First Coffee for 30 January, 2006

David Sims : First Coffee
David Sims
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First Coffee for 30 January, 2006

By David Sims

The news as of the first coffee this morning, and the music is Bill Evans’s highly underrated piano jazz:

According to a new survey by investment bank AdMedia Partners, merger and acquisition activity for Internet marketing firms will be remarkably strong in 2006. AdMedia’s survey also found that mergers and acquisitions of “experiential marketing” companies – which includes buzz, viral, guerilla and event marketing firms – as well as database marketing and customer relationship management firms, will also be strong this year.

The survey – “Merger and Acquisition Prospects for Marketing Services and Internet Marketing Firms” – shows that the valuation multiples that respondents anticipate for marketing services firms increased to 6-7 times EBITDA (pretax profit) from 5-7 times last year.

The most notable increase in valuation parameters was seen for Internet marketing firms, with anticipated multiples of 6-10 times EBITDA, up from 5-7 times last year. By contrast, AdMedia officials say, valuation multiple expectations for traditional advertising agencies have held at last year’s level of 5-6 times EBITDA.

AdMedia Managing Director Abe Jones says of those who identify as prospective buyers, 54 percent expect to complete an acquisition during 2006, up slightly from 51 percent who thought they would do so in 2005. In a more dramatic shift, 42 percent of those who identify as prospective sellers expect to sell all or part of their businesses in 2006, vs. 25 percent who thought they would do so last year.

“It is widely recognized that marketers must look beyond traditional advertising to reach consumers, and right now Internet marketing, experiential marketing, and CRM are capturing a sizeable share of both industry budgets and buzz,” said Jones. “It follows that deal-making activity will be particularly strong in these sectors.”

A tip of the coffee pot to Thierry Guenoun, named Nominum’s VP of sales EMEA.

Nominum provides network naming and addressing.

Thierry has nearly two decades of European IT sales experience with expertise across telecoms, networking and security sectors. Most recently, he was the regional sales director of Southern Europe for Juniper Networks, formerly NetScreen Technologies. He’s also had various management positions at Sonus Networks, Ascend/Lucent, Nortel and Timeplex.

“The network demands of triple play, VoIP and next generation networks are bringing new opportunities for Nominum,” Guenon said.

Got a lot of responses to my column on GlobeTel and what Seth Jayson has written in Motley Fool about the putative VoIP-WiMax powerhouse. Basically Jayson’s research shows GlobeTel to be a lot of hot air, much better at PR than actual results.

Most were the sort of stuff you’d expect from shareholders getting anxious over their stock, heck if I had shares in GTE I’d be concerned too, but there was one fairly bright light.

“David...I e-mailed Seth Jayson on Tuesday concerning his article,” he wrote. “I had read on Raging Bull that Globetel CEO Timothy Huff had invited Seth to the Globetel headquarters to conduct a formal interview and wondered if he (Jayson) had so many unanswered questions about GTE why he didn’t take him up on the offer.”

No sane journalist would go to that kind of staged setup expecting to have a frank, enlightening discussion. If Huff has something to say why can’t he say it in a press release to everyone? Why does the media need to go one by one to make pilgrimages to a physical location to get fed a line of company PR? Odd behavior for a CEO concerned to get the truth out about his VoIP company.

Huff’s only public statement released since Jayson dissected his company with a scalpel is that he finds the mass of specific facts, dates, names, dollar amounts and stock connections Jayson presents to be “without substance” and “misleading.” He offers not a single specific rebuttal of anything Jayson writes – he doesn’t actually show how anything Jayson says is “without substance” or “misleading.”

What I always find telling is when specific facts are answered only with vague, general “rebuttals,” which don’t address the substance of the facts. To me that’s always a warning flag that there isn’t anything else to say – that the facts themselves cannot be answered.

My intelligent e-mailer wrote “Jayson never replied to my e-mail although he replied to numerous people on the Raging Bull board who had e-mailed him with other questions. I also talked to Maxwell Murphy of the Dow Jones Newswire personally by telephone (he wrote an article this week on GTE) and asked him if he had talked to Huff personally. He replied yes, that he and Huff had conversed by telephone.

“Since your article seems to have mirrored the concerns of Jayson may I ask you how much time you spent talking with Huff or the representatives of GTE? Since the allegations Jayson has made against their company were very serious I would hope you gave them a chance to voice their side of the argument.”

I didn’t spend any time talking to Huff because the focus of my last column was simply to explain what the issues were between GlobeTel and Motley Fool. And Huff has all the opportunity he wants to tell his side of the story via press releases, nobody should have to contact him personally to hear it.

However, I have e-mailed to GlobeTel and asked for an opportunity to ask Huff some questions. Yes, I’m still waiting for an answer.

Still, I find it unusual that if Huff has something to say to correct the high-profile, public negative impression that Jayson’s article made in a respected, widely-read forum, that he didn’t do so in the press release he sent out following the article’s publication, the “substance” of which is given in my Saturday column.

I mean, Huff feels it’s necessary to call Jayson’s article wrong, but in doing so he doesn’t actually show how anything Jayson wrote is actually wrong? Weird.

Isn’t it his fiduciary responsibility to his shareholders to show how Jayson’s wrong to reassure investors and the market? It’s not like the man’s allergic to publicity, he was certainly keen enough on splashy press releases when announcing the $600 million VoIP Russia deal.

It’s hard enough sorting through the mass of would-be VoIP and WiMax world-beaters, it helps a lot when company officers are as forthcoming about the operational details as they are about the PR.

RightNow Technologies is pleased as punch that it was named a “strong performer” in The Forrester Wave: E-mail Marketing Service Providers, Forrester Research, Inc., December 22, 2005. RightNow officials claim the Bozeman, Montana-based company was “the only CRM vendor” whose “e-mail marketing revenue, market presence, and business strategy” were included in the report.

The report was based on an evaluation of the top nine e-mail marketing service providers, including an assessment of each vendor’s product across 75 criteria, conversations with executives and customer references, product demonstrations, and a review of supporting documents. RightNow Marketing was specifically cited in the report for its “best-of-breed” multi-channel capabilities.

“[RightNow’s] multichannel capabilities are the best in the industry,” Shar VanBoskirk, the report’s author, stated in the report.

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