Wall Street Beat: M&A, VC funding stay hot
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(InfoWorld) - Merger and acquisition news from companies as diverse as Yahoo, Cognos, and MetroPCS Communications heated up IT investor interest this week, shoring up confidence in the sector even as credit-market concerns continued to buffet the stock exchanges. After wireless carrier MetroPCS proposed a merger valued at about $5.5 billion with rival Leap Wireless, its share price Tuesday spiked $1.36 to close at $28.65. Brokerage Jefferies & Co. Wednesday then upgraded its rating on the stock from "hold" to "buy," sparking another uptick in the company's share price. Though the merged company would have about 6.2 million customers, a far cry from the 50 million-plus subscriber base that market leaders like AT&T and Verizon have, the combined company would be the fifth largest in the U.S., with a national footprint. Meanwhile, investor faith in the beneficial effects of mergers was underscored by share-price increases in all the major acquiring companies this week. Often, the acquiring company stock takes a hit because acquisition costs are usually expected to dilute earnings for a while. Business performance software vendor Cognos Wednesday said it agreed toÂ pay $339 million for Applix, a developer of performance analysis software. The company has an aggressive plan to integrate Applix's products by early next year. Company shares jumped by $0.18 to close at $41.08 Wednesday, rising further on Thursday as brokerage JPMorgan raised its rating on the shares, saying that underlying demand for the Cognos' software and services is strong. JPMorgan also said that gross margins on product sales at Cognos should also benefit from the Applix acquisition. Yahoo meanwhile continues to pursue its strategy of scooping up companies in the online advertising market, WednesdayÂ announcing a $300 million purchase of BlueLithium. BlueLithium's banner advertising network should help expand Yahoo's ad reach. The news sparked shares to rise by $0.13 to close at $24.10. Also this week, IP-based communications technology company Telanetix announced it would buy VOIP company AccessLine Communications for up to $34.9 million in cash and stock, and OracleÂ continued its buying spree.Â Oracle snapped up Netsure Telecom, a provider of network intelligence and network data integrity software, andÂ Bridgestream, a maker of software that helps companies map employee responsibilities, for undisclosed amounts. The M&A news mirrors data on venture capital funding, which in the first half of the year hit its highest point since 2001, with IT taking a big share. Now, the latest MoneyTree Report by PricewaterhouseCoopers and the National Venture Capital Association (NVCA), based on Thomson Financial data, shows that a growing percentage of those funds are coming not from pure venture-capital firms, but from operating companies such as manufacturers and IT vendors. A lion's share of this corporate VC funding is also going to IT businesses. For example, corporate VC funding amounted to $1.3 billion in 390 deals in the first half of 2007, representing 21.4 percent of all VC deals -- the highest percentage of corporate venture deals and dollars since 2001, according to the report. The biggest slice of the investment pie -- 20 percent -- was taken by software companies. Intel was the biggest corporate investor, plunking down $112.3 million in 42 deals. "Corporate venture capital deals are a good measure of confidence in IT," said Claudia Fan Munce, the Chairman of NVCA's Corporate Venture Board and managing director of IBM's Venture Capital Group. While pure venture capital companies need to make investments just to stay in business, operating companies like IT vendors don't have that particular sort of pressure, she noted. Corporate VC funding and M&A "allow companies to tap into innovative new technologies and business models," she said. Â
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Investor's Business Daily - Investors pumped $10.75 billion of new money into stock funds in July. But most of it went to world equity funds, while U.S. stocks saw outflow of $4.11 billion.
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A recap of some of the hottest stocks on the market.
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These red-hot investments won't burn your portfolio.
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Wall Street stocks are poised to push  higher at the start of Wednesday trade, buoyed by a batch of  merger activity, as investors shake off cautionary comments  from the U.S. Federal Reserve.
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Index funds aren&#39;t splashy. They never lead the &quot;mutual fund of the month&quot; lists or get plugged by commentators on the financial news.
