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E*Trade buys its joint venture E*Trade U.K. and Net services bank Telebanc Financial, while Schwab buys financial firm U.S. Trust, as the online brokerages rush to extend their reach in the face of greater competition.
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E*Trade buys out U.K. joint venture The online brokerage says it has taken 100 percent ownership of E*Trade U.K. in a move to further its plans for a global trading network.
Schwab to buy U.S. Trust in stock deal
E*Trade gets approval to buy Net savings bank
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The investment--$75 million in DoubleClick stock and $10 million in cash--gives DoubleClick a 30 percent equity stake in ValueClick. DoubleClick also received a warrant to buy another 15 percent of ValueClick within 15 months.
ValueClick said it plans to use the new capital to fuel its growth and expansion efforts, including acquisitions, as well as to further develop its performance-based advertising solutions, which use a cost-per-click model. The funding, however, will not change ValueClick's plans for additional financing or other sources of capitalization, the company said.
Analysts said there has been increased grumbling by advertisers that click-through rates at online sites are too low, making performance-based advertising, which tracks click-through rates, more sought after.
"DoubleClick's investment in the (performance-based network) will become increasingly important as advertisement buyers look for varied models for buying online advertising," said Patrick Keane, an analyst with research firm Jupiter Communications. "For DoubleClick to offer different kinds of solutions is attractive and makes sense."
With the investment, DoubleClick will gain two seats on ValueClick's board of directors.
ValueClick, which uses an in-house ad serving solution, said it served 1.3 billion ads in December 1999. ValueClick's performance-based banner advertising solutions use a "cost-per-click-through" pricing model where advertisers pay only for click-throughs to their Web sites.
The company will work with DoubleClick to integrate its proprietary technology platform with DART, DoubleClick's full-service ad serving solution.
ValueClick said it has created technology designed to aggregate thousands of Web sites. The company has more than 11,000 sites in its network and serves ads that reach 25 percent of U.S. Internet users, according to Media Metrix.
InterTrust Technologies today said it has formed an alliance and cut a licensing deal with consulting firm PricewaterhouseCoopers for InterTrust's digital rights management products.
As part of the deal, PricewaterhouseCoopers has made an equity investment of an undisclosed amount in the Santa Clara, Calif.-based company, the companies said in a statement. PricewaterhouseCoopers said it has also agreed to use InterTrust as the preferred digital rights management (DRM) provider for its clients and is licensed to sell InterTrust products, offer consulting services, and implement and manage the DRM software.
Financial terms of the deal were not disclosed.
InterTrust, one of the early players in DRM, gives content providers a way to block illegal copying with its flagship product, MetaTrust Utility. InterTrust competes against companies like Reciprocal, another DRM pioneer, and Canada-based RightMarkets.com. The DRM market has been gaining wider attention from investors in recent months.
Yesterday, Reciprocal announced that key IBM executive John Schwartz has joined the company as chief executive. Last November, Reciprocal nabbed a $35 million round in financing from a broad investing group including Xerox and Hewlett-Packard.
PricewaterhouseCoopers and InterTrust said they will work together to provide the technology and services necessary for clients to manage and protect digital products, such as music, video, games, images and business information. PricewaterhouseCoopers said it will also use InterTrust technology to develop DigiHub, an online service center that will process, analyze and protect business data and proprietary content.
Online brokerage E*Trade Group today said it has taken 100 percent ownership of E*Trade U.K. in a move to further its plans for a global trading network.
E*Trade U.K., which launched in 1999 as a joint venture between E*Trade and U.K.-based Electronic Share Information, will operate as a wholly owned subsidiary providing personalized online financial services to the U.K. market, the company said.
Under the terms of the agreement, shareholders of E*Trade U.K. will receive about 3.8 million shares of E*Trade common stock. At yesterday's closing price of $26.06, the deal would be worth about $100 million.
"The U.K. is a major European market and a magnet for foreign investment, and is therefore a crucial component of E*Trade's global business strategy," Judy Balint, chief international officer of E*Trade, said in a statement. "This acquisition of E*TRADE UK is a critical step toward our goal of building the first global cross-border trading network for online investors."
The deal comes on the same day that rival Charles Schwab said it plans to buy financial firm U.S. Trust in an effort to extend its business to wealthy investors.
Online brokerages have been rushing to stake a presence internationally with expectations that online trading is likely to grow overseas. AmeriTrade, E*Trade, Charles Schwab and others have been cutting deals and forming partnerships with regional players overseas.
According to a recent survey conducted by research firm APCIMS/ComPeer, online trading activity in the United Kingdom tripled during the third quarter of 1999. Another survey conducted by Fletcher Internet Research Group noted that more than 4.2 million homes in the United Kingdom were connected to the Internet during 1999.
E*Trade recently formed strategic joint ventures in Germany, Denmark, Norway and South Africa. In August 1999, E*Trade also completed its acquisition of TIR Holdings, an international financial services company offering global multi-currency securities execution and settlement services as well as providing independent research to institutional investors. NEW YORK--Brokerage Charles Schwab said it agreed to buy U.S. Trust for $2.7 billion in stock, extending its discount business to cater to wealthy individuals.
U.S. Trust shareholders will get 3.427 shares of Schwab for each share of U.S. Trust, valuing shares at $129 apiece, a 63 percent premium over U.S. Trust's closing stock price of 78.875 yesterday.
