The Ponderings of Woodrow

Nostradamus or Nostra-dummy...You Decide

It's that time of year when we all like to reflect on the year that was, and postulate on the year that will be...and in the blogosphere it's almost as if there's a rule buried deep in the Blogging Bylaws which reads..."thou shall make bold predictions about the year ahead." The great thing about making predictions is...if you're right, you look like a genius and if you're wrong, no one really notices [hint hint, because you don't remind them!].

As a technology investor with a vested interest in enterprise software, I've found the back and forth between Vinnie Mirchandani and Jeff Nolan. Vinnie put forth his own set of predictions for the upcoming year and Jeff commented on where he disagreed [particularly as it related to Sarbanes Oxley and SAP].

In the spirit of the season, I too will put my prognostication cap on and give you my thoughts on the enterprise software [and investment] market for 2006 [and please, feel free to label me a Nostra-dummy 12 months from now if I completely fall short]...

Software-as-a-Service [SaaS] rhetoric will reach a crescendo

Taking nothing away from the salesforce.com and the success they've enjoyed in the last few years, 2006 is going to be a MUCH different year for the stand-alone SaaS companies, in my opinion. It's my contention that the public SaaS vendors currently enjoy a scarcity premium AND an M&A premium. The fast growth exhibited by salesforce [CRM], RightNow [RNOW] and to a lesser extent Concur [CNQR] and Ultimate [ULTI] have fueled the fire, but they'll have company soon...

• NetSuite will either come public OR be acquired by Oracle [Larry Ellison is the majority shareholder in privately-held NetSuite]
• Readen Commerce might also make its way to the public markets
• Oracle will become heavy-handed in their marketing message behind SaaS, proclaiming themselves as the "leader" in On-Demand software applications. They will make this claim thanks to the combination of Siebel OnDemand, Peoplesoft OnDemand and their own ASP-rooted efforts...Ellison will more openly combat Marc Benioff and salesforce much in the way he combated Tom Siebel in the late 90s.
• SAP will take a measured approach to this market, as they [correctly] recognize the limitations of offering hosted solutions in large enterprises for core transactional applications that encompass much of the mySAP suite.
• A number of second-tier public software companies will try to ride the SaaS wave by announcing new hosted versions of their software...but a closer inspection will show them to lack the true multi-tenant functionality needed to offer 100% hosted functionality.
• The VC lovefest for SaaS will continue apace, with announcements of more and more "me too" investments muddying the SaaS landscape.
• Dave Duffield's Workday will garner some attention, and he'll likely acquire his way into a broader suite of functionality than the HR/Payroll early forecasters envision.

Supply-Chain Software will rise from the ashes

The last few years have been devastating for the stand-alone supply chain management software vendors. Former high fliers like i2 and Manugistics have seen massive dropoffs in license revenue attainment, and the sins of the past [i.e., selling functionality that didn't exist] made the segment virtually toxic to CIOs.

But the value of supply-side optimization remains significant, and certainly enterprises are in constant need of improvements in the way they source, design, manufacture, store and ship their goods & services. Expect advancements in master data management, RFID and intelligent messaging to create a buzz for SCM in 2006; particularly in the industrial and process industries. Expect niche technologies such as fulfillment, order management and profit optimization to re-gain a presence in marketing decks.

Maintenance Revenues will become the new battlefront between customer and vendor

Maintenance revenues have quietly become the driving economic engine among healthy software vendors, and have been THE impetus for much of the M&A we've seen among public takeouts [i.e., paying a multiple on the expected NPV of future maintenance revenue streams.] As I discussed earlier this month, there is anecdotal evidence to suggest price rationalization on maintenance is a very real threat to enterprise software growth in 2006.

