Facebook IPO puts bankers on back foot
Posted by Randa Fathy
(Financial Times) -- As Wall Street makes final preparations for the largest technology debut by value in history, it has also faced what some bankers and investors have come to see as a series of snubs from Facebook.
From the sidelining of the banks through the registration process to the dithering of Mark Zuckerberg, Facebook's co-founder and chief executive, over whether or not he will turn up for the investor roadshow, the message has been clear: whatever the normal rules governing Wall Street initial public offerings, Facebook is the one calling the shots. The notion that Mr Zuckerberg has even considered steering clear of such a key event in the build-up to an IPO that investors have long been waiting for, is just one illustration of the bargaining power he and his social networking company, with 900m users and counting, wields over some of the world's most dominant banking institutions.
"I look at Wall Street as broken, from the point of view of Silicon Valley," says Roger McNamee, an established tech investor and founder of Elevation Partners, the $1.9bn fund.
Facebook's handling of its offering is taking the slowly shifting power dynamic in favour of Silicon Valley to a new level in its historically tense relationship with Wall Street; a tension that stems from bankers' success in the 1990s "bullying" often young management into deals benefiting investors more than the companies, according to Silicon Valley veterans.
Google's co-founders Sergey Brin and Larry Page are credited by these industry insiders as being the first technology entrepreneurs to wrest significant control of the IPO process away from their bankers back in 2004, though they also earned a reputation among investors of being arrogant. Since then, according to one long-time technology investor, Silicon Valley IPO advisers have become more savvy, and bankers, in turn, have become less aggressive.
Reuben Daniels, partner at EA Markets, a boutique investment bank, adds that a more common view has developed among tech entrepreneurs that Wall Street is a service provider rather than offering essential insight or relationships. Facebook's rise from start-up to global company adds to its influence, he says. Jay Ritter, a professor of finance at the University of Florida, says: "In Silicon Valley, the venture capitalists and entrepreneurs know that what's best for the investment bankers is not necessarily what's best for the companies. With big tech companies such as Facebook and Google, the companies realise that they've got a lot of bargaining power."
As with any large IPO, Facebook's offering, which could give the company an equity value between $75bn and $100bn, has already given it the leverage to make more common demands such as lower percentages on banking fees compared with smaller debuts. Although Facebook is not going as far as Google, which used an auction system instead of having underwriters set the price for its own $2.4bn IPO, the largest tech IPO at the time, Facebook is still planning to keep close control over the pricing and allocation of its shares, according to people familiar with the process.
Australian billionaire Clive Palmer to build Titanic II
Posted by Randa Fathy
Clive Palmer, one of Australia's richest men, has commissioned a Chinese state-owned company to build a 21st Century version of the Titanic.
The mining billionaire told Australian media that construction will start at the end of next year.
It would be ready to set sail in 2016.
The plan, he added, is for the vessel to be as similar as possible to the original Titanic in design and specifications, but with modern technology.
Mr Palmer told Australian media that he had signed a memorandum of understanding with CSC Jinling Shipyard to construct the ship.
"It will be every bit as luxurious as the original Titanic but of course it will have state-of-the-art 21st Century technology and the latest navigation and safety systems," he said in a statement.
The announcement comes just weeks after the centenary of the sinking of the ill-fated Titanic.
The vessel, the largest luxury ship in its time, struck an iceberg on its maiden voyage from Southampton to New York. It went down on 15 April 1912, leaving more than 1,500 people dead.
"Of course it will sink if you put a hole in it,'' Mr Palmer said in response to questions from reporters on whether the Titanic replica would sink.
The new vessel is scheduled to sail from London to New York in late 2016, if all goes as planned.
"It is going to be designed so it won't sink,'' he added. ''But, of course, if you are superstitious like you are, you never know what could happen.''
The cost of the construction is not known, a spokesman for Mr Palmer told Australian media.
The mining magnate from Queensland, who has strong business relations with China, has expanded into tourism. He owns a luxury resort on the Sunshine Coast and has plans to build a fleet of luxury liners.
His plan to build the Titanic replica was announced on the same day that he revealed plans, in a separate news conference, to contest the next federal election in Queensland.
Vivus Pill Promising Faster-Than Viagra Erection Approved
Posted by Peter Fawzy
A Vivus Inc. (VVUS) pill that is supposed to provide erections within 15 minutes, about half the time or less than Pfizer (PFE) Inc.’s Viagra, won U.S. regulatory approval.
The Food and Drug Administration today cleared the erectile dysfunction treatment, called Stendra, the agency said in a statement. Erectile dysfunction is the inability to get or keep an erection firm enough for sexual intercourse.
The drug, known chemically as avanafil, is the sole product on the market for Mountain View, California-based Vivus, which is seeking a partner to sell the medicine in the U.S. New York- based Pfizer’s Viagra, the top-selling erectile dysfunction pill with $2 billion in sales last year, works in 30 minutes to an hour, according to the drug’s website.
I do think it’s a differentiated product,” said Michael King, an analyst with Rodman & Renshaw LLC in New York. Unlike competitors such as Eli Lilly & Co. (LLY)’s Cialis, Vivus’s drug features “rapid onset; rapid off."
