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 »

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:

Read the rest of this entry »

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.

One of the most significant trends I’ve been watching over the past decade is the dramatic drop in public companies in Silicon Valley. Naturally, that number was artificially inflated during the dot-com bubble when it reached 417 in 2000. For our purposes, Silicon Valley includes San Mateo and Santa Clara counties, and the southern half of Alameda County.

But the number of public companies has dropped for nine straight years now. Even when IPOs briefly reappeared in 2006 and 2007, they weren’t enough to overcome the net loss of public companies through acquisitions or bankruptcy.

In 2008, the number had fallen to 261. We just updated our records and the latest figure is 241.

That’s not just less than the dot-com era, that’s well below the 315 public companies the valley had in 1994 when the Mercury News started keeping track.

Here’s why I think this is a big deal.

Read the rest of this entry »

If you missed it, over the weekend we ran my look at Hewlett-Packard’s massive job cuts over the past decade: 75,505.

I have a few other stray thoughts that didn’t make it into the main story. And a few questions I want to follow up on in the coming weeks.

First, the stray thoughts.

Read the rest of this entry »

What is it with those demonic sheep?

IBM rolled out a new line of Unix server systems under the Power 7 nameplate on Monday. Analysts said IBM appears to be positioning the new machines as a counter to Oracle CEO Larry Ellison’s ambitious plans for selling high-end Sparc servers from newly acquired Sun Microsystems.

Both companies are angling to sell powerful (and expensive) systems that combine hardware and software, engineered and optimized for specific uses such as running complex financial operations. IBM’s press release lays out all their technical specs in detail.

But IBM didn’t stop there. Ellison has been trash-talking IBM for months now, and Big Blue answered back today with a feisty Facebook page (www.facebook.com/ServersForTruth) and a YouTube video that digs at Oracle on several points, including an episode last fall when an industry standards group fined Oracle $10,000 for using the group’s name in ads that didn’t meet its rules.

The video, which IBM says it produced in-house, is a fun spoof of a typically over-heated political campaign spot. Borrowing from former Hewlett-Packard CEO Carly Fiorina and her much-discussed ad attacking rival Senate candidate Tom Campbell,  IBM even threw in a cameo appearance by a sheep with glowing red eyes.

Last year, our most popular post by far was “HP’s Mark Hurd made $42.5 million in fiscal 2008.” The post has drawn a whopping 254 comments, with more still coming in.

So given the interest, it seems only right to post an update with Hurd’s last salary numbers for fiscal year 2009: $24.2 million. A story in the Mercury News this week covered the basics: Read the rest of this entry »

Back on Sept. 17, Palm released its long-awaited earnings. They were eagerly anticipated because these would be the first full quarter that included the performance of the Palm Pre. Ever since, analysts and investors have been trying to figure out whether the numbers were good news, bad news, or something else entirely.

This head scratching was reflected in the news coverage of the earnings. The Mercury News had a first-day headline that said “Pre Sales Give Palm A Boost.” But within a couple of days, the consensus seemed to turn against Palm, with analysts and others questioning just how good the numbers were, and worrying about the company’s outlook. Four days later, the Motley Fool wrote: “Palm Discovers Its Limits.”

The confusion was largely due to a change in accounting methods. More on that in a second. But once we take a closer look at the numbers, it seems clear to me that Palm seems to be setting itself up to be sold. And that would likely need to happen sometime in the next six to 12 months.

Read the rest of this entry »

Last week this blog offered a bulletin on the runway debut of Hewlett-Packard’s latest “digital clutch,” a chic netbook marketed toward women, featuring a butterfly motif from designer Vivienne Tam. This week we have a little update on footwear.

Miguel Helft at the NYTimes was first to report this one, but we also noticed the unusual shoes that Google co-founder Sergey Brin was wearing when he popped over to NASA’s Ames Research Center, next door to Google’s Mountain View campus, for a discussion on cloud computing yesterday.

Brin, who’s been seen wearing Crocs at other company events, was sporting high-tech Vibram FiveFinger moccasins — thin-soled sports shoes with a design that fits around each toe, the way a glove fits around each finger. (Vibram’s Website promises “the same physical and visceral sensation” as going barefoot.)

Brin was wearing standard Silicon Valley khakis and a short-sleeved shirt. But the more traditionally dressed government officials who flew out from Washington to attend the event — at which Google announced plans for a dedicated “government cloud” to host software applications for public agencies — would undoubtedly have been reassured to see that Google product manager Matthew Glotzbach wore a dark business suit.

We figure most people aren’t reading this blog for scoops on haute couture (did we spell that correctly?), but what the heck: Contacts at Hewlett-Packard tell us that designer Vivienne Tam will introduce her latest tech offering, the “HP Vivienne Tam digital clutch,” this Saturday as part of Fashion Week in New York.

Some of you may recall that HP created a buzz last year when it introduced a mini-notebook computer with a striking red floral design on the exterior, created by Tam. Looking somewhat like a stylish purse, it was marketed toward fashion-conscious women who didn’t mind paying a relatively high price ($699 for a netbook) to be able to surf the Web without lugging around a big, ungainly laptop.

This year’s offering, we are told, will have a cover design that reflects Tam’s upcoming spring collection, “inspired by the classic Chinese love story, “Butterfly Lovers,” a beautiful tale of freedom, romance and inspiration.”

And if that’s not enough, the HP announcement adds: “It fuses high fashion, small form factor and innovative function to take the personal computer from a necessity to a lifestyle statement for modern women on the go.”

No word yet on whether Tam will be introducing her own design for an x86 server next fall …