Tuesday, January 29, 2008

Exit strategies by San Diego firms

I was quoted heavily in Sunday’s story in the UT on the origins of the San Diego telecom industry. The interview was done last July with Kathryn Balint, who apparently left the UT in August.

Despite the lag, I still stand by what I said then. The only problem is that the book on the local telecom industry, Digitizing Communications, is moving forward but running behind schedule.

One of the points I made (also made by Martha Dennis) is that local firms are being acquired rather than seeking an IPO as has happened with so many famous Silicon Valley companies. The companies need liquidity — or must have it to fulfill promises made to VCs — and thus take the best route available.

For the book, I sat down this afternoon and tried to update our record of public San Diego-based telecom companies. (The definition of “telecom” here is as loose as possible, including defense electronics and computer networks).

Market Cap†
S&P 500 stock
Leap WirelessNasdaqLEAP

S&P 600 Small Cap stock
Novatel WirelessNasdaqNVTL
S&P 600 Small Cap stock
Maxwell TechnologiesNasdaqMXWL

Dot Hill SystemsNasdaqHILL


Quoted 0-1¢/share by various sites
† Market cap at 4pm EST Monday, according to WSJ.com

This does not include companies that were acquired after IPO (like Applied Digital and Copper Mountain) or moved to SIlicon Valley after a local IPO (both AMCC and Copper Mountain). Remec IPO'd but eventually liquidated itself. I gave up on making sense of the Woody Norris companies (American Technology Corp., Norris Communications/e.Digital, Jabra).

As it turns out, the use of acquisition (rather than IPOs) as an exit strategy seems to be becoming more the norm, even in Silicon Valley. As I remarked this morning after Nokia bought Trolltech, IPOs are becoming more scarce in software. It may turn out that the roaring 90s was the last rush of startup-to-IPO miracles; very few San Diego companies made it before the 2001 NASDAQ crash, fueled by the end of FCC’s policy fantasy known as the CLEC.

I remember when Charlie Jackson sold Silicon Beach to Aldus back in 1990. Charlie told me he’d been planning on doing an IPO, but the markets weren’t favorable. Charlie did it again later with FutureWave and Macromedia — although the FutureWave sale was an opportunistic exit with the invention of Flash.

Of course, Linkabit also exited via acquisition (by M/A-COM), but after the new owners mucked it up, Irwin Jacobs and Andy Viterbi didn’t make that mistake a second time.

Thursday, January 17, 2008

EV-DO live and kicking

Several years ago, Mac users wanting to use EV-DO modems had rely on third parties to provide support and drives. But this week’s Macworld Expo suggests that the demand for the Mac has gone mainstream enough to earn direct support from the two major US CDMA carriers.

Verizon Wireless was demonstrating three Novatel Wireless EV-DO (Rev A) modems: the USB720, the USB727 (which takes a microSD memory card), and ExpressCard V740. Sprint has the 727 (which it calls the "Ovation U727”) and a Sierra Wirless AirCard 595U. As the names suggest, all but the V740 are USB devices — which is good since the MacBook (and new MacBook Air) don’t have ExpressCard slots.

Sprint was demonst the PHS300S Wi-Fi hotspot by CradlePoint Technology. You stick one of their USB EV-DO cards into its port, and then you have a Wi-Fi device that supports 4 CPUs. The obvious application is a construction work site — or perhaps a trade show or street fair where you need credit card clearing. I could also see it used at a vacatio home, if you had a wired family that couldn’t get by without Internet coverage.

EVDOInfo.com — the original Mac third party support for such products — seems to be still acting as a reseller of these products, even if it’s no longer the only source. (Its website seems to be finicky, but its sister site 3Gstore is still alive).

Tuesday, January 15, 2008

Qualcomm and Nokia truce?

Nokia has a new EV-DO capable CDMA phone that has passed FCC certification. This means that it could once again sell phones to the majority of the US market that uses CDMA, beyond the low-end 2135 candybar sold by Metro PCS.

Nokia would have a hard time shipping a new UC CDMA phone given the expiration of its patent license with Qualcomm. On the other hand, this would be consistent with the UT report that the two parties are trying to bring all pending IPR disputes to resolution in a single venue.

Still, the one dissonance comes from CEO Paul Jacobs in a Bloomberg interview:

Jacobs, 45, said Qualcomm is not making any progress in its talks with Nokia, the world's largest maker of mobile phones, in another dispute. The companies are at odds over how much Nokia should pay to use Qualcomm technology under a new licensing agreement, a dispute that has spilled over into several court cases.

``Though we keep talking to them, there hasn't been a lot of movement,'' said Jacobs. A legal victory will be needed to bring the two sides closer together, he said.

In other words, both sides hope to win in court, and neither will be willing to compromise until the courts say who has a better hand. With appeals, that could be another two years.