Raja Jasti’s Blog - Renaissance Thinking

November 9, 2009

Big day for M&A

Filed under: Business, Internet, Mobile — Tags: , — Raja @ 10:24 am

Today is a big day for tech M&A sector.

Google clearly identifies mobile as the source of their growth beyond the web. Today they acquired mobile ad company AdMob for $750M.

Google has just announced that it has acquired AdMob, the mobile ad platform that has been especially popular on the iPhone, for $750 million. This is a big win for the company’s early investors, which include Sequoia Capital and Accel Partners (this is a huge day for Accel — they were also investors in Playfish, which was just acquired by EA). More recent investors include DFJ and Northgate Capital.

Today also saw EA acquiring web social gaming company Playfish for $300M with another $100M in earn outs.

After lengthy negotiations, Electronic Arts closed it’s anticipated acquisition of social gaming startup Playfish for $275 million in cash. An additional $25 million in stock will be set aside for retaining the top talent at the startup, and another $100 million in earnouts are part of the deal as well if the business hits certain milestones. So the total value of the deal could amount to as much as $400 million when all is said and done. Although, earnouts have a tendency to come up short (see Skype).

Playfish is based in London, and has raised $21 million from Accel Partners and Index ventures. The Accel investment is from its European fund. Playfish’s estimated annual revenues are $75 million.

May 2, 2009

Apple targets the gaming industry

Filed under: Entertainment, Mobile — Tags: — Raja @ 8:33 am

Frobes has an article on Apple’s recent moves that hint at their targeting the gamin industry.

Apple appears to be preparing an all-out assault on the handheld gaming market, moving to snap up gaming industry insiders from Microsoft to go with its growing team of graphics-chip specialists.

News that Apple has poached Richard Teversham from Microsoft’s Xbox business this week is only the latest sign Apple has gotten serious about the gaming business. Teversham, who was senior director for insights and strategy at Microsoft’s Xbox Business, drove the “three year strategy for the Xbox business” in Europe, the Middle East and Asia, according to his LinkedIn profile.

Earlier this week Apple ( AAPL - news - people ) hired Bob Drebin, chief technologist at Advanced Micro Device’s graphics group and the creator of the Nintendo ( NTDOY.PK - news - people ) Gamecube’s graphics processor.

That move came as IBM ( IBM - news - people ) chip designer Mark Papermaster began his role as head of Apple’s iPod business last month after a long legal tussle with IBM.

Apple is also putting some of its huge pile of cash into semiconductor technology. In December, Apple purchased 3.6% of U.K.-based ImagInation, licensing its PowerVR graphics technology. And last year Apple purchased processor designer PA Semi for $378 million (See “Apple Buys Chip Designer “).

Where will those investments be put to work? Apple Chief Executive Steve Jobs said in an interview last year that he plans to put his PA Semi designers to work building silicon for the company’s iPhones and iPods. And while Apple keeps its hardware roadmap to itself, iPhone developers such as Damon Allison figure the iPhone and iPod’s hardware will evolve in at least three areas.

First, the iPhone will almost certainly get a better camera and multi-media capabilities. That could unleash a new generation of applications that integrate video and still images into games and social applications, as Nintendo’s new DSi has done.

Second, sooner or later the iPhone and iPod touch will get a new, faster processor, most likely an ARM-based design customized by Apple’s in-house designers. The result will be snappier, better looking games.

Earlier this week Apple ( AAPL - news - people ) hired Bob Drebin, chief technologist at Advanced Micro Device’s graphics group and the creator of the Nintendo ( NTDOY.PK - news - people ) Gamecube’s graphics processor.

That move came as IBM ( IBM - news - people ) chip designer Mark Papermaster began his role as head of Apple’s iPod business last month after a long legal tussle with IBM.

Apple is also putting some of its huge pile of cash into semiconductor technology. In December, Apple purchased 3.6% of U.K.-based ImagInation, licensing its PowerVR graphics technology. And last year Apple purchased processor designer PA Semi for $378 million (See “Apple Buys Chip Designer “).

Where will those investments be put to work? Apple Chief Executive Steve Jobs said in an interview last year that he plans to put his PA Semi designers to work building silicon for the company’s iPhones and iPods. And while Apple keeps its hardware roadmap to itself, iPhone developers such as Damon Allison figure the iPhone and iPod’s hardware will evolve in at least three areas.

First, the iPhone will almost certainly get a better camera and multi-media capabilities. That could unleash a new generation of applications that integrate video and still images into games and social applications, as Nintendo’s new DSi has done.

Second, sooner or later the iPhone and iPod touch will get a new, faster processor, most likely an ARM-based design customized by Apple’s in-house designers. The result will be snappier, better looking games.

April 29, 2009

Calling BS: Zynga making $100M?

Filed under: Internet, Mobile — Tags: — Raja @ 10:51 pm

Techcrunch says so.

picture-511Zynga, the online gaming publisher, is making a ton of money. Just how much? Well, earlier reports put revenue at something around $50 million, but some new numbers obtained by Sarah Lacy suggests that it’s closer to $100 million. And clearly, it’s accelerating. We’re hearing that the run rate for 2009 may even be well above that.

So in case it wasn’t already clear, there looks to be a bright future in the online gaming sphere and specifically around micro-transactions. That’s how Zynga makes most of its money. With some of its leading games on MySpace and Facebook, it charges users for playing time or for things like chips in poker. These small purchases which usually amount to only a few dollars at a time, start to add up quick. And that’s only with a small percentage of overall players opting to buy them.

And Zynga recently transitioned this model to the iPhone, but because the iPhone doesn’t yet allow for in-app purchases, it has been forced to sell expensive versions of its apps like Live Poker, with chips included. But that’s about to change with the iPhone 3.0 software due this summer. The new software’s in-app purchases could very well take Zynga’s revenues even higher.

Just last week, VentureBeat’s Eric Eldon speculated that Zynga, which is now the largest Facebook app developer, might be trying to raise another large round of funding — something to the tune of $30 million. Given these revenue numbers — and yes, Zynga is already profitable as well — that certainly doesn’t seem out of the question. The company raised a $29 million round back in July of last year, and has raised $39 million total.

If Zynga is doing $100M in revenues and is profitable why would they need to raise $30M. This doesn’t add up.

Update: BW has a featured article on Zynga. It looks like there is a calcualted PR campaign going on in preparation for fund raising.

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