The purchase comes as Schwab faces greater competition from traditional brokerages, such as Merrill Lynch and Morgan Stanley Dean Witter, which last year set up online trading units. Both Merrill and Morgan offer accounts that provide advice as well as online trading.
"The baby boomers are emerging as a dominant wealth segment in the United States," said Schwab president David Pottruck in a statement.
Since Merrill announced its plans to go online June 1, Schwab stock has fallen 24 percent compared with an 11 percent increase in the Standard & Poor's 500 Index.
The 147-year-old U.S. Trust has $86 billion under management, much from wealthy individuals, a growing market that Schwab is seeking to enter.
Copyright 2000, Bloomberg L.P. All Rights Reserved. The Year 2000 computer problem may have hit a collection of U.S. image-collecting spy satellites a lot harder than first thought, according to a report.
The family of satellites was affected by the Y2K glitch for nearly three days, a failure far more substantial than the Pentagon's earlier reports of just a few hours, The Chicago Tribune reported today, based on interviews with what it terms "knowledgeable" government officials.
A computer patch intended to avert Y2K glitches turned the flow of data from five spy satellites into indecipherable garble. Within a few hours, Pentagon technicians redirected the satellite signals and began the slow process of manually deciphering the signals, according to the report.
Government officials were unavailable for comment on the report this morning.
The three-day shutdown occurred at a time when the entire U.S. intelligence community was on global alert for potential terrorist activity relating to Year 2000 celebrations, the report states.
ATI Technologies, the giant graphic chipmaker, said today it generated record revenues in its first quarter, meeting Wall Street estimates, but saw its gross margin decline.
Thornhill, Ontario-based ATI said sales for the first quarter ended Nov. 30, 1999, were $413.5 million, a 26 percent increase from the year-ago quarter. Adjusted net income for the first quarter, excluding the amortization of acquisitions, rose 5 percent to $54.5 million, or 25 cents per share, compared with $52 million, or 24 cents per share, for the same period last year.
Actual net income for the first quarter, including the amortization of acquisitions, was $53.6 million, or 25 cents per share, compared with $50.1 million, or 23 cents per share, for the same period last year.
ATI's gross margins declined to 34.1 percent for the first quarter compared with 36.6 percent for the year-ago quarter because of shifting in product mix, as well as increased material costs.
The company said sales in the first quarter reflected demand for ATI's Rage 128 and Rage Mobility products, which comprised a greater percentage of corporate revenues than in prior quarters. ATI said that demand for the company's XPERT series of board products was also robust.
"ATI approaches a bright future with growth prospects not only in our traditional PC business, but in new and burgeoning markets like consumer electronics appliances," K.Y. Ho, ATI's chief executive, said in a statement. An improved version of Intel's Pentium III Xeon processor was greeted with yawns from computer manufacturers which see the new chip as too similar to the standard Pentium III.
The Santa Clara, Calif.-based chip giant yesterday introduced an 800-MHz version of its Xeon. Arguably Intel's most powerful processor to date, the chip can be used in complex multiprocessor server and workstation systems.
Unfortunately, the chip's performance characteristics are almost identical to the recently released 800-MHz Pentium III, according to industry analysts and PC company personnel. But while the Xeon costs $901 per chip in volume quantities, the Pentium III goes for $50 less.
Perhaps as a result, no major PC makers announced equipment using the chip, an Intel spokesman confirmed, although a number of companies are planning products for the near future.
Xeon's identity crisis stems from an overlap on Intel's product road map. Historically, Xeon processors have outperformed Pentium II or III chips running at the same clock speed, but recent changes have minimized the difference, undermining the Xeon's market appeal.
Xeons contain the same processor "core" as standard Pentium II or Pentium III chips but typically have come with a "secondary cache" that was both larger and faster than the cache on standard Pentium IIIs. Secondary cache is a memory reservoir located near the processor that keeps the chip fed with data. The character of the cache helps determine the processor's overall ability.
Until recently, the secondary cache for both the Pentium III and Xeon lines came on separate memory chips. In October, though, Intel launched the "Coppermine" Pentium III and Pentium III Xeon processors, both of which come with integrated cache, which runs faster than the older, separate cache.
While integration of a 256K cache raised the bar for Intel's chips, it largely erased the differences between the Pentium IIIs and Xeons coming out just now.
"The Xeons basically are all Pentium IIIs," Dean McCarron, principal at Mercury Research, summarized in a November interview.
Xeons with larger caches are coming, but they aren't here yet.
The chip is still relatively popular in servers, especially the more elaborate multiprocessor boxes. Both Compaq and Dell, for instance, incorporate Xeon in their more expensive "enterprise" class severs, and put Pentium IIIs in the less expensive single- or dual-processor servers for workgroups or small offices.
The chip has been less used in the smaller workstation market. Since the differences have been reduced, Dell and HP have not picked up any new Xeons, opting instead to use Pentium IIIs.
In fact, HP has said that its future workstation products will only contain Pentium IIIs: Just yesterday the company released a new workstation that incorporates the 733-MHz Pentium III. The system also forsakes Rambus-style memory, which Intel has been pushing.
Xeons coming later this year will contain 1MB and 2MB of cache. This will once again create a difference between the Pentium III and the Xeon line.
But the line will find itself atop the Intel chip family for a limited time. By the middle of the year, Intel is planning to release Itanium, its first 64-bit processor, and "Willamette," a new family of 32-bit processors based around a more advanced architecture. Both chips will likely outperform the current Xeon design.
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