• undefined, among others, contends that SaaS vendors have been the most egregious in terms of premium maintenance and support pricing, watch for that to become a key negotiating point as the SaaS landscape widens out

Indian Outsourcing firms will become the primary lever for trends in application development, QA and testing

Mercury Interactive's deal with Satyam is an early example, but expect the floodgates to open in 2006 as vendors line up to be slotted in preferred positions with Satyam, Infosys, Wipro, Tata, et al...the leverage of the outsourcers has grown to the point where they can control the customer [something the tools vendors were reluctant to give up in prior negotiations], and the cost benefit of tactical testing being sent overseas is far too compelling for U.S. enterprises to ignore. Look for the outsourcers to drive the technical specifications of QA & development testing going forward.

• One offshoot of this trend will be whether Accenture and the other U.S. consultants are willing to make more committed partnerships with the testing vendors in order to combat competition abroad

M&A will continue to be a prominent them among enterprise software vendors [and investors]

2005 was a banner year for software M&A, ranging from the massive [e.g., Siebel+Oracle, Symantec+Veritas] to the niche [e.g., Captiva+EMC, Khimetrics+SAP] and we should expect no shortage of M&A activity in '06.

• The market is maturing
• There's excess capital, everywhere
• undefined are rationalizing the number of vendors, encouraging roll-ups of complementary feature sets
• Technology investors reward growth, and M&A is a cost effective means of acquiring growth at present

You can bet at least one massive, head-scratching software merger will take place, and it probably won't be one most of us see coming. I'm betting HP [ready to make noise after an impressive turnaround in '05 post Carly Fiorina's ouster] will become aggressive in the software M&A market, matching IBM and CA step for step going forward.

Microsoft will be accused of some type of anti-competitive act

Is there ever a year this isn't true? :)

Microsoft will be omni-present in the news, but will it re-ignite the share price?

I'm hardly the only one pointing out the importance of 2006 for Microsoft, but it still needs to be acknowledged formally. We've got Vista, XBox 360, Search [and possibly a Yahoo! partnership?], and Ray Ozzie's Web 2.0-ish initiatives [i.e., SSE, Live!] to name a few.

Business Intelligence [BI] will engender a slowdown after a torrid 24 months

The business intelligence vendors have enjoyed prodigious growth the last two years, as the need for data analysis, query and reporting tools extended beyond the analysts and power users within the enterprise. However, several headwinds are upon the sector which could curtail the investment momentum, at least for the early part of 2006:

• Product overlap is now significant -- The product sets of Business Objects, Cognos, Hyperion Solutions and Microstrategy [among others] have evolved into startlingly similar offerings. Each vendor has acquired missing functionality over the years [i.e., BOBJ+Crystal, Cognos+Adaytum, Hyperion+Brio] and now offer very little differentiation among core punch lists in competitive bake offs. This market will become more about sales and marketing execution [i.e., who has the best reps and message?] and product cycles.
• Product cycles are maturing -- Aside from Cognos 8 [which has been disappointing out of the gate], most of the major BI platforms don't have a major product cycle to ride in 2006 as they did the last two years
• Sarbanes Oxley comps are anniversaried -- Sarbanes Oxley compliance has been a driving force behind the uptick in demand for BI solutions. While Sarbox compliance costs aren't going away anytime soon, the BI vendors will now face 2005 comps which already included Sarbox-related growth

Open Source still won't be ready for prime-time among enterprise-class applications vendors

All apologies to SugarCRM, Compiere, and JasperSoft...but we're still several iterations away from one of these vendors emerging as a real threat at the high-end [i.e., someone capable of taking more than a few % of market share]. Software investors would do well to pay closer attention to these vendors [and other open source efforts] though, because you can be sure it's just a matter of time before one or two break away from the pack.

That's all for now [I may add some more as time permits], I look forward to hearing from everyone as to where you agree [i.e., Wood, you're Nostradamus] and where you don't [i.e., Wood, you're Nostra-dummy].

Note: At the time of this writing I and/or funds I maintain discretionary control over may have maintained long equity positions in a number of the companies mentioned but did not maintain a short equity position in any.

open source software applications SaaS MSFT woodrow predictions pricing M&A supply chain ERP CRM BI

Opera Finally Finds a Buyer...

