The digital business week

20 Sep 2010

A digest of the top business and technology news stories from the past week.

Venture capitalist Maloney urges tax breaks for entrepreneurs

Executives leading Irish start-ups who left pensionable jobs and are existing solely on salaries and share options should not have to pay income tax for their gains, urged leading venture capitalist Barry Maloney of Balderton Capital, who has invested in firms like Bebo and Big Fish Games.

Speaking at KPMG’s ‘Switched On for Growth, Financing Innovative Companies’ conference in Dublin late last week, Maloney gave a valuable insight into the workings of venture capital firms.

“Our model is to try and apply business skills and take advantage of the mistakes we’ve made in the past. If anything you need coaching skills to do what we do,” Maloney said, adding that empathy is an important characteristic of an instinctive investor.

He said that Balderton’s typical deal size ranges from €100,000 up to €50m. “We like building companies from the ground up and take them through the various life cycles. We don’t take on personal money because the average life cycle is eight years. What people don’t realise is often the IPO is the start of the journey, not the end of it. So we look to invest in longevity and make sure we can get the company through the various cycles.

Maloney said that in terms of the Innovation Taskforce report from earlier this year, one of the key initiatives that must be acted upon is the need to stop taxing stock options for entrepreneurs. “This would cost the country nothing and provide a positive impact on the entrepreneur who exists on salary only and has sacrificed their pension.”

Irish operations of Calyx Group secured

It has been announced that the Irish operations of the Calyx Group have been secured after a management buyout of the firm’s voice, data and security divisions in Ireland and the acquisition by private equity firm Better Capital of its software business in this country.

As a result, 150 jobs in Ireland have been saved.

Better Capital bought the Calyx Group’s debt from Anglo Irish Bank, placing the company’s UK operations into administration and its Irish entities into receivership on 3 September 2010.  Tom Kavanagh of Kavanagh Fennell was appointed as the receiver for the Irish operations. 

“Today’s announcement is positive news with the future of the business and the majority of jobs secured,” said Kavanagh.  “Better Capital’s decision to purchase the Calyx Group’s debt from Anglo Irish Bank is unique in that an outside investor purchased a distressed business’ outstanding debts, allowing it to quickly dispose of assets and ensure that the future of the business was secured.  I would expect to see the mechanism of purchasing bank debt by investors as a new and innovative way to acquire companies in a distressed market.”

Calyx Group has been trading under the Calyx brand since 2002, following the management buyout of the voice, data and training businesses of Alphyra Plc. Calyx floated on AIM in 2004 but was taken into private ownership again in 2007.

Cloud firm InishTech raises €1.8m in venture capital

An Irish technology company that acquired and successfully built upon Microsoft’s intellectual property in return for a minority stake has successfully raised €1.8m in private equity.

Kernel Capital has confirmed that the Bank of Ireland Seed and Early Stage Equity Fund has led a €1.8m investment in software protection and licensing services specialist InishTech. 

InishTech’s leading-edge service enables software companies globally to protect their code and maximise their product sales through the innovative use of licensing.

The company is based on technology provided by Microsoft under the Microsoft IP Ventures program in collaboration with Enterprise Ireland. 

LG’s CEO resigns due to mobile phone business losses

South Korea’s LG Electronics Inc’s chief executive Nam Yong has resigned, due to the poor performance of its mobile phone business.

According to Reuters, Koo Bon-joon, a founding family member and the head of the trading firm for LG International will take over from Nam.

Nam resigned in order to take responsibility for poor management, LG reportedly said recently. He was made CEO and vice-president of LG in 2007.

LG has been under pressure due to a lack of competitive smartphone models to stand up against rivals such as Apple’s iPhone and the Samsung Galaxy S.

LG’s mobile division reported a record loss last quarter and expect a similar loss this quarter.

HP to buy cyber security firm ArcSight for US$1.5bn

HP revealed that it has signed a definitive agreement to acquire security and compliance management company ArcSight for an enterprise value of US$1.5bn, or US$43.50 per share.

The acquisition, it seems, is being spurred on by the continuing consumerisation of IT with workers choosing which technologies best suit their workstyles. This, it said, puts enterprises under pressure to provide their employees, partners and customers with more access to applications, services and information.

This access and connectivity exposes enterprises to escalating threats, increasing complexity and regulatory challenges.

“From a security perspective, the perimeter of today’s enterprise is porous, putting enormous pressure on clients’ risk and compliance systems,” said Bill Veghte, executive vice-president, Software and Solutions, HP.

“The combination of HP and ArcSight will provide clients with the ability to fortify their applications, proactively monitor events and respond to threats,” Vechte said.

Norkom H1 revenue to be down, but outlook good, board says

Software company Norkom Group’s preliminary revenue and earnings results for its first half year ending 30 September 2010 indicate turnover of €22m to €22.5m, compared with €24.6m in the first half of last year.

EBITDA is expected to be between €1.2m and €1.5m, compared with €4.5m during the same period last year.

Having received advanced payments in fiscal year 2010 against this period’s revenue, cash is expected to be €36m to €36.5m, down on the end of year cash position as expected.

The company, which provides financial crime and compliance software solutions for the global financial services sector, said revenues would be lower than anticipated due mainly to lengthening sales cycles and delays in the passing into law of new regulatory statutes in Asia. It said its sales pipeline volume and activity were higher than in the first half of last year, it is continuing to invest in sales and product development, and its US operations are returning to growth.

Top Nokia exec for mobile solutions resigns

Nokia’s Mobile Solutions lead Anssi Vanjoki has resigned, days after CEO Olli-Pekka Kallasvuo was replaced by Stephen Elop. The announcement also comes just before the company’s major annual event Nokia World.

The resignation is badly timed for Nokia, who will host their annual event Nokia World on 14-15 September.

Vanjoki had only joined the company in July and was going to help Nokia position itself as a major competitor in the smartphone arena.

He has given a six-month notice period and will continue his current tasks until his departure.

“I felt the time has come to seek new opportunities in my life,” Vanjoki said.

“At the same time, I am 100pc committed to doing my best for Nokia until my very last working day.