SiliconBeat

UPDATE: I just got a call from someone close to Elevation Partners who walked me through the numbers. Bottom line: Elevation expects to receive $485 million from the HP deal for the $460 million it invested.

Why? The original $325 million that Elevation invested was guaranteed in the event of an exit. In other words, out of the $1.2 billion that HP is paying, Elevation get made whole for that $325 million. Through in the other warrants and other convertible stock, and Elevations winds up with $485 million.

Worth noting: That also means that common shareholders will be getting much less than the $5.70 per share being touted in press releases.

The common shareholders still get $5.70 per share, a figure calculated after Elevation’s payout is backed out.

See this post from the Wall Street Journal and this one from Barron’s for more details on how the preferred shares are structured.

MY ORIGINAL POST:

At first glance, it’s hard to say for sure whether Elevation Partners will take a hit or just about break even on its Palm investment. On Wednesday, Hewlett-Packard said it was buying Palm for $1.2 billion, or $5.70 per share.

Elevation is Silicon Valley’s big buy-out firm whose investors include Bono of U2 fame and noted venture capitalist Roger McNamee. For a good overview of Elevation, check out this TechCrunch post from a few weeks ago. Palm was one of its biggest bets.

Here’s my math on the deal: Read the rest of this entry »

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The news (or at least the leaks and rumors) surrounding Palm seem to be only getting worse. Today, reports have emerged that Asian wireless companies HTC and Huawei declined to bid on Palm. The speculation now is that Chinese PC maker Lenovo is the front runner.

At the same time, Palm CEO Jon Rubinstein insisted the company could remain independent. In an interview with the Financial Times, Rubinstein suggested Palm might license its WebOS, the mobile operating system that runs the Palm Pre and Pixi, to other companies. But how much would you pay to license an OS from a company that seems caught in a death spiral?

No, it seems a sale of some sort is more likely. When you start blaming your partners for your troubles, as Rubinstein did in the FT piece, things aren’t likely to improve any time soon. Palm has Goldman Sachs and Frank Quattrone’s Qatalyst Partners on the case to find a buyer. And I have to believe there has to be a price at which Palm would be valuable to someone.

After all, Palm has a solid mobile operating system, although it’s struggled to attract developers to match the applications ecosystems of Apple’s iPhone and Google’s Android platform. But I’m guessing in part that developers are reluctant to jump in with two feet and create things for a company with such an uncertain future. A sale to someone with deep pockets could turn that around.

Here are my thoughts about who is left in the running, or should be:

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After spending the morning at f8, the Facebook developers conference, I’m convinced more than ever that Facebook is about to take over the whole Web. And by the whole Web, I mean, well, all of it.

And if Google isn’t trembling over this, they ought to be. We might look back at this day as the moment when Facebook set itself on a path to eventually dwarf Google in size, power, and eventually, revenues.

Simply put, Facebook is positioning itself to become deeply embedded in almost every single website. And the way it’s structuring this platform, it places Facebook itself at the center of Web more than ever.

Here’s why I think Facebook is about to become a monster.

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Last week, the biggest social media service most people have never heard of came out with a startling announcement. Ning, which allows you to build your own social networking site, was going to end its free service and focus on its paying customers.

The news was broken last week by Techcrunch which snagged a copy of CEO Jason Rosenthal’s memo to employees about the big change:

“When I became CEO 30 days ago, I told you I would take a hard look at our business. This process has brought real clarity to what’s working, what’s not, and what we need to do now to make Ning a big success. My main conclusion is that we need to double down on our premium services business.”

Rosenthal has just replaced Gina Bianchini as CEO. She co-founded Ning with Mark Andreessen. The company confirmed the change in a blog post the next day:

“As many of you know, we made a decision yesterday to focus 100% of the company on enhancing the features and services we offer to paying Ning Creators. The tens of thousands of you who already use our paid service represent over 75% of our traffic, and we’ve heard repeatedly from you ways that we can deliver a killer service to help make your Ning Network more effective.”

This announcement touched off a wave of panic among users of Ning, particularly educators and non-profits. But it also set off a round of smug “I-told-you-so” posts from developers who didn’t like Ning because it was a closed, proprietary system. They had long been warning people of the risks of putting so much content and resources into a service run by an unprofitable company with no sense of what might happen to all of that information should the company go kaput.

But the reality is not so simple. And while I’m generally a fan of open source and the open Web, I also became a big fan of Ning. And I think in that seeming contradiction, there’s a lesson for people who are building Web services and tools that they want regular folks to use.

So let me talk about my experience and what I plan to do with my network going forward.

