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Throughout the tussle between Yahoo! Inc. and Microsoft Corp. earlier this year, Microsoft always had the trump card of pulling its offer, knowing that in all likelihood that shares of Yahoo! would drift back to the $19.18 level where they were trading on Jan. 31, just before Microsoft's $31 a share, $47.5 billion offer was made, and they could make another offer at an even lower price.

Well, the $19.18 support level held for a while, but since the rout on Wall Street, Yahoo!'s shares have traded to a five-year low, below $14, so guess what? There's talk that Microsoft could revive its bid, albeit at a lower price.

Some of the speculation is being attributed to a research note put out by American Technology Research Wednesday in which analyst Rob Sanderson slashed his financial estimates and price target for Yahoo! and speculates that Microsoft "may try again."

Continue reading at TechConfidential.com.

International Rectifier Corp. on Tuesday issued a scathing reply to Vishay Intertechnology Inc.'s $23 a share, $1.7 billion tender offer made on Monday, saying in a letter to its shareholders that Vishay does not have their best interests in mind, that it is trying to buy the company on the cheap and that the offer itself is highly conditional. It urged stockholders not to tender shares into the offer and to reject Vishay's three nominees to its board of directors.

In its letter, International Rectifier notes the opportunistic aspects of Vishay's offer, pointing out that it came right after IR had completed a restatement of its earnings, when its shares were trading at a five-year low and at a dip in the cycle of the semiconductor industry. It also notes that the offer is highly conditional, still requiring a financing commitment from Vishay's lenders.

After reviewing proxy solicitations from both companies, Friedman, Billings & Ramsey Inc. analyst Craig Berger sees "little chance" that International Rectifier will be sold to Vishay simply because the offer price is too low. In a research note published on Tuesday, Berger writes that he also doesn't expect IR shareholders to elect the Vishay candidates to the board of directors. Berger believes IR has an attractive risk-reward profile, noting that the downside in its shares should be limited to around $16 if arbitrage traders abandon their positions; the shares could potentially trade into the $40s if aggressive margin projections made by IR management are achieved. Berger maintains a $29 price target on the stock.

Continue reading at TechConfidential.com.

Has eBay Inc. stumbled with another acquisition? TechCrunch is reporting that the online auction giant has hired Deutsche Bank to shop StumbleUpon, the Web site recommendation service it acquired in 2007 for $75 million.

StumbleUpon helps users discover Web sites based on their interests. It tries to take the place of a traditional search engine by limiting the number of search results, making money by embedding sponsor sites in those results. Interestingly enough, there's no indication on the site that StumbleUpon is actually an eBay company.

Perhaps eBay had some grand plans for StumbleUpon that it never got around to implementing, though we were critical of eBay for not disclosing its intentions back when it made the acquisition. There was some talk that the service could be integrated into eBay's Skype phone service, but with that property under-performing and reportedly up for sale, eBay may no longer have a need for it.

Continue reading at TechConfidential.com.

Nortel Networks Corp.'s (NT) surprise announcement that it plans to seek a buyer for its Metro Ethernet Networks business is a decisive, but risky, move that analysts say could presage an unraveling of the whole company. While some applaud the move as the sort of bold action that struggling Nortel has long required, they say it will be an extremely bitter pill for the company to swallow. As one of the company's stronger businesses, a sale of MEN could leave Nortel's remaining assets in jeopardy, says Lehman Bros. analyst Jeff Kvall.

Other analysts quoted by Business Week are viewing the planned sale as a harbinger of more sales. At least for now, however, Nortel is insisting that's not its intent. In this interview, Philippe Morin, who heads the MEN business, which makes technology to deliver broadband Internet access in urban environments, said the company had identified MEN for a sale precisely because of its relatively strong performance.

"It will help the balance sheet for Nortel but, at the same time, also help us to make some further investments around enterprise, around applications, and other areas around the core strategy direction that Nortel is focusing on," Morin says.

Continue reading at TechConfidential.com.

Flash memory maker SanDisk Corp. (SNDK) has rejected a $26 per share, $5.85 billion unsolicited takeover offer from Samsung Electronics Co. Ltd., calling the overture "opportunistic."

Talks between Samsung and SanDisk -- which have been rumored for weeks -- were revealed in a letter made public late Tuesday by Samsung. In the lengthy missive to SanDisk chairman and CEO Eli Harari and vice chairman Irwin Federman, Samsung vice chairman and CEO Yoon-Woo Lee said he was "deeply disappointed" that despite four months of discussions and meetings about a possible business combination, SanDisk "continues to cling to unrealistic expectations on both its standalone market value and an appropriate merger price."

