Apple (AAPL) shares are down $4.02, or 1.2%, at $348.35 in early trading on the heels of what are generally very favorable reviews in the major media outlets for the iPad 2, which goes on sale on Friday, starting at 5 pm, Eastern. (Or probably earlier than that if you’re ordering online.)

The Wall Street Journal’s Walt Mossberg says the device “moves the goal posts, by being slimmer and lighter, boosting speed and power, and holdings its price advantages.” The best tablet for “average consumers,” he writes. He notes the cameras are so-so, and that the battery life was a little less than he’d gotten in similar tests with iPad 1.

David Pogue with The New York Times writes that despite the coming onslaught of tablets from competitors, “The iPad will still dominate the market, because it dominates in all the most important criteria: thinness, weight, integration, beauty — and apps.” Pogue finds the improvements to the size and weight to be meaningful, writing, “Just that much improvement in thinness, weight and speed transforms the experience. We’re not talking about a laptop or a TV, where you don’t notice its thickness while in use. This is a tablet. You are almost always holding it. Thin and light are unbelievably important for comfort and the overall delight. So are rounded edges, which the first iPad didn’t have.”

Engadget’s Joshua Topolsky writes, “the iPad 2 is as good as it gets right now. And it’s really quite good,” and “the iPad 2 isn’t just the best tablet on the market, it feels like the only tablet on the market.” Topolsky is more critical than Mossberg or Pogue on the camera side. “In short, it feels like the iPad 2 has a serious photon deficiency.” Topolsky offers much praise for the new GarageBand software for iPad. “Overall, this is a groundbreaking piece of software for tablets,” he writes. In contrast to Mossberg, Topolsky writes that the battery tests he ran on iPad 2 delivered on Apple’s 10 hours claim, and even beat it a bit.

USA Today’s Ed Baig writes the iPad 2 is “second to none” in the “ever evolving state of the art” of tablet computers, despite not having everything on one’s wish list. He also found the the battery life claims of roughly 10 hours was not exactly what he experienced.

I would note that the Associated Press’s Peter Svensson this morning writes that the iPad 2′s price “hobbles” the efforts of rivals to break the company’s hold on the market, writing, “It’s rare for prices to start low and stay low, yet it looks as if that’s exactly what Apple intended. “

Article courtesy of Tech Trader Daily

Sprint Nextel (S) has held onto gains since this morning’s rumor that the company is exploring the possibility of some kind of deal with Deutsche Telekom (DT) for its T-Mobile USA unit.

S shares are up 22 cents, or 5%, at $4.70.

Later in the day, CNBC’s David Faber threw a bit of cold water on the matter, stating that nothing appears imminent, stating,

I’ve talked with a number of people today who say, Yes, there are conversations ongoing. One person tells me Deutsche took a more serious run at buying Sprint. I’m told they were very far apart on price a few weeks ago. T-Mobile needs to embark on what their 4G strategy is. While perhaps one day inevitable, that day does not appear to be here yet.

But Citigroup’s Michael Rollins wrote in a note to clients that a merger between Sprint and T-Mobile “is the best opportunity for the two companies to improve their scale and competitive position in industry.”

Potential “synergies” are a big deal, notes Rollins, perhaps as much as $3 and $5 in value over time for Sprint “over time,” he thinks.

“We continue to believe both companies would use a bolstered TMU HSPA+ network on the way to LTE over time,” writes Rollins, “with an option to use Clearwire (CLWR) to bolster 4G capacity over time.”

Rollins reiterated a Buy recommendation on Sprint and a $6 price target, based on his belief Sprint will return to wireless revenue growth this year, will see improving profit margin over time as it overhauls its network, and the “option value” of its strategic position — meaning, possibly hosting or sharing on its network, or doing a deal with T-Mobile.

Article courtesy of Tech Trader Daily

Deutsche Telekom is apparently in talks with Sprint to sell its T-Mobile USA division, sources in the know tell Bloomberg.

The companies are supposedly far from finalizing a deal after on and off talks. The biggest roadblock, according to the sources, is Sprint and Deutsche Telekom’s inability to agree on T-Mobile’s valuation after it saw a major drop in profit and subscribers last quarter. If a deal is reached, Deutsche Telekom will land a major stake in the combined company.

Deutsche Telekom vaguely confirmed the fact that it’s looking to sell off T-Mobile in an email statement to Bloomberg, saying that it may sell off all or part of the company. The company didn’t mention who it was looking to sell its T-Mobile business to. A Sprint representative declined to comment to Bloomberg, and we’re still awaiting an answer to our inquiries.

