$$$ JPMorgan To Double Headcount In Brazil [Reuters]

$$$ “Michigan is giving hundreds of financial professionals and public employees a crash course in advising troubled municipalities, building an army of emergency managers that may become a model for other U.S. states.” [Bloomberg]

$$$ Jitters Put Focus Back On European Debt [WSJ]

$$$ Where did your tax dollars go? [GB]

$$$ Morgan Stanley fund fails to repay debt on Tokyo property [Reuters]

$$$ ProPublica wins Pulitzer for The Wall Street Money Machine [Pulitzer]

$$$ Texas University Takes Cue From Kyle Bass to Hold $1 Billion in Gold Bars [Bloomberg]

$$$ Winklevoss Twins Ask for New Hearing in Facebook Case [Bits]

Article courtesy of Dealbreaker

Morgan Stanley’s european software analyst Adam Wood this morning raised his rating on shares of SAP AG (SAP) to Overweight from Equal Weight, with a €54 price target on SAP’s ordinary shares, arguing that the company’s “core” business is primed to “accelerate,” given that SAP is “in the sweetspot of enterprise IT spending.”

Morgan Stanley’s survey of U.S. chief information officers, as well as recent results from Oracle (ORCL) and Accenture (ACN), suggest enterprise IT spending is showing continued “momentum,” writes Wood. That fact should help SAP, combined with the fact that the company has made some important changes: “SAP has appointed new co-CEOs, revised its maintenance pricing structure and launched a series of new products that are reviving its reputation for innovation.”

Wood raised his 2011 revenue estimate to €3.83 billion from a prior €3.73 billion, and raised his 2012 estimate to €4.32 billion from a prior €4.08 billion.

Moreover, the 10% growth in combined license and software sales in 2012 that the Street is currently modeling can probably be achieved just on the basis of the core products, such as ERP, business intelligence and analytics, PLM, middleware, and database sales, writes Wood. Everything else — the HANA product, the Business By Design offering, and SAP’s mobility products — would be gravy, he argues.

SAP shares today fell 1.4% to €43.79 in European trading. American Depository Shares of SAP fell 57 cents, or 0.9%, to $63.48.

Article courtesy of Tech Trader Daily

Senator Levin: Goldman Sachs Misled Congress After Duping Clients (Bloomberg)
Goldman Sachs misled clients and Congress about the firm’s bets on securities tied to the housing market, the chairman of the U.S. Senate panel that investigated the causes of the financial crisis said. Senator Carl Levin, releasing the findings of a two-year inquiry yesterday, said he wants the Justice Department and the Securities and Exchange Commission to examine whether Goldman Sachs violated the law by misleading clients who bought the complex securities known as collateralized debt obligations without knowing the firm would benefit if they fell in value….Much of the blame for the 2008 market collapse belongs to banks that earned billions of dollars in profits creating and selling financial products that imploded along with the housing market, according to the report. The Levin-Coburn panel levied its harshest criticism at investment banks, in particular accusing Goldman Sachs and Deutsche Bank AG of peddling collateralized debt obligations backed by risky loans that the banks’ own traders believed were likely to lose value.

Senate Report Lays Bare Mortgage Mess (WSJ)
“I think I found white elephant, flying pig and unicorn all at once.” –Goldman Sachs email describing an Australian client that invested in a souring mortgage structure 4/26/2007

Moody’s, S&P Caved to Goldman, UBS Mortgage Pressure, Levin Says (Bloomberg)
“Investment bankers who complained about rating methodologies, criteria, or decisions were often able to obtain exceptions or other favorable treatment,” according to the Levin report. The decisions appeared to be “concessions made to prevent the loss of business.”

US Probes Libor Dealings (WSJ)
For the past year, law-enforcement officials have been investigating whether the U.S. and European banks understated their own borrowing costs, which are used to calculate the London interbank offered rate, or Libor. The investigators are now looking into whether the banks effectively formed a global cartel and coordinated how to report borrowing costs between 2006 and 2008.

Geithner: We Must Raise Taxes (PBS)
Appearing on the PBS NewsHour Wednesday evening, U.S. Treasury Secretary Timothy Geithner said there is “no plausible way” to cut the deficit without raising taxes. “Unless you’re going to cut deeply into commitments we have made to seniors and to the disabled and to the poor, or ask the country to go borrow the money, you can’t solve this,” he said.