"Notwithstanding the current market conditions, to stay competitive, SanDisk will need to fund critical investment and development over the next several months - cost cutting alone will not suffice," Lee wrote. "Our offer insulates your shareholders from the risk of market conditions that have severely deteriorated and are expected to remain challenging."

Continue reading at TechConfidential.com.

VentureDeal issued its second-quarter VC funding reports, and the sector drawing the biggest increase in private financing is, not surprisingly, energy.

During the period, 60 companies got $1.3 billion in backing. That represents a nearly 300% jump from the first quarter of 2008, and a 67% increase in the number of companies funded, the report said. Naturally, the numbers were skewed a bit by a few large deals in the alternative energy sector including solar service provider SunEdison's $131 million fundraising and BrightSource Energy Inc.'s $115 million Series C round.

The sector was also boosted by fundings for cutting-edge energy technologies, such as advanced batteries and wireless power transmission.

Continue reading at TechConfidential.com.

Those who were banking on Electronic Arts Inc. doing whatever it took to get a deal with Take-Two Interactive Software Inc. are in pain Monday after negotiations between the two game makers ended over the weekend.

Analysts, meanwhile, were left trying to figure out why the deal didn't happen, and what's next for Take-Two. There weren't too many answers to the first question, other than the pretty obvious conclusion that Take-Two wanted more money than EA was willing to pay, but plenty of guesses about the second.

Wedbush Morgan Securities analyst Michael Pachter in a research note Monday said that despite strong third-quarter results, the company's balance sheet foreshadows a "reversal of fortune" in 2009. Specifically, the analyst said Take-Two's cash reserves are significantly lower than its peers, as a percentage of its trailing six months of publishing revenues.

Continue reading at TechConfidential.com.

Having invested in and led a handful of Internet startups, John Borthwick knows well that the tide of new Web 2.0 companies is changing how people interact with the Internet. But recently, the co-founder of Internet technology incubator and investment firm Betaworks has noticed something altogether different. Hundreds of technology startups are cropping up, many backed by venture capital, and coalescing to create a new experience for Internet users.

The hallmark of these companies is that they rely on or enable the near-instantaneous exchange of information and online content. Borthwick calls it the "Now Web."

"There is something new going on here," muses Borthwick, whose New York firm has invested in nearly 20 startups over the past year. "Somewhere in the past few months, the way that I experience the Internet, and specifically live information, changed. There is a 'Now Web' emerging out of an ecosystem of loosely coupled products.

Continue reading at TechConfidential.com.

We keep picturing execs from Electronic Arts Inc. (NASDAQ: ERTS) and Take-Two Interactive Software Inc. (NASDAQ: TTWO) holed up in a basement somewhere duking it out in a winner-take-all battle of Madden NFL (Northern California-based EA a supreme underdog with either the San Francisco 49ers or Oakland Raiders to New York-based EA's Giants or Jets). Why else would it be taking so long for the two companies to either come to terms on a merger or announce that their talks have ended.

The two gaming companies entered a confidentiality agreement on Aug. 25 to discuss a deal. Under the agreement both sides are barred from publicly discussing the status of negotiations unless one of the companies notifies the other that it is terminating the talks. Hence the lack of information.

As usual, the longer it takes for a resolution, the more nervous investors get. Take-Two shares, which traded as high as $25.75 on the day the confidentiality agreement was signed, recently traded at $21.17. Part of the decline is attributable to weakness in the overall market, but uncertainty over whether EA might sweeten its $25.74 is also damping the stock. While some analysts don't think EA is willing to pay more than $26 to $28 a share, others think the price could top $30 a share.

Continue reading at Techconfidential.com.

Media critic Jeff Jarvis pleads Google Inc.'s (GOOG) case after the U.S. Department of Justice hired an outside attorney to examine the search company's advertising alliance with Yahoo! Inc. (YHOO]. Google's no monopoly, he says. So to what does Jarvis attribute the feds looking into the ad deal? Americans hate success. "It's the yin-yang of American business: we love success stories but we hate too much success," he says.

This is false on many levels. First, and apologies in advance for belaboring the obvious, but investigating big mergers and, in this case, contracts for their potential effect on competition is what antitrust enforcers do.