It’s becoming increasingly difficult for both Sprint and T-Mobile — the third- and fourth-largest carriers in the US, respectively — to compete with AT&T and Verizon. Those companies have much larger network footprints, and as of February they also both offer Apple’s iPhone. By joining forces, Sprint and T-Mobile might find it easier to fend off competition.

But while it sounds good on paper, in practice a union between the companies would likely result in disaster. Sprint and T-Mobile’s 3G networks are completely incompatible, and at the moment the companies are also pursuing completely different 4G strategies. T-Mobile is focusing on expanding its 3G network with HSPA+ technology, while Sprint is counting on its majority stake in Clearwire to deliver WiMAX 4G. Having the separate networks coexist under a single company sounds like a major headache, and it would be years before Sprint and T-Mobile subscribers could coexist on the same network.

Instead of a union between the companies, T-Mobile may consider buying wireless spectrum from Clearwire, two sources say. That would allow T-Mobile to either expand its network to regions where it doesn’t have full coverage, or strengthen it in metropolitan areas where it has to compete with other carriers.

Tags: 3G, 4G, carriers, networks

Companies: deutsche telekom, sprint, T Mobile

Article courtesy of VentureBeat » deals

A couple weeks ago, we met Toby Carroll, a New Zealand-born real estate analyst for HSBC currently stationed in Dubai, who’d spent the last two months in prison. Carroll had ended up there after his ex-girlfriend, Priscilla Ferreira, found him and a new girl, Danielle Spencer, in his apartment and proceeded to start slashing curtains, furniture, etc, and go after the Danielle with a knife. The police were called and all three were put in jail.

Carroll has since been freed but faces charges of “sex outside marriage.” Last week his ex spoke, denying reports she had been dumped by Carroll a day before she caught him in bed with Spencer, and claiming they were going to get married. Today Spencer, who “lapdanced her way across the USA and Australia” before relocating to Abu Dhabi where she found work “in the property business,” has been good enough to add yet more color to the story. The new details include the fact that she was on her second and not first date with Toby when she went back to his place for “coffee,” a vivid description of being splayed out on her stomach when Priscilla jumped on top of her and why she didn’t fight back.

Spencer and Carroll met and exchanged phone numbers at a party shortly before Christmas. Soon afterwards Carroll, a New Zealander, took Danielle to the Yacht Club. She recalls: ‘The evening had been wonderful, we’d been out to dinner and talked about our lives in Dubai. We had a lot in common. He was smoking-hot, charming, intelligent, had a good job and a top-of-the-range Porsche. He was quite a catch.’

He invited Danielle back to his apartment for coffee and within a few short minutes they were in a passionate clinch on the sofa. They made their way into his bedroom.

Okay, and then what happened?

Danielle says: ‘I saw this white floaty garment and heard a loud Latino voice. I thought the TV had come on. Suddenly I felt someone land on my back and grab my hair. Toby yelled, “Stop it Priscila. What are you doing?”

Did you fight back? And if not, why not?

“I didn’t move, because I had just paid £250 for hair extensions and I didn’t want them falling out two days before Christmas.”

From Lap Dancer To Yacht Seller To Bust [Emirates via BI]

Article courtesy of Dealbreaker

Chase Coleman’s Tiger Global Said to Put New Private-Equity Fund Into Facebook (Bloomberg)
Tiger Global has $1 billion in commitments and plans to line up an additional $250 million by next month, said the people, who asked not to be identified because the information is private. Coleman, 35, has steered about $80 million from the new pool into Facebook, whose more than 600 million users make it the top social-networking site.

Treasury Announces Citigroup’s Warrant Auction (AP)
The government says it will sell 465.1 million warrants it holds from Citigroup in an auction on Tuesday. It is the latest effort to recoup costs from the $700 billion financial bailout.

Morgan Stanley Banker Drawn Into Galleon Probe (WSJ)
Kamal Ahmed, 42 years old, is the first Wall Street banker publicly drawn into the Galleon investigation. The government is preparing for Mr. Rajaratnam’s trial late in February. Mr. Ahmed wasn’t named in the filing but people close to the situation say he is the banker referred to anonymously by the government. Mr. Ahmed was put on leave on Friday in connection to the filing. He hasn’t been accused of wrongdoing and it isn’t clear if he will be charged in the case. The government filing on Friday said that the unnamed Morgan Stanley banker informed another person that ATI Technologies Inc. was going to be acquired by AMD. The other person, whose name was also redacted from the filing, told Mr. Rajaratnam about the acquisition, the filing says.