Raj Keeps Chin Up (NYP)
One reason Rajaratnam has to smile might be the ebullient praise he received yesterday from prominent educator and social activist Geoffrey Canada. Canada, who was called as a character witness, called Rajaratnam a “dear friend” with “a genuine concern for children.”
“Raj and I hit it off right away,” said Canada, the CEO of charitable group the Harlem Children’s Zone. Canada said he approached Rajaratnam earlier this decade to donate to the group and found him eager to help “level the playing field for kids.” “I never had to convince Raj” to be a donor, Canada said when asked to respond to the prosecution’s allegations that Rajaratnam committed his alleged crimes out of greed. “He’s a very generous person,” he added.

Deutsche Bank Sold Mortgage-Linked ‘Pigs’ as Market Buckled, Lawmakers Say (Bloomberg)
“Keep your fingers crossed but I think we will price this just before the market falls off a cliff,” Michael Lamont, the group’s co-head, said in a Feb. 8, 2007, e-mail about Deutsche Bank’s Gemstone CDO VII Ltd., according to a report released yesterday by the Permanent Subcommittee on Investigations. The Frankfurt-based firm sold $700 million of the instruments, which lost most of their value within 17 months.

IMF: Banks Face $3.6 Trillion ‘Wall’ of Maturing Debt (Reuters)
Many European banks need bigger capital cushions to restore market confidence and assure they can borrow, and some weak players will need to be closed, the International Monetary Fund said in its Global Financial Stability Report.

Obama Challenges Republicans With Deadline For Deficit Deal (Bloomberg)
The timeline Obama proposed for coming up with an agreement — beginning talks in early May and completing them by late June — sets up a negotiation over the nation’s long-term fiscal challenges in parallel with a congressional debate over raising the $14.29 trillion legal debt limit.

Glenore Aims For $8.8 Billion In IPO (WSJ)
The company said it plans to list a 15% to 20% stake, through an offer to raise around $6.8 billion to $8.8 billion in new capital and up to $2.2 billion in existing shares. At the upper level, that would make it London’s largest-ever initial public offering, topping Rosneft’s $10.6 billion offer in July 2006.

London Retains Lure For Hedge Funds As Banks Demure (Reuters)
Throgmorton’s Rubio points to the “Harvey Nicks effect” — referring to upmarket London department store Harvey Nichols, a magnet for big spenders — and said he had seen one manager relocate to Barcelona, only to move back to London.

Article courtesy of Dealbreaker

Obama Girds for Struggle With Republicans Over Debt Limit (Bloomberg)
The U.S. government is projected to slam into the $14.3 trillion legal cap on government borrowing sometime this spring. As the price of their vote to allow the government to go further into debt, congressional Republicans are demanding far deeper cuts than the $38 billion they got last week in the deal to fund the government for the last six months of the 2011 fiscal year. Failing to raise the debt ceiling would have much more dire consequences than a shutdown, with Treasury Secretary Timothy Geithner predicting last week that it would “call into question the willingness of the government of the United States to meet its obligations,” and “shake the basic foundations of the entire global financial system.”

PIMCO goes short US government debt, raises cash holdings (Reuters)
The portion of PIMCO’s $236 billion Total Return Fund held in U.S. government debt, including U.S. Treasuries, was -3 percent of total assets in the fund as of March, down from zero in February.

JPMorgan Accused Of Breaking Its Duty To Clients (NYT)
In the summer of 2007, as the first tremors of the coming financial crisis were being felt on Wall Street, top executives of JPMorgan Chase were raising red flags about a troubled investment vehicle called Sigma, which was based in London. But the bank chose not to move out $500 million in client assets that it had put into Sigma two months earlier. Sigma collapsed a year later. Now, new documents unsealed late last month as part of a lawsuit by bank clients against JPMorgan show for the first time just how high the warnings about Sigma went — all the way to the office of the bank’s chief executive, Jamie Dimon. While the clients lost nearly all their money, JPMorgan collected nearly $1.9 billion from Sigma’s demise, according to the suit.

