AlacraBlog

Alacra Adds Experian to its Data Warehouse

Alacra has integrated Experian’s UK business information content into the Alacra Data Warehouse.  Experian’s vast coverage of the United Kingdom will expand the depth and breadth of Alacra coverage of UK companies. 

The Experian content will be accessible through Alacra Premium and the Alacra Store, providing pay-per-view access to Experian’s business information reports and document images.  The database includes more than 2.4 million UK public and private companies and 4 million directors and shareholders.  Document images include annual accounts, annual returns, directors (Form 288), capital, incorporation and change of name documents.

With the addition of Experian, Alacra now has company profiles & financials data from more than 25 content providers including D&B, Datamonitor,  Aspect Huntley, Revere Research, Thomson Financial and more.

To see recent research from Experian, visit the Experian Publisher page on the Alacra Store.

Yahoo! Skewered

At Seeking Alpha there's a post titled Yahoo!: Time for Plan B that tears apart Yahoo CEO Terry Semel and the organization's lack of strategy.  One thing the post calls for is not only Semel's resignation or firing, but the replacement of 6 other Board members.

Terry Semel, Robert Kotick, Roy Bostock, Ron Burkle, Eric Hippeau, Arthur Kern, and Gary Wilson should be Immediately Replaced on Yahoo!’s Board of Directors. Terry Semel ultimately reports to Yahoo!’s board of directors. The board must be held accountable for the numerous missteps outlined above. Of the 10 directors, we believe 7 should resign or Yahoo! shareholders should withhold votes for them at Yahoo!’s 2007 annual meeting of shareholders.

I'm not saying Yahoo's performance has been anything to write home about but a) Yahoo has historically had good corporate governance and b) there are a bunch of buy ratings on the stock based on the expected success of Panama.  With regard to governance, the Institutional Shareholder Services (ISS) Corporate Governance Quotient (CGQ) rates Yahoo as outperfoming 65% of the of the companies in the S&P 500 and almost 98% of the companies in the Software and Services group.  Specifically, from the most recent CGQ report on Yahoo:

• The board is controlled by a supermajority of independent outsiders (independent outsiders greater than 67%)
• The nominating committee is comprised solely of independent outside directors
• The compensation committee is comprised solely of independent outside directors

Most of the other board specific practices of Yahoo! are rated positively.  As far as sell-side research is concerned, here are some of the most recent headlines:

From RBC: Panama Transition Smooth, Raising Estimates For 1H07
From Jefferies: Solid Q + Panama Launch Date to Offset Conservative Guidance; Reiterating Buy
From William Blair: Yahoo: Seamless Transition to “Marketplace Design” so Far

Clearly, Yahoo! has not performed recently.  But the complaints about governance seem too harsh and Panama should yield some improvement.  So maybe the timing for a big change isn't exactly right. 

Weighing in at 400+ Pages...Safa Rashtchy of Piper Jaffray

Last week Piper Jaffray Senior Research Analyst Safa Rashtchy and team published one of the largest and most comprehensive investment research reports in recent memory: 425 pages of charts,  tables, stocks to watch, information on ad agencies...it's overwhelming.    The User Revolution: The New Advertising Ecosystem and The Rise of the Internet as a Mass Medium introduces Piper's concept of "Communitainment," the combination of the internet as a medium for community, communication and entertainment.  The Piper team also "expects global online advertising revenue to reach $81.1 billion by 2011, representing a 21% CAGR (2006-2011).  The press release for the report can be downloaded here, and there's also an 8 page executive summary (3 pages of disclosures) that needs to be acquired through Piper as does the full report.  The graphic seen here is part of the executive summary with the caption: "In this new media reality, companies will need to own or partner with many channels to be omnipresent with users, forcing media companies to cooperate much more on standards, realizing that the user is king."

The Rapidly Changing Financial Information Industry

Information Arbitrage blogger and Monitor 110 CEO Roger Ehrenberg was interviewed on FT's Alphaville blog last week and talked about the difference between the traditional information tools for trading - services from Reuters, Thomson and Bloomberg - and Monitor 110's collection and presentation of web-based information.  Themes like "early discovery," "tickerising the unstructured universe," and "source expansion" are described as critical components of Monitor 110s value proposition, which is to harness the firehose of information on the web into meaningful, investable information. 

Earlier this month Connotate Technologies announced an equity investment by Goldman Sachs.  Connotate is similar in some ways to Monitor 110; the difference seems to be that user does a lot more of the targeting of the discovery agents with Connotate.

Connotate develops, sells and supports intelligent content monitoring, mining, and delivery tools called the Information Agent Suite (IAS) for business applications and knowledge management.

By automating the monitoring and mining of Web content, enterprises can better track and extract (i.e., harvest) key data and information across a wealth of web pages. They can also collect updates and aggregate the content with other business information for analysis and action. IAS harvests both the “shallow Web” accessible by popular search engines and the much larger “Deep and Dynamic Web,” generally not accessible using search engines.

