Corning and Xerox bask in SOTU limelight
Forget Larry Page becoming the new chieftain at Google or Facebook’s Mark Zuckerberg being crowned Time’s Man of the Year — the only two U.S. business leaders who will be sitting in Michelle Obama’s private box tonight at the State of the Union address will be Xerox’s CEO Ursula Burns and Corning’s CEO Wendell Weeks.
The high profile honors for the decades-old U.S. tech giants just happen to have been conferred in the same week both report earnings.
Corning, the 159-company which produces specialty glass for flatscreen TVs and more recently, smartphones and tablets, saw its shares rise today by almost 7 percent. While the bump probably has more to do with the company’s earnings forecast than tonight’s appearance on Capitol Hill, we’ll just have to wait and see if the special invite has the same effect on Xerox, which reports earnings early tomorrow.
The burning questions on everyone’s minds are obviously: what the execs will be wearing and, should Corning’s Weeks really take out the gorilla suit?
Corning’s first ever consumer ad campaign for its glass
Dot-Com: ‘Three Letters and a Punctuation Mark’ That Changed the World
Twenty five years ago, on March 15, 1985, the first commercial dot-com domain name – Symbolics.com – was born. It was one of only six dot-com domain names registered that year (Among the 15 oldest are Northrop.com, Xerox.com, HP.com, IBM.com, Sun.com, Intel.com, TI.com and ATT.com.)
A lot has happened between then and now: the fall of the Berlin wall, the dot com boom and bust, two Gulf wars, Sept. 11, at least one major global economic crisis and the creations of YouTube and Facebook. To give you an impression of the passage of time, REO Speedwagon’s “Can’t Fight This Feeling” had just succeeded “Careless Whisper” by Wham! on the U.S. pop charts.
Today there are more than 80 million websites and the Internet, for many, is nearly as omnipresent as air.
What’s next for the Internet? We posed a few questions to Ken Silva, chief technology officer of VeriSign, which serves as the global registry for .com, .net, .tv, .cc, .name and .jobs domain names.
When was the tipping point for dot-com registrations and what caused it?
A tipping point for .com was in the early- to mid-1990’s with the advent of Internet browsers and consumer PC operating systems. Prior to the mass adoption of these tools by consumers, there was no compelling reason for organizations to have an Internet presence. Browsers had a significant impact as people now had a graphical user interface to view Web content. In addition, operating systems such as Windows 95 had built-in TCP/IP functionality for the user, making it much easier to access the Internet.
Looking back at the last 25 years, what are the most impressive changes the Internet has brought about?
It’s sad that one of the oldest domain names is going to vanish: sun.com. As a 13+ year employee I was really bummed when you go to sun.com and it redirects you to oracle.com. Godspeed former Sun comrades, I hope you survive the merger.
CSC: No comment is the safest
I was rather surprised yesterday to see an e-mail from Ogilvy PR pitching an interview with Dave Booth, the Chairman President of Global Sales and Marketing at Computer Sciences Corp, only a couple of hours after Xerox announced its $6.4 billion planned purchase of Affiliated Computer Services.
After all, CSC — an IT services company that competes with ACS, and has a market value of $8.1 billion — was the first company that came to bankers’ and analysts’ minds when I asked them who else could be in play, as tech companies look to buy into new growth opportunities.
Given how market sentiment works, any comments from the chief senior executive of a potential acquisition target like CSC could easily move the stock. As a rule, that’s why, companies typically don’t comment on rumor or speculation about themselves. So naturally, an on-the-record interview with the CSC chairman executive wasn’t something I could pass up.
The e-mail offered:
…(T)he opportunity to hear comments from Computer Sciences Corp. (CSC). As you might know, CSC is a marketplace contrarian that can offer a POV on the other side of the coin – staying independent. CSC anticipates greater interest from those clients that value the objectivity of a technology-independent approach. With one less independent firm in the marketplace, CSC’s position is strengthened as a global, technology-independent option for clients.
I let Ogilvy know of my interest, and waited, and followed up, and waited. By the late afternoon, I figured the pitch was too good to be true because CSC had thought the better of it. Sure enough, the e-mail that eventually turned up in my inbox, said: “CSC now prefers not to comment.”
