The digital business week


7 Mar 2011

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

Twitter now valued at US$4.5bn – JP Morgan to buy 10pc stake

Investment bank JP Morgan is in talks to acquire a 10pc stake in social networking site Twitter for US$450m. The move values Twitter at US$4.5bn.

The fund intends to buy its share in Twitter through direct deals with existing shareholders and investors and not on the secondary market.

JP Morgan’s Digital Growth Fund was established in the past month and has raised US$1.2bn so far, not far off its US$1.3bn target.

Facebook buys messaging service Beluga

Social networking kingpin Facebook has acquired a group messaging firm headed by a bunch of ex-Googlers called Beluga, with the intent of getting its hands on the firm’s technology and of course, its talent.

Beluga covers two of the sweet spots that Facebook wants to command – groups and messaging.

How much Facebook paid for the company – which was in the process of attracting angel investment – has not been disclosed.

Intel completes US$7.7bn McAfee acquisition

Intel has completed its US$7.7bn acquisition of data security firm McAfee. It is understood McAfee will continue developing and selling security products under its own brand.

Intel and McAfee said they plan to bring the first fruits of the acquisition to market later this year, with the intent of tackling security and the pervasive nature of computing threats in an entirely new way.

Intel announced in August it was buying McAfee for US$7.7bn – US$48 a share – making it the largest acquisition in Intel’s history.

Tablet computers to become US$35bn market in 2012

JP Morgan forecasts that the market for tablet computers will be valued at US$35bn by next year.

It predicts that tablet computers will eat into PC market share and that competition will drive down premium pricing.

JP Morgan predicts a steep adoption rate, spurred on by improved operating system platforms, such as devices running Android 3.0 ‘Honeycomb’ and adoption in the enterprise and education markets.

The company predicts that more than 35pc of tablets sold in 2012 will cannibalise erstwhile sales of netbooks and notebooks.

The company has raised its 2011 tablet revenue estimates to US$26.1bn from US$24.9bn and 2012 estimates to US$35.2bn from US$34.1bn.

iPad and arrival of tablets depress HD drive market

The decline in the market for hard disk drives has been laid at the door of the iPad and other tablet devices that are arriving into the marketplace, according to IHS iSupply.

Rising sales of tablet devices coming at the expense of conventional netbook PCs will contribute to a low single-digit decline in shipments of hard disk drives (HDDs) for the first quarter of this year.

HDD shipments in the first quarter of 2011 are anticipated to reach 160.9m units, down 3.9pc from 167.5m in the fourth quarter of 2010.

However, the contraction in HDD shipments is not entirely due to the impact of tablets.

Declines will occur in four of the six major segments driving demand for hard disks, including desktop PCs, notebook PCs, netbook PCs and consumer electronics, pulling overall figures down despite slight HDD increases in the enterprise business and the entry-level server segments.

Furthermore, the first quarter of every year is a slow period for HDD sales, and an oversupply of some 6m to 8m drives at the end of the fourth quarter is prompting a burn-off of excess inventory.

Double-digit growth for online retail in Europe and US

Online retail in both the US and Western Europe will continue on a double-digit growth trajectory over the next five years to reach US$279bn and €134bn respectively in 2015, according to Forrester Research.

Both US and European online retail will grow at a 10pct compound annual growth rate (CAGR) from 2010 to 2015.

The forecasts include business-to-consumer sales, excluding travel and financial services.

The European forecast encompasses 17 Western European nations and includes a category-by-category breakdown of online retail across these markets.

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