In their white paper The New Research, Connotate claims to use intelligent agents  to understand what has changed on a set of user-defined web pages and report back to the user in a spreadsheet, database, or email.  One example they give is the ability to monitor pricing and discounting trends on retail websites and deliver information to a spreadsheet.  In some ways this is similar to what Majestic Research does - uncover new or derivative information sources that can be used for investment purposes.

Whereas Monitor 110 and Connotate will target the high end of the investment research spectrum, with their initial clients most likely being hedge funds, an article in Business Week Friday titled An Assault On Fortress Bloomberg describes Salesforce.com's new entry into the financial information market.  Although I haven't seen  the Salesforce.com new wealth management service, it's hard to imagine CEO Mark Benioff's prediction coming true: "We're going to move Bloomberg off the desktops of brokerages and replace it with commodity PCs and internet services."  There have been many attempts at Bloomberg-killers over the years; none of which have been successful.  Benioff might sell a lot of deskotps at the $500 per month price point, but it's unlikely any of those desktops will be acquired at Bloomberg's expense. 

Venture Capital Patience

When I got back from a few days skiing and caught up with my blog-reading, I saw Fred's post titled Patience.  Fred writes:

I am on the board of four companies that were started in the mid to late 90s and I have a significant investment in one other. All of them are Flatiron Partners portfolio companies. We have had our capital invested in these businesses for seven or eight years now. And we’ve had our time invested in most of these investments as well. The time and money are significant and finance theory teaches you that time works against you when you are in the rate of return business.

He then goes on to explain why he believes the focus on rate of return in the venture capital business is unwise. 

It’s not like you can turn around and invest your money at that rate of return so easily. So if your capital is tied up in a company that is building significant value for its shareholders, it’s often best to let it stay there.

As one of the four Flatiron Partners companies Fred mentions, Alacra certainly appreciates the patience.  I distinctly remember a Sand Hill Road swing I made trying to raise money and despite our optimistic financial forecast, we still couldn't hit the VC IRR target.  But we did have some of the other characteristics a VC would look for, especially "Does the management team have the desire to slog it out for close to ten years?" We're still slogging. 

Check Out Shore's Content Industry Outlook

John Blosson over at Shore Communications has published a free 2007 forecast called Content Industry Outlook 2007: Reality Checks.  The report is well worth reading but two points stand out:  John spends some time talking about aggregation, specifically with regard to major media companies: "...today's aggregation is a highly moveable feast that may make any headway in aggregation gained from acquisitions rather short-lived.  Instead, adjusting business models to help audiences aggregate their own content collections more effectively will be a key to revenue growth."  This led me to recall Scott Karp's post several weeks ago:  Content Businesses Don't Scale Anymore.  While benefits from acquisitions may be short-lived, major media companies may have no alternative.  Adjusting a long-held business model is difficult and takes time and there's little internal growth to fund the transition.  And this is in a favorable economic environment.

Another point John makes he terms Alternatives:  "While there is still plenty of ground to be gained by content pioneers, a more competitive market for media, enterprise and personal content services is going to make 2007 much less of a year to favor first movers in a given content sector."  Many first movers have already moved, yes.  And content businesses do not scale like platform businesses do.  But just as many businesses and industries take a long time to die (think newspapers), they also take a long time to be fully born.  I'm sure we'll see lots of successful niche content businesses emerge this year as the barriers to entry are low and the life style remains attractive.

We've Joined the SIIA

After years of procrastinating, Alacra finally joined the SIIA - the Software and Information Industry Association.  While in my view the focus of the Association is much larger companies, Alacra has gotten to a size where it really made sense to join.  Their events are alway top-notch and many of Alacra's business partners have been members for years.  So we're glad to be a part of it.

The Hot M&A Market

Day after day the financial press is chock full of articles on deal activity.  The McKinsey Quarterly has recently published some excellent articles on what's going on in M&A.  Are Companies Getting Better at M&A asks whether shareholders will be better off following this boom in the cycle compared to the last.

"With announced merger activity approaching $4 trillion globally in the first 11 months of 2006, the year had already surpassed the record levels set in 2000. That earlier boom was known not only for the number of deals completed but also for a lack of discipline and the number of deals that destroyed value for the shareholders of the acquiring companies; in fact, earlier McKinsey research shows that as many as two-thirds of all transactions failed to create value for the acquirers. Are shareholders doing any better this time around?"

Another edition of the McKinsey Quarterly, The Corporate and Investment Banking Trendspotter covers, with the help of Dealogic, quantitative fee-pool information by sector, product and geography. 

CreditSights also has some great coverage of the M&A enviroment. Their 3-part series is available through the Alacra Store:

A Whirlwind Affair: 2006 M&A Review, Part I

2007 M&A Outlook, Part II: Detailed US Sector Commentary

2007 M&A Outlook, Part III: Detailed Europe Sector Commentary

Alacra Seeks Product Manager

Alacra is currently seeking an experienced Product Manager in our New York office to steer the growth of our Alacra Compliance products.

Candidates should have a strong background in product management with a technology or content-based business OR hands-on experience in the Anti-Money Laundering space. 

For immediate consideration, send your CV to nyjobs@alacra.com or view the full position description here.