Or at least they're supposed to. The Justice department that Jarvis implicitly chides for presuming to scrutinize the Google-Yahoo! deal is one of the laxest antitrust regimes in recent history. The last time this DOJ challenged a commercial arrangement like this one on competition grounds was, well, never (That's right, they haven't opposed a single one.) And it's hardly any more aggressive in policing mergers. Under Assistant Attorney General for Antitrust Thomas Barnett, the agency has yet to challenge a merger, although it did retroactively move to block a small newspaper deal in West Virginia. Even the DOJ's antitrust brethren at the Federal Trade Commission are getting exasperated, firing off a statement on Tuesday attacking Justice for weakening antitrust law.

Continue reading at TechConfidential.com.

It's not yet clear how serious the talks are, or whether the two parties involved could overcome substantial antitrust and other regulatory concerns that would likely arise, but just the word that Korean memory chip maker Samsung Electronics is mulling a purchase of SanDisk Corp -- a deal that would be valued at about $3.2 billion -- is generating excitement. Investors and industry watchers say such a move could be a stroke of genius by Samsung in knocking down its archrival Toshiba Corp.

Japan's Toshiba, currently second behind Samsung in the flash memory chip market, is planning to double its chip production through a partnership with SanDisk, so an acquisition of the company, especially from the market leader, would raise the stakes.

Of course, the deal's not done yet. Following reports in a Korean newspaper on Friday, Samsung acknowledged in a statement, and later in a regulatory filing, that it was lookig at SanDisk as part of a review of various options. But such cross-border deals can be tricky to complete. And analysts noted that the news leak so early in the process doesn't help Samsung.

Continue reading at TechConfidential.com.

Under pressure from some of its largest shareholders to pursue a deal, document management firm Captaris Inc. on Thursday said it would be acquired by Open Text Corp. for $131 million.

At $4.80 a share, the purchase price is only slightly better than the $4.75 a share offer made by private equity firm Vector Capital on March 17, the same day Captaris announced it was exploring strategic alternatives. But Vector, which owns a 10.2% stake in Captaris, withdrew its offer on March 28, a week after the company said it would not preempt its review process to limit talks with the firm. Captaris also was under pressure from activist shareholder Emancipation Capital LP, which holds a 6.7% stake, to strike a deal.

Continue reading at TechConfidential.com.

It's admittedly a warning that's been circulating for a long time now without ever seeming to lead to much, but venture buyout investor Terry Garnett sounded another alarm about the unsustainable economics of the VC sector on Wednesday when he said it was "perplexing" that so much money continued to flow into venture capital.

Citing some gloom-and-doom forecasts that the roughly 1,000 venture capital firms operating today should contract to about 100, Garnett said "that's probably not too far off the mark." Garnett, himself a former venture capitalist with Venrock Ventures who went on to co-found the venture buyout firm Garnett & Helfrich, which spins out businesses from global companies, said the venture model simply did not support the $35 billion of new investments that was poured into startups last year.

Behind some of the highest-profile Web 2.0 startups, he said, there were a host of other startup companies receiving funding but generating a lot less hype and standing less chance of succeeding. The result: "an incredibly bifurcated model" in which the very top tier of VC firms do well and all the others lose money.

Continue reading at TechConfidential.com.

A handful of VCs notched an exit Tuesday with the announcement that Oracle Corp. (NASDAQ: ORCL) has agreed to buy ClearApp Inc. for undisclosed terms.

The Silicon Valley startup, formerly known as Acsera Corp., raised a $14.2 million Series B round in 2006, bringing its total at that point to $20.2 million. The company's investors include Sierra Ventures, 3i Group plc and Partech International. The six-year-old startup's technology helps manage and monitor Java- and service-oriented architecture-based enterprise applications that run customer portals, back-office systems and finances.

Oracle said that combining ClearApp's offerings with its own enterprise manager products will help enhance customer service levels and reduce application down time.

Continue reading at TechConfidential.com.

The Active Network, which operates a bunch of sports related Internet properties including 10-K race registration sites, has landed a whopping $80 million in Series F money in a round led by ESPN.

The investment, which was also supplied by previous investors Canaan Partners, North Bridge Venture Partners and Performance Equity Partners, brings the total raised by the ten-year-old company to more than $275 million, according to TechCrunch.

For ESPN, the investment builds upon $20 million it sunk into The Active Network two years ago. The company merged in 2001 with MyTeam.com and since then has struck a number of acquisitions, including the purchases of InfoSpherix and Hy-Tek Sports Software earlier this year. It filed to go public in 2004, but withdrew the filing four months later.

Continue reading at TechConfidential.com.