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I’ve had a couple of days to reflect back on Chirp, the first Twitter Developers Conference held this week. Reading back on my column this week, written the day before, my gut feeling that Twitter is at an inflection point was reinforced by what I heard and saw this week.

What’s amazing about Twitter is how the company has succeeded despite itself. The service is unreliable. It’s hard for newbies to learn how to use it. And there’s been no grand vision guiding it along the way. Just a flourishing of ideas and applications and uses driven by consumers and developers that Twitter has been racing to keep up with. That it hasn’t collapsed completely may be its most remarkable achievement so far.

But while that’s amazing, it also presents immense challenges for building a company for the long term. Twitter execs addressed a range of issues. Some of what they said was good. Some was bad (or troubling). And some is bound to get ugly.

I’m going to walk through each of those, and what I think it means for the future of Twitter. Read the rest of this entry »

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The PC market is coming back strong, according to new research released today by Gartner and IDC. But HP and Dell, the leading US manufacturers, are losing share to their Asian rivals.

Worldwide PC shipments were up 27.4 percent in the first quarter of 2010, compared with a year earlier, according to Gartner. IDC pegged the year-over-year increase at 24.2 percents, still exceeding expectations.

HP remains the world’s leading seller of PCs, with 18.2 percent of the global market by Gartner’s count and 19.7 percent according to IDC. Both firms estimate that HP shipped almost 20 percent more units than a year earlier, while still losing a little under one percentage point of market share.

Acer, by contrast, was in the No. 2 position with 14.2 percent of the world market, up from 11.7 percent a year earlier, according to Gartner. IDC’s report gives Acer 13.6 percent of the market, up from 11.9 percent.

Both research firms are reporting that Dell’s share of the market also slipped a bit, while Lenovo, Toshiba and ASUS showed gains from a year ago.

IDC and Gartner each use slightly different methods of estimating the market, but their numbers usually track pretty closely. One difference this time: Gartner reported Apple gained almost a point of market share in the United States, while IDC reported Apple lost ground slightly.

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Perhaps not a surprise, but a sign of transition: James Gosling, the longtime Sun Microsystems software guru credited with developing the Java programming language, has resigned from Oracle just a few months after it acquired Sun.

 

In a blog post on Friday, Gosling wrote that he resigned on April 2. “As to why I left, it’s difficult to answer: Just about anything I could say that would be accurate and honest would do more harm than good.”

 

Gosling, 54, is a popular and respected computer scientist and, to many, an icon of the free-spirited early days of Silicon Valley. The bearded, long-haired Gosling favors t-shirts and jeans and always seemed to enjoy himself at Sun’s annual Java One conference, at least during the traditional opening rite in which he and other Sun execs used giant sling shots to loft souvenir t-shirts into the crowd.

 

Last year, when Sun was in talks to be acquired by IBM, Gosling told tech blogger Jason Stamper that there might be some interesting issues as IBM tried to integrate Sun’s free-wheeling culture with its own. “We’re definitely weirder than they are,” he said then.

 

As it turned out, the IBM deal fell through and Oracle swooped in. Many wondered if there might be a similar culture clash as Sun old-timers found themselves working for a company that’s definitely oriented to the bottom-line. Gosling didn’t say much more in his post. Instead he wrote:

 

“The hardest part is no longer being with all the great people I’ve had the privilege to work with over the years. I don’t know what I’m going to do next, other than take some time off before I start job hunting.”

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I just got an iPad review unit. I’ll have my full review later today. In the meantime, you can read my thoughts about it here:

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Last week’s criminal conviction of former Brocade Communications CEO Gregory Reyes, on charges relating to options backdating, was not as big a bombshell as the results of his first trial in 2007, when dozens of other Silicon Valley companies were still smarting from examinations of their own stock options practices.

Reyes’ conviction on nine counts of securities fraud and submitting false statements - he was acquitted on a conspiracy count - came after the results of his first trial were overturned last year on appeal. Meanwhile, experts say that heightened scrutiny and new regulations have clamped down on options abuses.

But there have been some ripples of fall-out this week. The Hill, a politics newsletter in Washington D.C., is reporting that national Democratic Party officials are attempting to make hay with Reyes’ conviction by calling attention to $75,000 that he donated over the previous decade to GOP causes.

A Democratic National Committee staffer blasted her Republican counterparts for keeping the donations, claiming that Reyes “defrauded the public using the same irresponsible tactics that sparked the worst economic crisis since the Great Depression,” according to The Hill.

In politics, of course, appearances count. The Hill also reported that the DNC has announced it will give $505 to charity after it was pointed out that Barack Obama’s presidential campaign was given that amount in 2008 by a man recently charged with threatening to kill Republican U.S. Rep. Eric Cantor of Virginia.

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