Wonder if that was a PR learning experience.
I’m a current employee of CSC and find the company less paternalistic than EDS/HP and a lot more concerned about the wellbeing of its employees than most of the companies I have worked for in the past 35 years.
Sure, the execs in the head office breathe a kind of rareified atmosphere, but what large, mature company doesn’t constantly battle that problem?
What I really like is the way that CSC constantly tries to reinvent itself, to keep itself relevant to customers and competitive with other industry members.
from Breakingviews:
Tech services deals count on more with less
The U.S. computer services industry is back in favor, after a decade of struggling to cut costs and compete with offshore firms from India and elsewhere. At least that would be the obvious conclusion to draw from a recent string of multibillion-dollar deals.
Xerox has agreed to buy Affiliated Computer Services for $6.4 billion while Dell is paying $3.9 billion for Perot Systems. They are picking up where Hewlett-Packard left off when it paid $13.9 billion to buy Electronic Data Systems in 2008.
But what's driving these deals is not a bet on the improving growth prospects of the services industry. Instead, the buyers value computer services companies more as sales pipelines for their own products.
Take Xerox, which has struggled for years to move beyond copiers. The idea now is to manage information in both printed and paperless form. ACS is a leader in processing health claims and student loan payments for governments. It helps commercial clients cut the costs of payroll or human resources processing.
So don't think of this deal in terms of the traditional revenue synergies used to justify technology mergers. It's about helping commercial and government clients cut costs, a tight margin business in the best of times.
For while demand for services has stabilized as the economy recovers, there's little sign of any broad-based growth surge returning. There's no end to the need for services firms to continue to restructure, replacing labor in high-cost markets with technically savvy workers in lower-cost ones.
from DealZone:
Xerox-ACS: the backstory
Xerox, which said early Monday morning it will buy Affiliated Computer Services for $6.4 billion, has had its eye on the IT services company for at least two years, but talks only began toward the end of the first quarter of 2009, several people familiar with the matter told Dealzone. Blackstone, which advised Xerox, worked with the company on this over the past 18 months, in addition to making the introductions earlier this year, according to one source.
Talks grew hot and heavy over the summer, especially as the credit market conditions improved, a second source said. Xerox has committed financing of $3 billion for this deal, which is being arranged by JPMorgan, so the deal only began to look like a real possibility once the financing side was sorted out.
ACS, which competes with other technology services providers such as Computer Sciences Corp and Accenture, is an attractive company because of its recurring revenue business model. It's been an especially alluring target for private equity buyers, with Cerberus having offered to buy it for $62 a share in 2007. Cerberus withdrew its offer citing the credit crunch and ACS management's refusal to engage with them. TPG was also interested in ACS about five years ago, the second source added.
Buyout firms didn't lose the opportunity to sniff around at ACS this time around either, the sources said, although it's not clear if the ACS management asked its bankers to run a formal sale auction.
"Every PE firm in the world that could raise the debt was kicking the tires on this one because of the cash," said the third source.
So after doing the M&A dance for months, why did the companies rush to announce the deal on Yom Kippur, the Jewish holiday? Apparently, word got around on Sunday that Xerox was preparing a significant announcement, and some reporters were tipped off about it, two of the sources told Dealzone. But the board only ended up meeting late at night to approve the deal, and so it was considered "safe" to hold on to the announcement overnight, but not through all of Monday!
Update: From my colleague Franklin Paul, who said Xerox CEO Ursula Burns apologized to the audience on the ACS deal call "for our need to do this announcement on Yom Kippur." "It was certainly not our intention," Burns said, but they wanted to seal the deal before it began leaking. Certainly they did, given that Xerox has coveted ACS for a long time and probably would have hated to see the deal botched by rumors before the two sides signed on the dotted line.
Just make sure Corning, always a glass act, encodes any new product so officers looking for knock off’s can easily recognize the good ones and take aggresive actions with the bad with the hopes that good works are properly rewarded and stay cheep and unlike free Microsoft products in our country and abroad that are subsidized by the purchasers. No free lunch box meals!