Obama’s Address Previews 2012 Race (WSJ)
The speech and the Republican response are likely to frame contrasting philosophies that will drive political discourse for the next two years. Mr. Obama has chosen “competitiveness” and “investment” as terms to guide discussion over how to create jobs, daring Republicans to resist his push for new spending in areas that he will call vital to the nation’s future. He will seek to wall off education, infrastructure, science and energy from cuts, in effect making them the ground on which the 2012 campaign is to be fought.

Mortgage Giants Leave Legals Bills To Taxpayers (NYT)
Taxpayers have paid $24.2 million to law firms defending three of Fannie’s former top executives: Franklin D. Raines, its former chief executive; Timothy Howard, its former chief financial officer; and Leanne Spencer, the former controller.

US Treasury’s Toxic Asset Fund Gains 27% (Reuters)
Since the funds were established in 2009, they have used about $5.2 billion of Treasury’s equity investment to buy toxic assets. As of the end of 2010, the funds have gained $1.1 billion to about $6.3 billion, according to the data.

Metals Traders Worth $3 Million at Wall Street Banks (Bloomberg)
Metals traders probably earned as much as 20 percent more last year than in 2009, with the most-profitable getting $2 million to $3 million, said Peter Henry, head of front-office search at Commodity Search Partners Ltd. The figure, confirmed by three other recruiters who declined to be identified because they aren’t authorized to speak publicly, compares with no change to a drop of 10 percent in pay across commodities personnel. “Metals traders are an exception when there’s pressure on banks to cut remuneration,” New York-based Henry said. They “are making more money than other parts of the banks and the bonuses reflect that to some extent,” he said.

Woman Dies in Driveway as Cold Hits Northeast (AP)
An arctic blast from Canada is responsible for some of the frigid temperatures in the northern U.S. and some of the coldest air to hit the Northeast in two years. The cold was linked to at least two deaths in the Northeast, including that of a woman whose frozen body was found in a driveway.

Groupon Less Than `100% Committed’ to IPO, Chief Executive Mason Says (Bloomberg)
“An IPO is something we are considering, but we’re just trying to learn more about the option at this point and understand the benefits and drawbacks,” Mason said.

Goldman’s Long Bond Shows Inflation Concerns Are Waning (Bloomberg)
The bank received $9 billion in orders for its $2.5 billion of notes sold on Jan. 21, according to Mizuho Securities USA. The 6.25 percent senior bonds yield 170 basis points more than similar-maturity Treasuries, at the low end of a 5-basis-point range marketed by the New York-based firm, data compiled by Bloomberg show.

JC Penney To Name William Ackman To Board (WSJ)
The company agreed to name the activist investor and chairman of Vornado Realty Trust, Steven Roth, to its board as the department-store operator also outlined plans to close underperforming locations, wind down its catalogue and outlet operations and consolidate its call centers.

More Hiring Is Expected (WSJ)
The fourth-quarter poll of 84 companies by the National Association for Business Economics found 42% expected to increase jobs in the next six months. That is up from 29% in the first quarter of 2010. Only 7% of companies in the latest survey predict they will shed jobs in the coming six months, down from 23% at the start of last year.

Steve Eisman On Losing Streak (NYP)
Eisman’s FrontPoint Financial Services, which launched in 2004, was down 8.3 percent through Dec. 31, and FrontPoint Financial Horizons Fund slipped 7.7 percent. In 2010, the two funds were the firm’s worst performers, according to reports sent to clients.

Article courtesy of Dealbreaker

$$$ Hedge Funds Flock Back To Asia [WSJ]

$$$ Barclays Capital Said To Plan More Cuts [Bloomberg]

$$$ Like we asked earlier: what can WikiLeaks do that would actually embarrass the banks? [Fortune]

$$$ Winning Over Shareholders In Management-Led Buyouts [Dealbook]

$$$ Peak Ridge Seeks $30 Million in Morgan Stanley Gas Trade Case [BW]

$$$ Airports, airlines increase traveler access to alcohol [USA]

Article courtesy of Dealbreaker

Macquarie USA analyst Kelly Dougherty this morning raised his rating on Canadian Solar (CSIQ) to Ourperform from Neutral, with a new price target of $22, up from $20. The move follows a strong Q3 earnings report from the company yesterday.
“We were previously hesitant on CSIQ given its spotty execution track [...]

Article courtesy of BARRONS.com: Tech Trader Daily

With online media company Demand Media likely to price its IPO within a matter of days, I thought it was a good time to analyze how the company is likely to be valued in the public markets. I have to admit, when I first looked at Demand Media’s S-1 financials, my first thought was, “Uh oh, another company that thinks it’s still 1998”, a time when IPOs, like Boo.com, the Globe.com and eToys, rose to astronomical valuations based not on financial fundamentals but on the seemingly infinite promise of internet-driven growth.

