. In December 2016, Blackstone ended its $1.8 billion hedge fund, Senfina.
Now Blackstone may be successful in venture capital- it has venture veteran Jim Breyer on its boards – but time will tell.
On May 10, 2017, Snap reports its first quarter earnings as a public company and also as a Emerging Growth Company. That latter designation was one Snap received from filing under Jumpstart Our Business Startups (JOBS) Act of 2012.
Snap and other companies filing under the JOBS Act can take advantage of limited disclosure requirements that were enacted to encourage private companies to go public. For example, Snap is not required to have its internal controls audited, which is normally required of public companies after the Sarbanes Oxley Act of 2002.
On a quarterly basis, Snap’s filings will be similar to other public companies; on an annual basis, Snap will be different from other public companies. A year from now, Snap will need to present three year audit financial statements, but it is not required to report executive compensation information as long as it remains an Emerging Growth Company under the JOBS Act.
Look for this when Facebook releases its earnings on May 3, 2017: Did Facebook buy-back any stock during the quarter? Last year, Facebook announced a $6 billion share repurchase program that begins this year.
In the future, Facebook could use the repurchased stock for acquisitions like those of the past: Oculus, WhatsApp, and Instagram.
What’s in the name, SB Investment Advisers? That’s the new name for Softbank Vision Advisers, based upon filings on April 21, 2017. Between incorporating the original Vision Advisers in November 2016 and now, Softbank purchased another investment adviser, Fortress Investment Group.
Softbank’s Fortress acquisition reunites Rajeev Misra with his former employer; Mr. Misra worked briefly at Fortress and now works for SB Investment Advisers. So may be the new name is saying, Mr. Misra will manage more than just the Vision Fund, but all of Softbank’s investments.
Fifty year old Frenchman, and now ex-GS employee, Saleh Romeih officially joins Softbank Vision Advisers.
On March 31, 2017, Mr. Romeih became a director of Softbank Vision Advisers, the unit managing the soon to be $100 billion fund, as disclosed in filings made available on Tuesday.
With the announcement, Goldman Sachs will be losing the head of its securities unit for the Middle East and North Africa. Mr. Romeih will also need to update his LinkedIn profile:
TPG sold part of its interest in Intel Security to private equity firm, Thoma Bravo. On September 7, 2016, TPG’s Manta Holdings agreed to pay Intel $3.1 billion for a majority interest. Between then and now, TPG sequently sold part of its interest to Thoma Bravo, for an undisclosed amount, while still maintaining majority control over Intel Security.
On September 20, 2016, Thoma Bravo closed its Fund XII, that’s focused on software and technology companies. With a commitment of $7.6 billion, Fund XII plans to acquire between ten and twelve companies; making investments of between $200 million to $1 billion per acquisition.
Thoma Bravo’s Fund XII will adopt a “buy and build” strategy and hopes to exit investments through a sale or public offering.
It was not disclosed if Fund XII participated in the Intel Security deal, but Thoma Bravo did succeed with a similar investment when it sold Blue Coat to Bain Capital for $2.6 billion in 2015. Eventually, Bain Capital “flipped” Blue Coat again with its sale, last year, to Symantec for $4.65 billion.
It possible, TPG is looking to Thoma Bravo for the same magic. Last year, TPG agreed to purchase Mediware from Thoma Bravo.
Cloudera plans to go public as an emerging growth company under the JOBS Act. Cloudera competitor, Hortonworks, filed under the same status with its initial public offering in 2014. When Snap recently did the same, investors were not too happy with its emerging growth company status.
Emerging growth companies can benefit from the limited public disclosures of the Jumpstart Our Business Startups (JOBS) Act. For example, under the JOBS Act, companies can choose not to provide information about executive compensation which is normally required of all public companies.
Cloudera intends to take advantage of the exemption from public disclosure including those related to golden parachutes payments made to executives. Like Snap’s shares, investors may not find Cloudera’s shares “attractive” due to the lack of transparency. Cloudera warned in the S-1 that the emerging growth company status may cause there to “be a less active trading market for our common stock”.
Cloudera can ditch the emerging growth company status after five years or when revenues exceed $1 billion. Two years after its IPO, Hortonworks is still an emerging growth company. As more private companies go public, investors, especially large ones, will need to navigate the corporate governance issues presented by the JOBS Act.