Ebay and Stubhub

Today eBay closed its acquisition of online ticket reseller Stubhub. Less closing costs and fees, the deal, which was announced on January 10th closed at a purchase price of $307m with approximately $21m of net cash.

The purchase, unlike many that have followed since eBay’s shrewd acquisition of Paypal in 2002 for $1.5b, seems a natural fit to eBay’s core retail/auction business lines. Stubhub, which was founded by two classmates from Stanford’s GSB (who held approximate 25% of outstanding shares at the time of the sale), acts as a middle market for for person to person resale of event tickets. It has market-leading position in the growing market for secondary sales of event tickets. (IAC’s Ticketmaster is the leader in primary sales and MusicToday, which is owned by Live Nation, dominates the sale of Direct-to-Fan ticketing)

In December, 2006 the Stubhub site was the 5th most visited ticket vendor with 2.1m unique visitors according to ComScore Networks. (The Top 4: Ticketmaster with13.3m, Moviefone with 12.8m, Fandango with 5.4m and Movietickets.com with 4.8m). For the prior fiscal year, Stubhub’s revenues were close to $100 and earnings (EBIDTA) were approximately $10m. Those numbers puts the transaction price at a rich multiple of approximate 30x revenue. That’s a big premium, arguably too much of one, but compared to the purchases Click to Read More

Cisco acquiring Five Across

When it comes to mergers and acquisitions, there are some deals that you can almost see coming but then there are others that hit you like something falling out of the sky.  Cisco dropped a small bomb from above when it announced today it was acquiring small social network platform developer Five Across .

Five Across was founded in 2003 by software developers from Apple computer and Adobe Systems. They set out to create a rapid deployment platform for creating and publishing web communities (and social networks) and integrating dynamic content in to them.  Put another way, their idea was simple: web communities are popular but time consuming to build.  Create a rapid deployment platform and corporate customers can use tools to create their own interactive web communities; sites where they can engage fans/customers and enhance their brands.   

five across and cisco

At the time of the acquisition, Five Across software is beyond beta and in the market. The NHL with its NHL Connect fan website (currently listed as being in beta)is one of the notable first customers.

On the face of it, thinking purely about revenue, acquiring Five Across seems a curious choice for Cisco.  Buying a software developer, let alone one that hasn’t sold a lot of product, is a move away from Cisco’s core business of selling network routers and switches, or even its consumer networking product lines (through Linksys and Scientific Atlanta). 

Fortunately, direct impact on bottom line isn’t the only purpose of an acquisition.  In this case, there are several ways the acquisition could be to be complimentary without direct contribution.  Click to Read More

Disney: Q1 Earnings

Disney  (NYSE: DIS), reported strong Q1 earnings with help of big DVD sales for Cars and Pirates of the Caribbean: Dead Man’s Chest.

For the first quarter, ended Dec. 30, net income was more the double, buoyed by gains from the sale of interests in E! Channel and Us Weekly for $1.1b.  Excluding that transaction revenue, Q1 revenue was up 10% to $9.7b and earnings per share were up $0.15 over the prior year to $0.50 a share.

The movie studio had operating income of $604m over $128m last year. 
Outlook for the coming year is strong with another Pirates sequel and other Pixar productions do for release.

Profits for the media divisions rose to $750m, up 24%.

More detailed press coverage on Disney’s finances can be found at:

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DirectTV Earnings Q4

DirecTV  (NYSE: DTV), reported Q4 earnings and met estimates of $0.29 share.

Net income almost tripled to $356m.  Subscriber growth was 38%, churn was down 1.57% do to stricter credit requirements for new customers.  Average monthly revenue for subscribers climbed to $80.70, an increase of almost $5.

More detailed press coverage on DirecTV’s finances can be found at:

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Gannett Q4 Earnings

Gannett Co  (NYSE: GCI), the nations largest newspaper company based on circulation volume, reported Q4 earnings.

The company announced net income was up 3% on the quarter.  Earnings were up $10.2m to $353.5m ($1.51/share).  Revenue was up 7.5% to $2.21b.  Both returns beat analyst consensus estimates.

In the rough newpaper ad market, the company had ad revenue up 3.7% but that was partly attributed to an increase in December from an extra week.  USA Today was the best performer with 13% ad growth (8% if adjusted to remove the extra week).

The television station holdings had Q4 revenue of $270.6m, up 30.3%.

More detailed press coverage on Gannett’s finances can be found at:

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Amazon: Q4 Earnings Report

Amidst heavy spending on new initiatives Amazon (NASDAQ: AMZN), reported Q4 numbers. 

EPS were down to 23 cents versus 47 cents a year earlier for the same period.
Revenue was up to 34% to $3.99b from $2.98b.  Spending on technology and content was up 34% to $177.

Despite revenue growth analysts were generally concerned with trends in profitability.

More detailed press coverage on Amazon’s finances can be found at:

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Electronic Arts: Q3 Earnings

Game publisher Electronic Arts (EA)  (NASDAQ: ERTS), reported Q3 earnings of $160m, down 38% do to a lack of holiday hits.  Excluding costs of stock options and other items, the adjusted amoung was $201 (63 cents a share) beating analyst consensus estimates of 57 cents.

Revenue for the quarter was slightly up at $1.28b.  The company was partly hurt by production shortages and there impact on sales of Sony’s PS3 Platform on which EA had invested heavily.  EA was also not well positioned for the launch of Nintendo’s rival Wii platform.

During the quarter, EA did acquire Headgate Studios, a  company that had focused on the Nintendo Wii.  That may improve performance toward the tail end of this fiscal year.

More detailed press coverage of EA’s finances can be found at:

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