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Xtremepicks.com Alerts for Nov 23, 2009 include- Google Inc. (GOOG), Ciena Corp (CIEN)
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Google Inc. (GOOG) said Monday it agreed to acquire display advertising startup Teracent Corp., which has developed machine learning algorithms designed to deliver optimized Web ads in real time.
The acquisition is Google's latest move to bolster its presence in the online display ad market, a business dominated by rival Yahoo Inc. (YHOO). It wasn't immediately clear how the deal will affect Teracent's partnership with Yahoo to deliver mobile ads.
"The Google threat to Yahoo in display is still largely in the future, but Google is building up a pretty significant war chest to take on that side of the market, potentially at Yahoo's expense," said Gartner analyst Andrew Frank.
Terms of the deal weren't disclosed.
The algorithms developed by San Mateo, Calif.-based Teracent allow advertisers, agencies and ad networks to pick and choose the format of display ads in real time, such as changing an ad's images, products, messages or colors.
The formats vary based on the user's geographic location, language, the content of the Web site, or the past performance of different ad formats. The technology can be applied across image, rich media and video ads.
Google, which makes almost all of its revenue from text ads that appear next to search results, indicated its interest in display ads by acquiring DoubleClick for $3.1 billion last year.
Neal Mohan, a vice president who oversees Google's display business, said Teracent technology would be integrated into Google's ad network and DoubleClick offerings.
Google Chief Executive Eric Schmidt said in October the company was once again looking at acquisitions and expected to buy on average one small company per month. He said Google had looked at a handful of startups working on better ways to sort and deliver display ads.
Google earlier this month bought Internet telephony startup Gizmo5 Technologies Inc. and mobile advertising group AdMob Inc.
Google shares closed up 2.2% at $582.35.
Ciena to buy Nortel's Ethernet assets Beats out bigger vendors with $769 million offer Ciena Corp. will buy the optical and metro Ethernet business of bankrupt Canadian firm Nortel Networks for $769 million, trumping an offer from Nokia Siemens Networks after a three-day auction, under a deal announced Monday.
Many industry analysts had expected Ciena to be outbid by one of its larger rivals, but fewer suitors than expected emerged and Ciena raised its offer by 48%. Nokia Siemens eventually dropped out, saying it couldn't justify bidding higher.
"I would argue that this asset is more valuable to us than anyone else," Chief Executive Gary Smith told MarketWatch in an interview. "It's a great fit." Shares of Ciena (CIEN 12.10, +0.10, +0.83%) , however, retreated 6% to $12.46 in morning trading on concerns that the price might be too high for the Linthicum, Md.-based networker.
Ciena's winning bid consists of $530 million in cash and $239 million in convertible notes. It's considerably higher than the company's original offer of $521 million. See story on Ciena's longshot bid.
"This is a fair price to pay for this kind of technology and asset," Smith said.
The purchase is not without considerable risk. It will sharply increase Ciena's debt, double the size of the company and expand its operations into Canada. The company plans to make job offers to at least 2,000 employees of Toronto-based Nortel.
Analysts say the success of the deal will largely depend on how well and how quickly Ciena meshes Nortel's assets with its own.
"We can't think of anyone in Ciena's management team that has ever been involved in -- much less integrated -- an M&A deal like this," the brokerage Jefferies & Co. said in a note to clients.
To address that concern, CEO Smith has hired outside consultants with experience in large mergers. He also said the long bidding process gave Ciena time to more closely examine the assets and prepare an integration plan.
"We're going into this with our eyes wide open," he said.
Despite its financial failings, Nortel was one of the world's largest makers of optical gear and it's equipment is used by many of the world's leading phone companies such as blue chips AT&T Inc. (T 26.74, -0.04, -0.15%) and Verizon Communications Inc. (VZ 31.20, -0.13, -0.42%) as well as Japanese giant NTT (NTT 20.53, +0.03, +0.16%) .
The unit being acquired by Ciena is expected to generate sales of about $1.1 billion in the current fiscal year. By contast, Ciena is forecast to generate about $644 million in sales in fiscal 2009.
The acquisition of the Nortel assets would tighten Ciena's relationships with large phone carrier -- critical to any networker's survival -- and strengthen its position in the fast-growing optical and Ethernet market. Yankee Group researchers estimate that sales in that segment of the networking market could reach as high as $85 billion by 2012.
With the Nortel assets now being transferred to Ciena, executives believe sales will stabilize after a 20%-plus decline in 2009, much of which can be blamed on a severe recession.
"A lot of customers were holding back," Smith said.
Ciena said the acquisition would add "significantly" to operating profits starting in fiscal 2011. The deal is expected to close in the first three months of 2010.
Nokia loses again Nokia Siemens Networks, the telecom-equipment joint venture of Finland's Nokia Corp. (NOK 13.47, +0.06, +0.48%) (FI:NOK1V 8.96, -0.14, -1.54%) and Germany's Siemens AG (DE:SIE 66.30, +2.18, +3.40%) (SI 99.15, +0.18, +0.18%) , said in a statement Monday that it didn't submit the highest bid because it "could not be financially justified." The joint venture lost a similar auction in July, when Swedish rival Ericsson (SE:ERICB 70.10, -0.10, -0.14%) (ERIC 10.15, +0.05, +0.50%) outbid it for Nortel's CDMA wireless assets.
Nokia Siemens had been seen as keen to acquire the optical networking and Ethernet assets to reinforce its position in North America, where it has failed to gain a solid foothold. In the past few quarters, the money-losing venture has struggled to compete with fast-rising rivals such as China's Huawei Technologies.
In a broadly higher market, U.S.-listed shares of Siemens added more than 4% while Nokia rose 1%.
Last month, Ciena made a stalking-horse offer for the Nortel assets valued at around $521 million. Analysts generally expected a bidding war to send the price up toward $900 million
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