As I dug deeper, though, my thinking changed -– radically. I can now envision a scenario wherein Demand Media, whose properties include eHow, LiveStrong.com, and Cracked.com, is worth $1.4 – $1.7 billion. Not bad when you consider that the equity of the New York Times Company is currently valued at $1.2 billion. Before I’m accused of being stuck in 1998, let me explain how I arrived at that conclusion.

Step 1: Determine Your Comparables

I used Internet Brands, which recently agreed to be acquired by a private equity firm for approximately $640 million, as a comparable for this analysis. It is usually better to look at multiple comparables when valuing a company, but in this case additional comparables might actually muddy the waters. Internet Brands is unique in that it is a public company (with all of the associated financial disclosures) and it also has agreed to be sold in a private transaction that both sides agreed was fair, which in my mind minimizes the effect of market hype. Internet Brands and Demand Media are also very … well … comparable. They share very similar models – both create unique content online and monetize that content largely via online advertising. Both have also pursued acquisitions for growth, acquiring online properties and rolling those properties onto their platforms to maximize profitability. In that light, it’s hard to find a better comparable.

Step 2: Determine Valuation Multiples Based on Internet Brands

Internet Brands had around $100 million in revenue and $20 million in EBITDA in both 2008 and 2009. It appears that company management has done a commendable job in cutting expenses in 2010 and should finish the year with around $26 million in EBITDA with some growth in revenue. Overall, though, the company appears to be in a low growth cycle (more on that later). The 2010 projected financials imply roughly a 6x revenue and 25x EBITDA multiple.

Step 3: Apply Valuation Multiples to Demand Media Financials

The hardest part of determining the value of Demand Media is sorting through the company’s accounting practices. Because Demand has acquired so many companies and their associated content, it reports negative gross margins, EBITDA and net income on a GAAP basis, despite showing positive operating cash flow. To help analysts come up with the “right” answer, though, the company provides a non-GAAP measure that it calls OIBDA (operating income before depreciation and amortization).

While this may seem like a 1998-inspired make believe number, when you look closely at the reconciliation between it and GAAP Operating Income, they are actually just backing non-cash items out of their operating income, which makes it a pretty close proxy to EBITDA and therefore a valuable metric. To derive a valuation for Demand Media, I applied the multiples I calculated for Internet Brands. I assumed for this purpose that OIBDA was equivalent to EBITDA. The Revenue and OIBDA/EBITDA multiples imply a valuation of $1.4 – $1.5 billion. (The operating cash flow multiple implied a lower valuation, but I discarded it as an outlier.)

Step 4: Adjust for Growth

Based on this analysis, you might conclude that a valuation in that range is fair, but this simplistic analysis fails to account for relative growth rates. Demand Media is growing at a pace of 25 – 50% depending on which financial metric you choose to use (revenue, operating cash flow or OIBDA). Internet Brands grew at a 10% – 30% rate using the same metrics (and most of that was due to cost-cutting). Clearly Demand Media deserves some sort of premium for its higher growth rate, assuming you believe it is sustainable. I ran a simple “what if” scenario to see what the company would be worth with a 10% and a 20% valuation premium based on its higher rate of growth. (These are likely conservative if you believe Demand Media’s growth story.) When you apply these premiums, Demand Media’s valuation increases to $1.6 – $1.7 billion.

Conclusion: It Really Comes Down To Growth

As with many IPOs, the most interesting question when deciding the “real” value of Demand Media is whether or not you believe the company’s growth story. The company has two primary lines of business: a domain registrar business and a content creation business. Demand had $114 million and $198 million of respective revenue in those two lines of business in 2009. The domain registrar business, which includes the practice of “domaining,” or owning and monetizing domains with intrinsic value, is highly competitive and, in my opinion, unlikely to grow rapidly. If that was Demand’s only line of business, then I think growth rates akin to Internet Brands would be the target. However, a bulk of the company’s growth is likely to come from the content creation business. Demand Media has developed a content creation process that allows it to rapidly and cost effectively develop articles on topics that are likely to drive traffic from search and, for its branded content sites like Cracked and LiveStrong, from social media. It even sells components of this process as a service to major publishers, such as USA Today (travel). So the real question in evaluating its growth story comes down to whether or not you believe two things about its content creation business:

1. That there’s room to run — Demand Media targets evergreen and breaking topics with targeted articles that it produces “on demand”. The question is, how much coverage does the company already have? If you believe there is a limit on the number of new stories it can create because it has covered most of the valuable topics, then you should not buy into the company’s growth story. However, I personally believe that Demand Media has only scratched the surface of available topics. The search and social space is huge, and new topics are being searched for and shared every day. As long as the company’s systems are capable of identifying these topics in real-time, it should be able to sustain growth.