China Inflation Is `Somewhat Out of Control’ on Weak Currency, Soros Says (Bloomberg)
“It would be very advantageous to allow the currency to appreciate as a way of controlling inflation,” Soros said. “The authorities missed that opportunity. You now have inflation somewhat out of control, and causing some serious danger of wage-price inflation.”

NYSE Rejects Nasdaq Offer (WSJ)
In a statement Sunday, NYSE Euronext called the bid by Nasdaq and partner IntercontinentalExchange Inc. “strategically unattractive” and entailing “unacceptable execution risk.” The NYSE reaffirmed its commitment to a $9.7 billion merger with Deutsche Börse announced in February, itself fraught with political and antitrust issues in both Europe and the U.S.

Nomura’s Stock-Backed Loans Jump 50% as Japan Quake Spurs Demand for Cash (Bloomberg)
Daily loan transactions jumped to about 150 from 100 and credit volume also climbed 50 percent as customers sought funds following the disaster, Naoshi Sakai, an executive director of Tokyo-based Nomura’s banking and trust agency services unit, said in an interview.

U.K.’s ‘Moderate’ Bank Report Calls for More Capital, Sales (Bloomberg)
“The universal banks such as RBS and Barclays fare best from the report,” said Joseph Dickerson, a banking analyst at Espirito Santo Investment Bank. “The key negative in the report is the prospect of further branch divestitures at Lloyds which is currently unquantifiable.”

From Behind Bars, Madoff Spins His Story (FT)
He says he gets lots of mail from well-wishers, but no hate mail. “I spend most of my time in my room, reading,” he adds. “And – this is my secret – Danielle Steel.” We all laugh. “Yes, Danielle Steel.”

Economists See Growth Accelerating Later This Year (WSJ)
On average, the 56 economists polled downgraded their estimate of first-quarter growth in gross domestic product to 2.7% at a seasonally adjusted annual rate. That is down from an average first-quarter forecast of 3.6% just two months ago. The economy grew at a 3.1% rate in the fourth quarter.

Economist: Spain Will Not Escape Europe’s Debt Woes (CNBC)
“The fact is that nobody knows whether the country (Spain) will need external help in the months that lie ahead. But what everybody knows is that the European Central Bank’s decision to raise interest rates will intensify its difficulties,” said Roger Nightingale, a global economist at Pointon York in London in a note to clients.

Glencore Eyes Big Mergers After IPO (FT)
CEO Glasenberg told the Financial Times that the launch of the offering – the largest ever in London – was “imminent” after it received robust support from big institutional investors. Glencore plans to sell a 20 per cent stake worth about $10 billion-$12 billion, valuing the whole company at around $60 billion, bankers said.

Insider Trading in China Thrives With Selectively Disclosed Economic Data (Bloomberg)
“In China, it’s better to be prepared than to be surprised,” said Shi, 42, an investment manager with Nanjing 21st Century Investment Group, a property developer in eastern China. “There is a window for speculation.”

Article courtesy of Dealbreaker

$$$ Wall Street Would Be Hit Hard By a Long Federal Shutdown [NetNet]

$$$ Jamie Dimon said potential rewards of investing in five European nations including Greece and Ireland outweigh the risk of losing $3 billion if the countries default. “In the unlikely occurrence of extremely bad outcomes in all these countries, JPMorgan Chase ultimately could lose approximately $3 billion,” Dimon said today in a letter to shareholders. “But we are in the business of taking risks in support of our clients and believe that this is a risk worth bearing since we hope to be growing our business in these countries for decades.” [Bloomberg]

$$$ Blockbuster Lawyers, Bankers Spar Over Price, Pizza [WSJ]

$$$ Accused Insider Trader Sued For Anti-Gay Bias [Reuters]

$$$ Obama Administration Faces a Host of Senior Finance Openings to Fill [WSJ]

Article courtesy of Dealbreaker

Shares of Power-One (PWER), which makes inverters that convert power from renewable energy sources, are down 29 cents, or 3.5%, at $8, after the company late yesterday cut its Q1 outlook, citing “near-term feed-in-tariff uncertainty in Italy and Germany,” referring to European subsidies for renewable energy.

Power-One now sees revenue of $240 million to $245 million, down from a prior $260 million to $290 million, it said.