First it was Google...

Then it was Microsoft...

But credit to blogger Blake Ross who scooped everyone and figured out who Opera was REALLY being sold to...

opera M&A microsoft google browser woodrow

Merry Christmas!

Happy Holidays
       and a
Merry Christmas
       to All!

Private Company Spotlight: NetSuite

There is currently a scarcity premium being afforded the public software-as-a-service vendors, in my opinion [more on that subject soon]. With the enteprise software market maturing, the investment community has been rabid for a) growth and b) innovative "story" stocks. As a result, my fellow investors have run amok bidding up Salesforce.com [CRM], RightNow Technologies [RNOW], Ultimate Software [ULTI] and Concur Technologies [CNQR].

Regardless of what you may think of the aforementioned companies [or stocks], there is another significant player in the SaaS space firmly intertwined competitively with the public SaaS darlings...NetSuite.

NetSuite [formerly NetLedger] was founded in 1998 by Evan Goldberg and Larry Ellison. Goldberg, then an Oracle executive, wanted to create a hosted accounting solution for use by small businesses. Ellison, then an evangelist of the ASP model, funded the company. While most ASPs failed miserably, NetSuite powered through several fits and starts and has emerged as one of the more mature hosted applications vendors.

In 2002, Zach Nelson was brought on board as CEO and under his watch the company has undergone a meaningful maturation. Nelson was a driving force at McAfee prior to joining NetSuite [and like Goldberg, a former Oracle executive]. Under Nelson's watch, NetSuite has grown into a $40 million revenue company [5x since 2002 according to Prudential Securities], with a product suite that spans accounting, e-commerce enablement & CRM.

 Identifying NetSuite's niche...

On a recent conference call, CFO Jim McGeever said..."We are to SAP what salesforce.com is to Siebel"

...ummmmmm, not quite Jim.

When your largest backoffice reference account is 600 seats [McGeever's declaration, not mine], you are not competing in the same pond as SAP. More accurately, NetSuite competes on the low end against Intuit Quickbooks and Act!/Goldmine...while on the high end they compete against the likes of Microsoft Dynamics [formerly Navision/Great Plains], Epicor and Lawson. In other words, small- to mid-sized enterprises that are looking to move beyond point products into a loosely integrated solution set.

But anti-SAP rhetoric aside, NetSuite does differentiate itself from its public SaaS counterparts in two meaningful ways:

1. Integration: NetSuite offers an integrated suite of basic ERP, CRM, web-commerce and analytics and pushes integration and "one stop shopping" versus the more vertically focused offerings of salesforce [SFA], RightNow [Customer support], Ultimate [payroll/HR] and Concur [expense management].
2. Content with SMB Market: NetSuite's sweet spot is with small enterprises [1 to 500 employees typically], whereas salesforce and RightNow have successfully targeted much larger enterprises [and it's their intent to continue to push up market]

IPO or Acquisition?

With SaaS a hot-button issue, many expect NetSuite to come public in 2006. As a private company, I'm not privy to NetSuite's complete financials, but the company has publicly disclosed that it's on target for approximately $40mm in 2005 revenues, with a backlog significantly larger [due to the subscription-pricing model]. Furthermore the company has endorsed a 100% growth trajectory for 2006 [i.e., $80mm]. Hot space + superb growth = possible IPO.

HOWEVER, NetSuite isn't your typical pre-IPO company...

• Larry Ellison [CEO of Oracle] is the majority shareholder of NetSuite
• Oracle is, and will continue to be, a serial acquirer of complimentary software companies
• SaaS [On-Demand] is a focal point of Oracle marketing at this point [i.e., the future integration of Siebel OnDemand with Oracle OnDemand]
• Economically, acquiring a pre-IPO company makes more sense for ORCL shareholders than letting the public markets potentially mis-price NetSuite post IPO

I have no Earthly idea whether NetSuite will go public, remain private as a stand-alone, or be swallowed up by Oracle. But I do know that SAP and Microsoft are clarifying their SaaS strategies, and that NetSuite's public competitors have a financial arsenal at their disposal a privately-funded vendor simply doesn't.