Avanafil may have $68 million in sales next year, according to the average estimate of six analysts compiled by Bloomberg. Revenue may peak at $459 million in 2017, King said.
Sales may be slowed at first by Vivus’s capacity to market the drug. The company is discussing deals with potential partners to sell the medicine, Vivus said today in a statement.
Avanafil may have $68 million in sales next year, according to the average estimate of six analysts compiled by Bloomberg. Revenue may peak at $459 million in 2017, King said.
Sales may be slowed at first by Vivus’s capacity to market the drug. The company is discussing deals with potential partners to sell the medicine, Vivus said today in a statement.
Obesity Drug
In addition to avanafil, Vivus is awaiting a July 17 FDA decision on Qnexa, which potentially would be the first obesity pill approved in 13 years.
The erectile dysfunction drug also will soon face generic competition. Patents for Cialis and Levitra expire in 2016 and 2018, respectively, and generic Viagra is expected to be available in 2019, King said.
Vivus “will be rolling a rock up a hill on the generic side,” King said today in a telephone interview.
The National Institutes of Health estimates that erectile dysfunction affects as many as 30 million men in the U.S.
“This approval expands the available treatment options to men experiencing erectile dysfunction, and enables patients, in consultation with their doctor, to choose the most appropriate treatment for their needs,” Victoria Kusiak, deputy director of the Office of Drug Evaluation III in the FDA’s Center for Drug Evaluation and Research, said in the statement.
Vivus gained 3 percent to $25.15 at the close of New York trading. The shares have more than doubled this year.
Side Effects
Stendra in some rare cases may cause color vision changes and sudden loss of vision in one or both eyes, according to the FDA. The most common side effects are headache, redness of the face, nasal congestion, cold-like symptoms and back pain. The drug also shouldn’t be used by men who take nitrates, which are used to treat chest pain, because the combination may cause a sudden drop in blood pressure, the agency said.
The pill’s side effects are similar to other erectile dysfunction drugs on the market, Barbara Troupin, vice president of medical affairs for Vivus, said last month at a conference.
Amazon soars as digital sales boost margins
Posted by Ayman Hussen
Amazon.com Inc's stellar quarterly results are helping convince skeptics on Wall Street that a bout of intense spending is beginning to pay off for an Internet retailer trying to transform itself into a technology company.
Shares in Amazon leapt 15 percent on Friday after it reported first-quarter earnings and margins well above investors' most bullish expectations, tacking on some $10 billion in market value and marking its biggest single-day gain since October of 2009.
CEO Jeff Bezos has tried to convince investors to stick with the company for the long term as it flirted with losses in recent quarters. He is trying to transform Amazon from an online version of a big-box retailer like Wal-Mart into a provider of technology services.
Some investors argue that its valuation of over 70 times forward earnings -- dwarfing companies like Apple Inc and Google Inc that produce record profits -- is justified because Amazon is on track for enormous margin expansion as it expands into more-profitable services from hosting websites in the cloud to providing an online marketplace connecting buyers and sellers.
"These services will become an increasingly important part of Amazon's overall business and will be a driving force of profitability going forward," Bernstein Research analyst Carlos Kirjner wrote.
Amazon is trying to be "not a bookseller or a retailer, but a company that uses technology and (now) its scale to transform whole value chains" from retail to publishing and video distribution.
Heavy spending has pressured profit margins in recent quarters, hitting the company's shares. But in the first quarter, gross margins rose by about 120 basis points to roughly 24 percent, Macquarie analyst Ben Schachter estimated.
Amazon shares rose to $225.75 on the Nasdaq.
Samsung Ends Nokia’s 14-Year Run as Biggest Handset Maker
Posted by Shaimaa Gamal
Samsung Electronics Co. (005930) overtook Nokia Oyj (NOK1V) as the world’s biggest vendor of mobile phones for the first time, ending the Finnish company’s 14-year run as the global leader, according to an industry study.
Samsung shipped 93.5 million handsets in the first quarter, 36 percent more than a year earlier, compared with 82.7 million for second-ranked Nokia, researcher Strategy Analytics said in a statement today. Demand for Galaxy smartphones helped Suwon, South Korea-based Samsung post first-quarter net income today of 5.05 trillion won ($4.5 billion), beating analysts’ estimates.
Nokia had been the biggest mobile-phone maker by shipments since 1998, when the Espoo, Finland-based company took over the spot from Motorola Inc. (MMI) Nokia reported a 1.34 billion-euro ($1.8 billion) first-quarter operating loss after handset sales slumped. Both smartphones and low-end handsets declined as Nokia’s aging portfolio was outpaced by handsets running Google Inc. (GOOG)’s Android. Its handset shipments in China fell 62 percent.
“Last year Samsung became No. 1 in Europe while Nokia retained the No. 1 position in most emerging markets,” Tom Kang, a Seoul-based research analyst at Strategy Analytics, said in a phone interview today. “In the first quarter, we expect Samsung took a lot of market share from Nokia in Asia. China and India were the two biggest markets where Samsung gained.”