2. That the economics work — This is the billion dollar question. Demand Media pays an up-front cost to create a story targeting a specific topic. So what is the average payback today, and what will it be in the future? The big difference between the company’s reported OIBDA and GAAP EBITDA is amortization of assets that the company developed or acquired in previous periods. The question in my mind is, how much of its amortization is related to content creation? Based on the fact that the company is generating good operating cash flow, it appears the content it has created or acquired in the past is providing a nice return. So let’s assume the model has worked historically. Then the question is, will this continue? If too many companies attempt to replicate Demand Media’s model, the fear is that there will be a “race to the bottom”, and the return on each article produced will be significantly diminished. Demand Media has two primary barriers to entry that can help minimize, but not eliminate, this risk. First, the company owns domains that are popular in search and social media and therefore it has an advantage in distribution. Second, the company’s content creation process is well developed and probably more efficient than a new entrant’s process would be. However, neither of these factors completely eliminates the risk, so I believe this is the primary risk to Demand Media’s growth story.

So what does all this mean for the company’s valuation? If you believe the company will achieve growth around that of Internet Brands (primarily because you are concerned that there is a significant risk that the economics of the model won’t hold over the long-term), then the company is likely worth around $1.4 billion. Of course, if you believe the economic model will completely unravel, then the company is worth substantially less.

However, if you believe Demand Media has created a new media model that will help it sustain more rapid growth rates, the company is likely worth north of $1.7 billion. My belief is that reality is somewhere in the middle. Only time will really provide the answer. However, when you see a newcomer like Demand Media likely to command a valuation 15 – 50% higher than the current $1.2 billion market cap of the New York Times Company (which also has approximately $1.9 billion of long-term debt, so its total enterprise value is over $3.0 billion), it is probably worth taking a moment to ask yourself what you think of this new media model.

Stephen Walker is chief operating officer of Perfect Market, a company that helps online publishers monetize on their content. He previously worked at Idealab helping technology startups and was most recently managing director of the new ventures group at Idealab, where he sourced, screened and led new product and business concepts.

Companies: Demand Media, Internet Brands

Article courtesy of VentureBeat » deals

Macquarie USA analyst Shawn Webster this morning raised his ratings on both Intel (INTC) and Advanced Micro Devices (AMD), reflecting his view that microprocessor and PC shipments “should reach equilibrium” as soon as Q1 2011, at which point he expects the current inventory correction in the sector “to be over.”

On [...]

Article courtesy of BARRONS.com: Tech Trader Daily

Back in March, Lindsay Lohan filed a suit against E*Trade, claiming that the baby in the brokerage’s latest commercial was based on her life. Lohan came to this conclusion because the character’s name is Lindsay, she’s referred to as a “milk-a-holic,” and there’s a suggestion that the young one is a man-stealing tramp (she also claimed that though the name “Lohan” is never mentioned, she’s attained first name recognition. Plus, the stuff about the baby being a strung out slut). For the grave offense, Lohan demanded the spots pulled, and $100 million for the emotional distress they caused her.

At the time, E*Trade said the bitch be crazy, and claimed that they used the name Lindsay because it’s “a popular baby name” and not because they were trying to insinuate that Lohan is some sort of strung out whore (baby). They also shot back that Lindsay does not have “one name” recognition like “Madonna” or “RuPaul” or “Lloyd,” and that the commercial could have been about any one of the 250,000 people named Lindsay in the U.S.

Lohan’s lawyers responded that the issue isn’t “how many people in the USA are with the name ‘Lindsay’,” the issue was “how many celebrities are with this name ‘Lindsay’ in the USA, and then in the context, manner, characterization, persona.” For instance, when you take the name “Tiger” and put it in the context of golf or proclivity skanky ass bitches, it’s obvious you’re talking about Tiger Woods. To that end, it’s apparently patently obvious that when you have the name “Lindsay” in the context of an alcoholic “bimbus” (the lawyer’s words), we’re talking about Lindsay Lohan.

And apparently…that logic may have worked! Allegedly, a settlement between Lindsay and E*Trade has been reached and ole one name is said to be “very happy with the results.”

Article courtesy of Dealbreaker