NetSuite is clearly a company to watch if you're involved in enterprise applications investing, consulting or analysis.

Note: At the time of this writing, I and/or funds I maintain discretionary control over maintained long equity positions in the companies mentioned but did not maintain a short position in any mentioned security.

saas ondemand netsuite hosted software Oracle erp crm woodrow

Cowan Speaks Out Re: Visto & Microsoft Patent Dispute

I've known Visto for some time, and of late the company is making quite a bit of news; and attracting some of the blogosphere's most prominent voices in the process. Today, David Cowan [Bessemer Partner and co-founder of Visto] chimes in on the Visto patent lawsuit recently filed against Microsoft.

David doesn't pretend to be unbiased here, having played a role in creating the IP in dispute:

But now that the market is finally maturing, Microsoft is doing what is does so well--bringing products to market based on other companies' technology. Microsoft does indeed have a good track record of enhancing established products--I certainly prefer Word over Wordstar, Excel over Visicalc, and Access over dbaseIV. And if Microsoft can improve upon mobile PIM synchronization, I'll be the first to subscribe, but they can't expect to infringe upon issued patents without attracting lawsuits.

That's why Visto licensed NTP's patents--to respect others' intellectual property. NTP's patents are not cited in Visto's lawsuit. NTP, in turn, invested in Visto because of Visto's growth and intellectual property--not, as some have reported, to financially prop up a licensee. Believe me, prior to the NTP deal Visto was already very, very well funded (as one must be to outlast Microsoft's lawyers).

I expect 100 comments on this post decrying the evils of patent litigation, but I am here to bear witness that these patents were not crafted by a bunch of attorneys in order to pick deep, corporate pockets. These patents were written by programmers who were engaged in building a viable, commercial platform, and genuinely wished to protect the invention.

As an informed insider, there's one last thing I can tell you about this lawsuit: Visto is going to win.

David is nothing if not passionate and opinionated [traits that no doubt make him a successful VC, even if he is wrong about what a pack of hungry lions would do with a sheep], and he could be completely right in his assessment. But I hardly think it's the slam dunk he believes it to be and ultimately wonder whether this obviates a much broader issue of whether Visto can come out on top of a heavily funded, crowded market.

Note: At the time of this writing I and/or funds I maintain discretionary control over maintained a long equity position in Microsoft [MSFT].

visto microsoft mobile woodrow synch IP patento tech VC cowan

Micromusing about IBM's Latest Acquisition

All Big Blue wanted for Xmas was a little network monitoring software. This morning IBM announced plans to acquire Micromuse for $865 million in cash [$10 per share] pending the requisite shareholder approvals. Micromuse will be rolled into the Tivoli Software group, which is [along with Microsoft, CA, HP, BMC and, to a lesser extent Mercury Interactive] a major force in the systems management software arena.

According to the Wall Street Journal [sub required], Lloyd Carney [CEO of MUSE] described his company as being in "no man's land" -- large enough to bring sophisticated products to market but too small to compete with giants like Tivoli and grow into new areas. Kudos to Lloyd for the honest response.

While $865 million isn't a lot of money for IBM [they had over $8 billion in cash equivalents at the end of September], there's no question that IBM made an aggressive move to bring Micromuse into the fold...

• 39% premium over yesterday's close; one of the higher premiums to close we've seen paid for a software company this calendar year
• 23% higher than Micromuse's 52-week high of $8.13
• 5.4x TTM revenues
• 11x TTM maintenance revenues

There is no question IBM paid a hefty price [relative to other recent software M&A] for Micromuse, particularly when one considers that Micromuse had been struggling to grow organically for some time [note: license revenues increased increased 34.8% last quarter, signaling to some a much sought after rebound in the company's growth prospects].