CEO Richard Thompson remarked,

Although we expect to post a nearly 60 percent increase in revenue in the first quarter of 2011 compared to 2010, we’ve revised our guidance for the quarter due to recent adverse conditions in the European solar market. We still anticipate European countries such as Italy and Germany will continue to support solar adoption to reduce reliance on non-renewable sources of power. Further, for the remainder of 2011 and 2012, we believe we are better positioned to handle similar regional anomalies due to our expanded product line and focus on developing new markets, including the United States, China and India.

Who told you so? Gordon Johnson of Axiom Capital, I would note, actually cut his revenue estimate for PWER for the quarter last week to $248 million from a prior $271 million estimate. Johnson’s estimate cut came after competitor SMA Solar Technology AG of Germany on March 30th forecast Q1 revenue below estimates, citing Italian policy changes.

By and large, bulls and bears are sticking to their views on the stock this morning, while all are trimming estimates:

Jesse Pichel with Jefferies & Co. reiterates a Buy rating on the stock, while cutting his price target to $10 from $12, writing that, “We believe a weak Q1 is mostly factored into expectations given the slow-down in Italy and seasonality / bad weather in Germany. With Germany picking up and an Italian decision ~1 week away, we see sequential growth in Q2.” Pichel cut his 2011 estimates to $1.12 billion from $1.18 billion in revenue, and to 90 cents in EPS from $1.05 previously. Pichel looks to Power-One’s analyst day on May 17 as a “catalyst.” The “read-through is negative on inverter companies,” he writes, including Satcon (SATC), although he notes that SATC “is less exposed to Europe (15%) than peers.” SATC shares today are down 6 cents, or 1.6%, at $3.44.

Edwin Mok with Needham & Co. reiterated a Hold rating on PWER shares and cut his 2011 estimate to $1.05 billion in revenue from a prior $1.2 billion estimate, and cut his EPS estimate to 98 cents from $1.28. With a higher mix of revenue now destined to come from Power-One’s “traditional” power business, Mok sees operating margin declining to 22% this year from 25% last year.

Mark Bachman with Auriga Securities maintains a Buy rating on the shares and a $13 price target. He estimates 175 megawatts of shipments were lost “as a result of the Italian work stoppage.” Bachman cut his full-year revenue view to $1.21 billion in revenue from a prior $1.34 billion, and cut his EPS estimate to $1.10 from $1.30. Bachman is “encouraged” by industry data showing “increasing applications using PWER inverters.” However, he’s also concerned, because PWER had no presence at the “PV America” trade show this week, even though all of the company’s competitors were there.

Article courtesy of Tech Trader Daily

Feds: Insider Scheme Spanned 17 Years (WSJ)
The alleged scheme revealed on Wednesday stretched back to 1994, when Mr. Kluger allegedly told the co-conspirator while attending law school at New York University and after taking a summer associate job at Cravath that “I’ve got something,” meaning he had access to confidential information, prosecutors said. The co-conspirator then approached Mr. Bauer, whom he had worked with in the 1990s at venture capital firm Weiss, Peck & Greer. Mr. Bauer agreed to trade based on the information provided, prosecutors said. “They structured their relationship so that Bauer and Kluger did not have direct contact prior to the trades,” said Daniel M. Hawke, the regional director for the Securities and Exchange Commission’s Philadelphia office.

Portugal Bailout May Reach $129 Billion (WSJ)
“The talk is for around €75 billion, but this could be raised to around €90billion. A bailout package can be put together very quickly as there has already been preparatory work in anticipation of Portugal’s request,” said the minister, who asked not to be identified.

Moody’s May Take Axe To UK Bank Ratings (Reuters)
Up to 18 British banks could see their senior debt ratings cut several notches by Moody’s over coming months as the rating agency assesses how they would fare without implicit government support. The banks more immediately vulnerable to a downgrade are smaller institutions, including many building societies, rather than larger banks still heavily supported by the state, Moody’s said Thursday.

The Valley’s Banker Returns To The Top (NYT)
Andrew Ross Sorkin: “I’d really prefer you didn’t write about me,” Mr. Quattrone said recently, trying to dissuade me from this column. But it is hard to ignore Mr. Quattrone. In the last year, his boutique advisory firm, Qatalyst Partners, has been involved in nearly every major technology merger. As Hewlett-Packard and Dell battled over 3Par last summer, Mr. Quattrone was calling the shots. He orchestrated the sale of Palm to H.P. for $1.2 billion in April 2010. And Texas Instruments’ $6.5 billion deal to buy National Semiconductor this week? Yes, that was his deal, too.

