The digital business week

28 May 2012

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

Lawyers descend to pick over carcass of Facebook’s troubled IPO

Little did we think Facebook’s IPO would be seen as a tawdry mess. Indeed we all thought the golden boy of social media sites would be a roaring success.

Instead Facebook’s share price has hovered around US$31, down from the high of US$45 on 18 May. Now the news is that lawyers representing peeved shareholders are about to issue lawsuits over a perceived last-minute fumbling by Facebook’s board over the issuance of shares.

You see, effectively 25pc extra shares were issued at the last minute.

In addition to this, analysts at Morgan Stanley and Goldman Sachs are alleged to have told clients they were reducing their earnings estimates for Facebook based on analysis that Facebook’s advertising sales aren’t keeping up with user expansion.

It is believed that institutions only told their largest investors about these concerns while smaller investors were left out in the cold.

A class action suit has been filed against Facebook and its early backers by investor Darryl Lazar, alleging they failed to be upfront about prospects for the business.

HP revenues down 3pc to US$30.7bn – 27,000 workers to exit company

HP reported second-quarter revenues of US$30.7bn, down 3pc year on year but an improvement on the first quarter when revenues dropped 38pc. Net profits were down 31pc to US$1.6bn.

HP confirmed that as part of a multi-year restructuring drive some 27,000 workers – 8pc of its workforce – will exit the company by the end of 2014. The restructuring is projected to generate annualised savings in the range of US$3bn to US$3.5bn.

It said workforce reductions will vary country by country and it hopes the majority of those who exit will take up the offer of an early retirement programme.

Yahoo! and Alibaba in US$7bn stock deal

Chinese internet giant Alibaba Group is to purchase back a 20pc stake Yahoo! holds in its company as part of a US$7.1bn deal. The deal values Alibaba at US$35bn.

The acquisition – about half of Yahoo!’s stake in the company – sets the company on the road for a potential IPO.

The deal follows months of negotiations. It provides an exit for Yahoo!, liquidity and a return on investment for shareholders.

The deal consists of US$6.3bn in cash and up to US$800m in Alibaba preferred stock.

Irish tech firms gave €1.4m to local charity and the community last year

Tech firms AOL, IBM, Intel, Microsoft and Oracle contributed more than €1.4m to local community groups and charities in 2011, according to Business in the Community Ireland.

This information has been captured by Business in the Community Ireland on an online interactive map entitled the ‘Business Impact Map’.

The five firms are amongst 40 socially minded, large Irish companies to take part in the map. National statistics show that in total more than 3,600 community partnerships have been formed in 2011 and more than €16.7m has been given in cash donations, in kind donations and employee fundraising to local charities and community groups.

In Ireland, €11m was given in cash donations, €2.3m was contributed through in kind donations and €3.3m was raised through employee fundraising. Employees also volunteered more than 130,000 hours to local groups and projects during the year.

The technology sector had the highest recorded level of volunteering hours, with more than 75,800 hours volunteered by employees in 2011.

Eircom to exit examinership on 11 June

The High Court has approved a scheme recommended by Eircom’s examiner Michael McAteer that will allow it to exit examinership on 11 June. Under the scheme of arrangement Eircom’s debt is to be reduced by 40pc.

Under the scheme from 11 June Eircom’s senior lenders will become shareholders.

The entire issued share capital will transfer to a company owned by the senior lenders.

ST Telemedia and the Employee Share Ownership Trust (ESOT) will cease to be shareholders.

The debts on Eircom Group’s balance sheet will be reduced by 40pc to €2.3bn from €

It is also understood that the new scheme of ownership will safeguard the jobs of more than 5,000 employees.

In terms of the debts being written off, first lien lenders will see the money they are owed reduced by 15pc, second lien lenders’ debt reduced by 90pc. Each secured creditor will receive a shareholding equal to their share of the remaining €2.3bn of debt.

Unsecured creditors will be paid in full and an additional lending facility of €150m.

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