Why Micromuse and why now?

For a long time, network management was disintermediated from systems level management. Different groups within the IT organization were responsible for maintaining network integrity and the large systems management platforms were content to integrate products from niche vendors into their dashboards. But, as the market has matured, we're seeing an ever-increasing blurring of the lines between the software [application layer] and network infrastructure. Bill has an excellent take on how message-aware networking is creating a collision course for software vendors [IBM] and networking vendors [Cisco] at Burnham's Beat.

The proliferation of broadband [and with it VOIP, IPTV, Web-conferencing] along with the ubiquitous nature of IP-based applications has driven the need to offer large enterprise clients a holistic view of all layers of the technology stack.

IBM, despite its mammoth size, had a material hole in its portfolio related to network monitoring. With HP/Openview and CA [via the acquisitions of Concord and Aprisma] already offering network-level monitoring, IBM needed to be able to check off that box on incoming RFPs.

Another important point to remember is that the existing partnership between Micromuse and IBM had been gaining importance over the last calendar year [according to several analysts I've spoken with]. IBM was in position to know whether Micromuse was on the verge of license revenue re-acceleration [and commensurate margin leverage], and recognizes that $10 today could easily have been $15 nine months from now if MUSE executed to plan.

There remain questions I would want answered if I was an IBM shareholder [which I'm not]:

• Micromuse generates more than 60% of revenues from carriers, which is why MUSE partners like Cisco and Alcatel were rumored suitors, what is IBM's plan for that segment of the market?

• How does this acquisition impact the partnerships with Cisco [hint: it's not a positive, see above], EDS and Alcatel...all material revenue generators for MUSE in recent years?

• Were there other active suitors that justified such a marked premium to both MUSE's current stock price and relative to the multiples paid for other software M&A in recent quarters?

• Will IBM maintain the current product roadmap for NetCool and does this acquisition signal Tivoli's willingness to treat network-level management as something more than the bastard stepchild of sys management?

Note: At the time of this writing I and/or funds I maintain discretionary control over maintained a long equity position in CSCO but did not maintain positions [long or short] in BMC, CA, MUSE, ALA, HWP or IBM.

tivoli IBM micromuse M&A software woodrow netcool network Cisco investing tech

Private Company Spotlight: Akimbi Systems

In my daily research through the blogosphere, I recently came across a column by Daniel Lewin [via Don Dodge] that discusses innovative startups [who, not surprisingly, all happen to be .Net devotees]. Putting aside the trite Xmas references and the highly Microsoft-centric approach, I found Lewin's list worthwhile in its own right. Coincidentally, several of the companies mentioned are in spaces I, as an investor in public companies, pay close attention to and know a bit about already. Others I look forward to getting to know thanks in part to Daniel's recommendation. In Lewin's own words...

Every company on our list has taken advantage of the .NET framework to bring their products and services to market, and it has contributed wildly (OK, merrily) to their success. But enough about us. On to those incredible companies doing extraordinary things. Forget Comet, Cupid, Donner, and Blitzen; these companies may not be flying through the snowy night skies, but they are high-flying in a very good way, too...

One of the companies mentioned, Akimbi Systems, has been on my watch list for some time, having been brought to my attention by the fine folks at Gartner. My industry contacts has since confirmed that the Akimbi team is making quite a few people in the software testing and development world take notice.

Akimbi was founded in 2004 by James Phillips and Xun Wilson Huang and has raised $11.3 million via two rounds of financing. Hummer Winblad led the initial round along with Partech International and Stanford. Mayfield Fund joined [and led] an $8 million Series B round last month [November 2005].