ECB Raises Interest Rates (WSJ)
The European Central Bank on Thursday raised its benchmark interest rate to 1.25% from a historic low of 1%, as expected, making it the first of the developed world’s major central banks to initiate a cycle of raising rates.

A Hot Idea Falls Short At Goldman (WSJ)
Goldman spent millions of dollars to develop the private exchange, and senior Goldman bankers spent over a year on the project. They gave it an awkward name—the “GS Tradable Unregistered Equity OTC Market” or GSTrUE—but it seemed like an instant success. Los Angeles-based Oaktree Capital Management LLC raised about $1 billion in May 2007, selling a 15% stake in itself on the Goldman market. Two months later, Apollo Management LP, the big New York private-equity firm, also sold shares, raising $895 million. Many bankers expected the new market to steal some of the hottest offerings from the New York Stock Exchange and Nasdaq. Private-equity firms, hedge funds and others that guarded their privacy seemed likely to sell shares there. At the time, Oaktree partners Howard Marks and Bruce Karsh predicted in a memo to clients that “a number of premier companies in other industries” would join their firm on the Goldman platform. Rival banks and exchanges soon launched competing private markets. Then a curious thing happened—hardly any investors showed up.

Sailor, 85, crosses Atlantic on raft with friends (MSNBC)
A stroke of bad luck for Anthony Smith paid for the trip (he was hit by a van and broke his hip). “I got some compensation money,” he said. “So what do you blow the compensation money on? You blow it on a raft.”
Slower Recruitment In London (FT)
City hiring in 2011 is unlikely to reach the heights of last year when banks snapped up staff in a fight for market share, Robert Walters, the white collar recruitment firm, said on Wednesday. “Last year was an unrepeatable correction,” Robert Walters, chief executive of the eponymous firm, said. “Banks had made savage cuts during the financial crisis and they needed to replenish staff quickly. But that was a one-off. Now we’ll have to wait and see.”

RAB Says Clients to Pull 79 Percent of Flagship Fund’s Assets (Bloomberg)
The hedge fund will allow investors to withdraw money when a three-year freeze on client redemptions ends on Oct. 1, the London-based firm said in a statement today. The fund, run by co-founder Philip Richards, had $2 billion at December 2007. The fund slumped 73 percent in 2008, hurt by a bet on Northern Rock Plc, the first British bank nationalized during the credit crisis. RAB won investor approval to halt redemptions in September 2008. The fund declined 7.6 percent in 2010.

Marc Lasry & Team OKed To Control Trump Casino (AP)
Lasry’s Avenue Capital was given final approval Wednesday by New Jersey casino regulators to control the Atlantic City casino company that was founded by Donald Trump. Avenue, which specializes in distressed investments, won the company in a bankruptcy battle last year, and is the largest shareholder at nearly 22 percent.

Sokol Joins Brandon Winning Praise In Buffett Head-Scratcher (Bloomberg)
Sokol’s contributions to Berkshire were “extraordinary,” Buffett said when he announced his resignation March 30. Buffett said in 2009 that Brandon helped in “righting the ship” at General Re. Brandon left in 2008 after prosecutors named him an unindicted co-conspirator at a trial where four former General Re officers were convicted of helping American International Group deceive investors through a sham transaction.

Should There Be A Fat Tax? (CNBC)
Arizona says yes.

Article courtesy of Dealbreaker

Regarding a Bloomberg report yesterday that the U.S. Federal Trade Commission was considering a broad investigation of Google’s (GOOG) Internet search dominance, Stifel Nicolaus telecom and tech regulatory analyst Rebecca Arbogast this morning writes that the speculation was “not a surprise,” as it’s been her impression the FTC was waiting for the Department of Justice to finish with its review of Google’s proposed acquisition of ITA Software.

(In fact, the NY Post’s Josh Kosman this morning reports that approval of the deal is at hand, citing anonymous sources.)

Arbogast thinks the European investigation of Google is more serious. But in any event, she notes that the worst possible outcome is hard for government to engineer: “There are significant sensitivities to undertaking an antitrust action against Google. That means, in our view, that the antitrust agencies will proceed cautiously and there will be opportunity for Google to negotiate a settlement.”