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U.S.-based venture capital investments reached their highest point last year since 2001 with software remaining the strongest category, according to The MoneyTree Report, released this week by PricewaterhouseCoopers and the National Venture Capital Association (NVCA).VC firms sunk some $29.4 billion into 3,813 U.S. deals in 2007, according to the report.Software-related VC funding once again received the most money with $5.3 billion, compared to $5.1 billion in 2006, according to the report, which used data from Thomson Financial.VC spending on other technology categories also rose. Funding for computer- and peripheral-based interests was $580 million, up from $497 million in 2006; IT services, $1.3 billion, compared to $1.1 billion in 2006; networking and equipment, $1.25 billion, compared to $1.1 billion the previous year.However, semiconductor VC investment fell to $1.85 billion, from $2.14 billion in 2006. Telecommunication also saw a slowdown, falling to $2.14 billion, compared to $2.6 billion in 2006.While the VC market has hardly bounced back from its boom year -- 2000, when spending stood at $105 billion according to NVCA -- it has slowly crawled back to life. A low point came in 2003, when VC investments were a mere $19.7 billion, NVCA data shows.Major software vendors employ varying strategies toward the VC market. While some companies, notably Sun, infuse cash into startup companies through funds of their own, others, such as IBM, take a different tack, working with VC firms to analyze their portfolios and spot companies that could be potential future partners.&quot;We&#39;re not in the venture investment business,&quot; said Claudia Fan Munce, managing director of IBM&#39;s venture capital group and vice president of corporate strategy.&quot;The due diligence process today is much, much heavier,&quot; Munce remarked of the current climate. But as the report&#39;s numbers indicate, venture investing is far from dead. &quot;They&#39;re coming back in a very different way. They&#39;re not just looking at Silicon Valley,&quot; Munce said.According to the study released this week, U.S.-based VCs invested $1.1 billion in India and $1.4 billion in China, record highs for U.S. investments in those nations (The numbers are not included in the study&#39;s aggregate totals, according to PricewaterhouseCoopers.).
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Wall Street's fourth-quarter rally gave stock mutual funds a solid performance for 2004, with small-cap equity funds and real estate funds scoring some of the biggest returns. Large-cap growth equities and technology-focused funds had the slimmest gains.
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Wall Street stocks rose on Thursday, after strong results from Oracle (NASDAQ:ORCL) raised hopes that fears of a slowdown in corporate technology spending were premature, but investment bank Bear Stearns (NYSE:BSC) suffered another weak quarter.
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It's been a strong week for tech offerings, and the momentum may continue.
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Wall Street&#39;s merger-fueled rally may  continue next week, so long as Friday&#39;s payrolls report and  other economic news don&#39;t spoil the party.
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In one corner of Wall Street, money is still gushing. Early shareholders may be protected, but long-term investors may be the suckers.
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Leading shares ended a volatile session lower, but still above the key 6,000 level, as M&amp;A-fuelled gains in utilities and a bounce in Partygaming were offset by a weak Wall Street.
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Investor's Business Daily - Microsoft easily beat Wall Street's forecasts for its fiscal second quarter on Thursday thanks to strong sales of Windows Vista, Office software and video games.
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Mergers and acquisitions have slowed  during the volatility in global financial markets over the past  two weeks, but investment bankers say the upheaval would have  to last a long while to threaten the M&A boom.
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(InfoWorld) - Mergers and acquisitions and several strong financial reports excited IT investors this week, even as concerns about the U.S. economy continue to roil the stock market. The U.S. Federal Reserve Board decision Tuesday to cut interest rates gave a temporary boost to stock exchanges and benefitted bellwether IT companies, such as Google, Research in Motion, and Dell, which all posted share gains after the Fed's move. Since mid-quarter, investors have dumped shares, including those of IT vendors, as concerns about the faltering U.S. housing sector, mortgage payment failures, and related worries about the credit market have grown.The Fed's move was meant to allay worries about a potential tightening of credit, which is often expected to dampen business and consumer spending. But economic concerns have not appeared to slow the pace of M&A among IT vendors themselves. For example, to expand its foothold in the U.S.,Â T-Mobile announced Monday that it will buy SunCom WirelessÂ for $2.4 billion. SunCom Wireless jumped $3.65 to close at $25.65 after the announcement. Yahoo also helped the week start off with a bang, announcing a $350 million acquisition in the hot software-as-a-service market.Â Yahoo is buying Zimbra, which offers a hosted collaboration and messaging software suite. Yahoo shares closed Monday at $24.95, up by $0.22. There were a host of other M&A news, including Monday's announcement by InfoSpace, that it would sell its Switchboard.com online directory business for $225 million to Idearc, a print and online directory publisher. InfoSpace shares soared $4.13 to close at $17.38 on the news. Meanwhile Leap WirelessÂ rejected an unsolicited buyout offer from cell phone rival MetroPCS, saying the $4.7 billion bid underestimates Leap's growth potential. Generally, M&A news boosts investor confidence because it is taken as a sign that the vendors themselves are certain enough about new technology to bet big on it. Other good news this week came from software bellwetherÂ Oracle, which Thursday announced that strong database, middleware and services revenue helped bring net income for its first fiscal quarter to $840 million, a 25 percent jump from the year-earlier period. In the hardware arena, Best BuyÂ reported Tuesday that due in part to strong sales of computers, net income rose to $250 million for the quarter ended Sept. 1, compared with $230 million a year earlier. Gartner offered more good news for hardware, predicting in a report Thursday that lower prices and the improved performance of laptops will fuel continued growth in PC sales. Worldwide PC shipments will grow 12.3 percent this year, Gartner said.
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With just six business days remaining in the current calendar quarter, it's easy to spot the investors holding lots of technology stocks. They're the ones holding their breath.