So what does Akimbi do, and why all the buzz?...The company puts a new spin on virtualization

More specifically, Akimbi leverages the growing popularity of virtual machines to help streamline the process of software design testing and quality assurance. From Akimbi's website:

Building on virtual machine technology from Microsoft or VMware, Akimbi Slingshot enables software developers and QA engineers to suspend, then capture to a shared storage library, the complete state of a “complex configuration” – that is, a collection of running, interdependent computer systems that span multiple machines. Over time, an organization builds up its library, including test scenarios, production environments, and customer configurations. When a configuration in the library is later needed for development or test purposes, for example to test a new software build in the context of a customer production environment, Akimbi Slingshot can instantly deploy the entire configuration to the best available resources in a pool of managed servers – exactly as it was captured, running and ready for use.

Akimbi Slingshot-managed capture-and-restore operations literally take seconds. What would normally be a painstaking, multi-hour exercise (gathering machines, installing operating systems, installing and configuring applications, establishing inter-machine connections) can now be done with a single click of the mouse.

What's are the pain points being addressed?

• Reduction of overhead -- Server resource allocation has long been an inefficient process, particularly for processes like software design, testing and deployment which are inherently cyclical. For example, when a new application is about to be deployed across the enterprise, the QA/Testing group needs to requisition massive server capacity to run detailed scenario analysis before going live. In many organizations, that means huge server farms sit idly by much of the time, waiting to be deployed by the QA/Testing teams at unspecified intervals. In other [often smaller] organizations, they simply don't have the capital resources to keep servers shuddered on hold...so the QA/Testing teams are forced to fight for available processing space, often at off peak hours [i.e., when core processes aren't being utilized]. Akimbi seeks to reduce this overhead issue by allowing the creation and tear down of complex, multi-machine environments virtually that can be saved and re-deployed at will.

• Reduction of development costs and cycle times -- If Akimbi does what's promised, the cost savings could be tremendous, particularly for larger development organizations. The current method of QA testing and debugging in pre-deployment is cumbersome to say the least. The complexity of production environments is only going to increase as we move more into a web services/SOA environment...

• Multiple databases [e.g., DB2, Oracle, SQL]
• Multiple app servers [e.g., Apache, JBoss, Websphere, Weblogic]
• Multiple hardware configurations [e.g., client/server, virtual, Web-based UIs, mainframe]
• Multiple display paradigms [e.g., mobile, dedicated terminals, desktops, servers]
• Multiple security layers
• Multiple web interfaces [e.g., Firefox, IE, Opera]
• Multiple messaging and communication protocols

To be able to simulate disparate environments, and then freeze and capture the resultant outcomes of those environments into a library for later re-use allows QA and testing to become ITERATIVE in ways that simply weren't feasible in times past.

Akimbi is still an early stage company, but they're making headway and several public companies in the systems management and QA testing space have [or should be] taking notice. I can think of a number of companies that would do well to consider a partnership with Akimbi at a minimum. Another issue to consider is how proprietary their solution is [clearly they are a first mover, but the length of their lead in this space is something I'm less confident in declaring]. Will the VM players [i.e., EMC via VMWare, Microsoft, Open Sourcers via Xen] extend their solutions in this direction? Time will tell, but Akimbi is helping shape what could be an important evolution of the software design and testing process.

Related Articles of Interest:

• Wiki on Virtual Machines
• VMWare: What is Virtualization?
• Under the Radar: Akimbi Got Bank!
• Network World: The Rush Is On To Virtualize Servers
• IT Jungle: Akimbi Leverages Virtualization for QA Testing

akimbi virtualization QA testing software woodrow VC .net

FAST's Torbjorn Kanestrom interviewed in Red Herring

A few weeks ago I wrote about the merger of Verity & Autonomy, two of the better known companies in enterprise search. At the time, I mentioned that FAST and Endeca were the other two players of consequence and that they, along with Verity/Autonomy were going to face interesting times ahead as Google, Microsoft and Yahoo! seemingly pay closer attention to the desktop and enterprise crawling.

Red Herring posted an interview with FAST SVP of International Relations and it's certainly worth a read if you're interested in enterprise search.

Related Posts:

• Autonomy & Verity = Still Searching...