The question is what kind of conditions might be imposed on Google as part of a settlement. Regulators could block Google’s acquisitions or impose requirements on a case-by-case basis, or they could set up other regulations, such as requiring greater transparency in Google’s search algorithms.

Regardless of the exact outcome, a review by either the DoJ or the FTC would, “be far reaching and probably extend for years, and we expect that unless Google stops acquiring other firms, both DOJ and the FTC will in one form or another continue their oversight of the company.”

Google shares, which were under pressure all day yesterday, are today up $4.26, or 0.8%, at $573.35.

Article courtesy of Tech Trader Daily

U.K. early stage investment firm Passion Capital just raised its first investment fund of $60 million. The fund is a private-public hybrid, with the U.K. government contributing $40 million of the total.

Partners Stefan Glaenzer, Eileen Burbidge and Robert Dighero were among Europe’s most prolific angel investors, in companies such as social micropayments startup Flattr and courier-bidding service Shutl, before they started investing together informally and decided to launch their own fund. They will invest in digital media and technology startups.

Passion plans to make around 50 investments, on average in the range of $170-227,000 per deal. Burbridge told me that the fund will look for very early stage companies with a power point or a prototype. Any verticals, from cleantech to retail, where online software makes a certain process or workflow more efficient for that market will be considered.

Passion’s partners are something of a European investment dream team. Collectively they have been involved in 4 of the 10 most successful exits of recent years, including companies like Skype and Last.fm.

Stefan Glaenzer was the first investor and executive chairman of Last.fm, seeing that company through to its sale to CBS in 2007 for $270 million. American transplant Eileen Burbidge was investment director for private early stage VC firm Ambient Sound Investments, founded by the Skype founding engineers. Robert Dighero was the CFO of QXL/Tradus which sold to Naspers in 2008 for $1.6 billion.

London has emerged as one of Europe’s top startup hubs, and the U.K. government is making strenuous efforts to encourage high-tech startups in the U.K. with plans announced last year to provide $325 million in equity finance for businesses with high growth potential and $320 million for new technology and innovation centers. It also recently introduced an entrepreneur visa, long called for in the U.S.

Tags: early-stage, fund, uk

Companies: passion ventures

People: Eileen Burbidge, Robert Dighero, Stefan Glaenzer

Article courtesy of VentureBeat » deals

The Foundry makes digital visual effects software which has been used in motion pictures like Tron legacy 3D, Avatar, Harry Potter and many others. Private equity firm The Carlyle Group just acquired a majority stake in the Foundry from Advent Venture Partners and other stakeholders. The details of the transaction have not been made public.

Making a movie involving digital visual effects is a complicated and technically sophisticated business.  In fact, the visual rendering farms used for movies like Happy Feet or Lord of the Rings rank among the top 500 supercomputing centers in the world. Each film sequence combining live action and visual effects involves a huge number of visual elements which must be integrated into a final, polished product. The Foundry’s software creates rough combinations of these elements (a process called compositing) in a visual representation which can then be refined by dozens of artists. The video below shows some work created using Nuke, the Foundry’s core compositing product.

I talked to Mike Chalfen, a partner at Advent Venture Partners, the Foundry’s main investors about the deal. He contends that this deal is a validation of the firm’s growth investment strategy. Growth investment means investing is a business which has a proven business model and technology and is usually already profitable but wants to expand. Venture capital tends to invest in newer products and markets.

Advent only invested in the Foundry 2 years ago. Chalfen told me that the Foundry is a typical growth investment deal. The company makes a complex product which is hard to replicate and there was a pent-up sales demand which was not being satisfied. The company expanded 100 percent in 2009.

I asked Chalfen about the growth investment climate in Europe. He told me that he is feeling bullish about the tech market in Europe. It has become less important where a company is based. According to Chalfen, in the US massive companies created very rapidly but it is often easier to find truly differentiated companies in Europe. However, he is of the opinion that too many European founders here fall in love with their technology at the expense of the business aspect. European technology and American business savvy could be a match waiting to happen.

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Tags: digital, movies, special effects

Companies: The Foundry

Article courtesy of VentureBeat » deals