FAST redherring search woodrow

If You're Building a Startup to Flip?...You're A Fool

The blogosphere is abuzz over the concept of building a startup explicitly as an M&A target for GYM [Google, Yahoo!, Microsoft]. Todays' discussion started with a post by Dare Obasanjo.

His post ignited a spirited conversation...including reactions from Paul, Scoble, Michael [I particularly liked his take] and Don Dodge.

Reading through Dare's blog, he makes some very valid points. Somewhere along the way, it appears some have misrepresented what he wrote to imply he ENDORSES the idea of starting a company with a flip to GYM in mind. Unless I misread his post, that wasn't his intent. But unfortunately for Dare, he forgot that the last thing you say [or in this case, write] is often what lingers in people's minds...and he made the cardinal sin of ending his post with following:

If you are building a Web startup with the intention of flipping it to one of the majors, only three things matter; technology/IP, users and the quality of your technical team. Repeatedly ask yourself: would Microsoft want our users? would Google want our technology? would Yahoo! want our people?

Simply put, if you are building a startup with the intention of flipping it to one of the majors, the ONLY thing that matters is P.T. Barnum's famous uttering, There's A Sucker Born Every Minute. Whether the seed capital that funds such a business plan comes from the founders themselves [i.e., bootstrapped] or from angel/early stage VCs...it's dumb money.

I'm not a VC, but I know quite a few and have been pitched many a private equity deal in my own right. If I EVER thought a founder was already looking for the exit that early, I would run not walk away from the meeting. Being flexible to an early exit into a larger company is a very real avenue, and one that we've seen many of our colleagues opt for of late [e.g., Weblogs, Bloglines, del.icio.us, Flickr], but to a founder, there is strong indication that they were fully prepared to scale [or attempt to scale] these businesses themselves. Whether or not they all would've made it as stand alone companies in the long run is not the point, but rather that they weren't founded under the presumption that GYM would come along and give them an early payday.

Related Posts:

• To GYM or Not to GYM: An Entrepreneur's Dilemna
• Google Base: Why the Blogosphere Wants (or NEEDS) It To Be Underwhelming
• Yahoo! Becoming a Web 2.0 Poster Boy

Note: At the time of this writing, I and/or funds I maintain discretionary control over may have maintained long equity positions in some of the companies mentioned, but were not short any of the stocks in question.

GYM VC startup exit woodrow Google Microsoft Yahoo web2.0

AOL IPO, Part Deux?...Won't Be Long Now

OK, so Microsoft appears to have come up short at the expense of new uber-rival Google. According to numerous reports, Google will invest $1 billion in a 5% interest in AOL along with a host of extensions of it's already important partnership. This after widespread speculation that Microsoft was the favorite to land a piece [or all] of Time Warner's bastard internet stepchild.

The specifics [and potential aftereffects] of this deal have been discussed far and wide already, here are a number of the more thoughtful analyses I've come across:

• Ben Metcalfe Blog: What did Google actually get for their $1Bn?
• ZDNet: Looks like Google checkmates Microsoft's AdCenter?
• Michael Parekh: On Google Investing in AOL...Finally
• John Battelle: Yow. Don't Jump the Shark, Google

But one issue I wanted to raise specifically is how long it will take Time Warner to spin out a minority portion of AOL as a tracking stock? They've floated the idea to the Street for some time with divided opinion as to the ultimate value to Time Warner [i.e., how much is AOL really worth these days?].

Well, when the current technology darling [Google] is willing to pay $1 billion for a 5% stake [i.e., a $20 billion post-money valuation], Time Warner shareholders and advisers have GOT to be paying attention.

Related Posts:

• AOL Invests in Brightcove: What About Kontiki?
• Kontiki: The Not-So-Secret Sauce in AOL Hi-Q IPTV Venture

Note: At the time of this writing I and/or funds I maintain discretionary control over may be long MSFT, TWX and/or GOOG but were NOT short any of the aforementioned stocks.

AOL Microsoft Time Warner Google TWX MSFT GOOG woodrow search online ads